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The USDA set the October 2020 Federal Milk Marketing Order Class I base price at $15.20/cwt, down more than $3 from September. Dairy cow slaughter hit a four-year low in August.
Rising block cheddar prices from a USDA food box purchase approval are creating the potential for depooling and negative producer price differentials in October.
Lower Class I pricing and a cheese-driven rally in Class III futures shift milk value between classes and regions. Tighter cow slaughter supports milk supply and feed demand over the coming months.
agproud.comDave NatzkeSep 28, 2020After 136 past neutral report events, Milk (Class III) moved a median -0.1% over 5 sessions (43% higher; middle half -0.7% to +0.5%), and -0.3% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
USDA food box purchase approval lifted block cheddar prices and raised depooling and negative PPD risk, a demand-driven bullish factor for Class III futures.
Rising block cheddar prices tied to the USDA food box purchase approval point to a demand-driven cheese rally and depooling, which tightens milk supply to Class III and supports futures.
