June milk checks carried a dose of unwelcome pricing news.
That unfavorable news involved negative producer price differentials (PPDs), and those negative calculations were set in motion by historic swings in pandemic-driven milk markets. The situation reared its ugly head throughout the federal order system and involved markets with multiple component pricing.
California dairy producers were the hardest hit with a negative PPD of $7.91.
Other PPDs prevailing in the Federal Milk Marketing Orders (FMMOs) were:
- Negative $7.62 — Southwest (New Mexico, Texas, and southern Colorado.)
- Negative $7.51 — Central (northern Colorado, Illinois, Iowa, Kansas, Missouri, Nebraska, Oklahoma, and South Dakota; along with a few counties in Minnesota and Wisconsin.)
- Negative $7.05 — Mideast (Indiana, Michigan, and Ohio; plus eastern Pennsylvania, northern Kentucky, and West Virginia.)
- Negative $5.87 — Pacific Northwest (Oregon and Washington, along with northern Idaho.)
- Negative $5.35 — Northeast (Connecticut, Delaware, Maryland, New Jersey, New York, Massachusetts, New Hampshire, Rhode Island, and Vermont; along with eastern Pennsylvania and eastern Virginia.)
- Negative $3.81 — Upper Midwest (Minnesota and Wisconsin; plus northern Illinois, Michigan’s upper peninsula, and North and South Dakota.)
Situation could persist
The June milk prices were largely caused by pandemic-induced price swings that saw Class III prices move from May’s $12.14 to June’s $21.04.
However, the coming months could still have negative PPDs due to another situation — a large spread between Class III and Class IV prices. At the moment, CME futures indicate that July Class III could be near $24 and the July Class IV would be $14.
To learn more on that matter, we encourage readers to download “Making Sense of Your Milk Price in the Pandemic Economy: Negative PPDs, Depooling, and Reblending.”
Also, read “Big differences in June milk checks” as it will shed additional light on the matter.
