Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market. These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:
Domestic
According to the USDA’s latest sales report for the week ending December 28, 2024, the average price of butter was $2.5635 per pound, reflecting a decrease from $2.6784 per pound in the previous month. The price of 40-pound block cheddar cheese averaged $1.7793 per pound, which was a slight decrease from $1.7904 per pound. Similarly, the price of 500-pound barrel cheddar cheese, adjusted to 38% moisture, declined to $1.7551 per pound from $1.7724 per pound.
In contrast, nonfat dry milk saw a slight increase, averaging $1.3994 per pound compared to $1.3916 per pound previously. Dry whey also experienced an upward trend, with the price rising to $0.6630 per pound from $0.6081 per pound. These figures highlight that while butter and cheddar cheese prices have seen modest declines, nonfat dry milk and dry whey recorded slight gains.
Class III & IV
In December 2024, Federal Milk Marketing Order (FMMO) class milk prices showed declines across Class II, III, and IV categories compared to November, with the Class III milk price falling to $18.62 per hundredweight (cwt)—the lowest since May 2024. The Class IV price also decreased to $20.74 per cwt, creating a $2.12 spread between Class III and IV milk prices, the widest since April 2024. This significant gap may incentivize the depooling of Class IV milk from the FMMO system, potentially disrupting uniform milk pricing. Additionally, butterfat and protein values, key components in milk price calculations, declined in December, with butterfat priced at $2.91 per pound and protein at $1.96 per pound, both marking multi-month lows. The drop in butterfat and protein values has contributed to weaker FMMO blend prices for December.
The advanced Class I base price for January was set at $20.38 per cwt, down $1.05 from December and the lowest since June 2024. However, futures trading suggests improvements in Class III and IV milk prices for January, with CME Class III futures closing at $20.36 per cwt and Class IV futures at $20.94 per cwt, representing gains of $1.74 and $0.20, respectively. This would narrow the Class III-IV spread to $0.58 per cwt, reducing but not fully eliminating the incentive for Class IV depooling.
Impact of Cold Stress on Heifers
While cold stress is often associated with calves due to their smaller size and limited fat reserves, it also significantly impacts heifers, especially younger, post-weaned animals. Heifers are more vulnerable to cold stress during winter because:
Less developed winter coats: Heifers don’t have the same insulating coats as mature cows, making them more susceptible to cold.
Higher energy needs: Heifers require more energy to maintain their body temperature in cold conditions.
Increased risk of health issues: Cold stress can contribute to growth setbacks, respiratory issues, and delayed breeding, ultimately affecting long-term productivity and success in the herd.
3 Proactive Steps to Manage Heifer Health, Productivity, and Growth in Winter
Ensure Proper Housing and Bedding
Action: Provide dry, clean, and well-bedded pens to retain body heat. Test bedding quality using the “knee test”—kneeling in different areas of the pen to check if the bedding is dry. If it’s wet, add more bedding.
Outcome: Protects heifers from the cold and reduces the risk of cold stress. Dry bedding also helps prevent respiratory diseases by improving ventilation and reducing humidity.
Optimize Nutrition for Energy and Growth
Action: Increase the energy content of heifers’ diets to meet higher winter energy demands. Work with a nutritionist to ensure heifers receive enough calories to support both growth and the extra energy needed to stay warm.
Outcome: Helps maintain healthy growth rates (1.75 pounds/day for large breeds) and ensures heifers are physically ready for breeding, reducing the risk of late calving and calving complications.
Maintain Access to Fresh Water
Action: Regularly check waterers to ensure they are not frozen and are accessible to heifers. Heifers between 5 and 24 months old consume 3.8 to 9.6 gallons of water per day, so ensure water availability is uninterrupted during cold weather.
Outcome: Ensures heifers remain properly hydrated, which supports digestion, energy availability, and overall health. Proper hydration also helps prevent reduced feed intake, which could lead to energy deficiencies.
By taking these proactive steps, dairy farmers can protect their heifers from the adverse effects of cold stress, ensuring optimal health, growth, and future productivity throughout the winter months.
