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  April 23, 2010

Remarkably higher butter prices and an uptick in powder made Class IV the "higher of" in April to push the May Federal Order Class I "mover" up 58 cents over April's level to $13.80 per hundredweight. USDA announded the price today, April 23.

Because Class IV topped the Class III price, previous predictions of MILC payments in May will not occur. Those predictions were based on the dismal CME cheese market and its effect on the downtrending Class III milk price. The May Class I "mover" is based on commodity sales for the first two weeks of April. At $13.80, next month's Class I "mover" is $2.83 higher than in May of 2009.

Butter should continue to rock and roll for awhile. According to USDA's Cold Storage report Thursday, butter stocks were down 7% below year ago in March. Stocks usually increase from February to March, but this year, butter stocks fell 3% from February to March. Reports indicate butter exports have been brisk. This is not surprising given the fact that the U.S. price, even though it's on a roll, is still 20 cents/lb below the world price, as is powder.

Export demand for powder is also picking up and sales are made at prices more than 15 cents above domestic. But that is not translating to producer pay prices because it's not being reported. In February, U.S. powder sold to the international market at $1.19/lb while the NASS average was $1.07. As export volumes and prices increase, we'll see how much of that "benefit" is reported to NASS for the milk pricing formulas. 


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