Changes In Milk Checks Explained- AG Matters

If you only look at the total at the bottom, you may have not noticed a significant difference in your milk check. Marylynn Collins with Cornell Cooperative Extension explains the change that's been going for the past few months.

For the first time since the beginning of component pricing some sixteen years ago, the monthly federal order price for butterfat has exceeded both nonfat solid price and monthly protein price for the past four months. USDA Agricultural Marketing Service Announcement of Class and Component Prices for February 3rd posted butterfat at $2.31/lb. and protein at $1.81/lb.

National Milk Producers Federation vice president of economic policy and research, Peter Vitaliano offers the following explanation for this shift in component values. Exports of dairy components have declined sharply in the past two years, particularly the skim milk solids, which typically are priced in the world market, while milkfat is being priced in the U.S. domestic market. During 2014 we witnessed a sharp downturn in world dairy product prices that took U.S. nonfat dry milk and dry whey prices with them. Those prices have remained at depressed levels ever since.

Consumer attitudes towards fat consumption in our diets is also changing. This stimulates a greater demand for dairy products, including whole milk, full fat yogurt, higher fat cheeses, as well as butter. Vitaliano further explains; coupled with slowing growth in U.S. milk and milk fat productions, this has driven milkfat prices to record levels and reduced the amount of U.S. produced milk fat available to export.

Producers can expect to see milkfat values representing roughly 55% of the total milk price for the remainder of 2016. This may inspire producers to look more closely at forage content of the ration and to initiate a conversation with their veterinarian or nutritionist on how to achieve higher milk fat component levels.

SOURCE: Cornell Cooperative Extension - Jennifer Collins