Summary
In December 2024, Federal Milk Marketing Order (FMMO) prices for Class II, III, and IV milk declined compared to November, with Class III milk reaching its lowest level since May 2024. The gap between Class III and IV prices widened significantly, creating potential incentives for depooling, which could disrupt uniform pricing. Butterfat and protein values also fell to multi-month lows, contributing to weaker FMMO blend prices. Looking ahead to January 2025, MRV projects the Class I base price is expected to decrease further, although futures trading suggests potential recovery in Class III and IV milk prices, which could narrow the price gap. Additionally, cold stress in heifers continues to pose challenges during winter, as it impacts their growth, health, and productivity due to higher energy demands and increased vulnerability to cold conditions. Proactive measures, such as ensuring proper housing, optimized nutrition, and consistent access to fresh water, are crucial for maintaining their health and ensuring long-term productivity.
This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.
MRV BLOG: MRV Market Commentary January 6, 2025
Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market. These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:
Domestic
According to the USDA’s latest sales report for the week ending December 28, 2024, the average price of butter was $2.5635 per pound, reflecting a decrease from $2.6784 per pound in the previous month. The price of 40-pound block cheddar cheese averaged $1.7793 per pound, which was a slight decrease from $1.7904 per pound. Similarly, the price of 500-pound barrel cheddar cheese, adjusted to 38% moisture, declined to $1.7551 per pound from $1.7724 per pound.
In contrast, nonfat dry milk saw a slight increase, averaging $1.3994 per pound compared to $1.3916 per pound previously. Dry whey also experienced an upward trend, with the price rising to $0.6630 per pound from $0.6081 per pound. These figures highlight that while butter and cheddar cheese prices have seen modest declines, nonfat dry milk and dry whey recorded slight gains.
Class III & IV
In December 2024, Federal Milk Marketing Order (FMMO) class milk prices showed declines across Class II, III, and IV categories compared to November, with the Class III milk price falling to $18.62 per hundredweight (cwt)—the lowest since May 2024. The Class IV price also decreased to $20.74 per cwt, creating a $2.12 spread between Class III and IV milk prices, the widest since April 2024. This significant gap may incentivize the depooling of Class IV milk from the FMMO system, potentially disrupting uniform milk pricing. Additionally, butterfat and protein values, key components in milk price calculations, declined in December, with butterfat priced at $2.91 per pound and protein at $1.96 per pound, both marking multi-month lows. The drop in butterfat and protein values has contributed to weaker FMMO blend prices for December.
The advanced Class I base price for January was set at $20.38 per cwt, down $1.05 from December and the lowest since June 2024. However, futures trading suggests improvements in Class III and IV milk prices for January, with CME Class III futures closing at $20.36 per cwt and Class IV futures at $20.94 per cwt, representing gains of $1.74 and $0.20, respectively. This would narrow the Class III-IV spread to $0.58 per cwt, reducing but not fully eliminating the incentive for Class IV depooling.
Impact of Cold Stress on Heifers
While cold stress is often associated with calves due to their smaller size and limited fat reserves, it also significantly impacts heifers, especially younger, post-weaned animals. Heifers are more vulnerable to cold stress during winter because:
3 Proactive Steps to Manage Heifer Health, Productivity, and Growth in Winter
By taking these proactive steps, dairy farmers can protect their heifers from the adverse effects of cold stress, ensuring optimal health, growth, and future productivity throughout the winter months.
Summary
In December 2024, Federal Milk Marketing Order (FMMO) prices for Class II, III, and IV milk declined compared to November, with Class III milk reaching its lowest level since May 2024. The gap between Class III and IV prices widened significantly, creating potential incentives for depooling, which could disrupt uniform pricing. Butterfat and protein values also fell to multi-month lows, contributing to weaker FMMO blend prices. Looking ahead to January 2025, MRV projects the Class I base price is expected to decrease further, although futures trading suggests potential recovery in Class III and IV milk prices, which could narrow the price gap. Additionally, cold stress in heifers continues to pose challenges during winter, as it impacts their growth, health, and productivity due to higher energy demands and increased vulnerability to cold conditions. Proactive measures, such as ensuring proper housing, optimized nutrition, and consistent access to fresh water, are crucial for maintaining their health and ensuring long-term productivity.
This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.
Statistical data referenced here is gleaned from reports by MRV Proprietary Data, CME Group, Dairy Herd Management and USDA.
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