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July 10, 2020

Central Order PPD Plunges to -$7.51

 |  By: Jim Dickrell

As feared, the June Producer Price Differential (PPD) was a big, ugly, negative number, coming in today at -$7.51/cwt for the Central Federal Milk Marketing Order at Jackson, Mo.  

The negative number was the result of a combination of factors: a run-up in Class III prices, a wide difference between Class III and IV, and—in the case of the Federal Milk Market Central Order—massive depooling. Only 57 million pounds of Class III milk was pooled in June on the Central Order compared to 548 million pounds in May.

As a result, Class III utilization plunged to less than 7 percent, down from almost 40 percent in May. June Class I utilization jumped to 43 percent compared to 27 percent in May, Class II went to 18 percent in June compared to 10 percent in May and Class IV went to 32 percent in June compared to 23 percent in May.

Consequently, the Statistical Uniform Price (Class III + PPD) at 3.5% butterfat was $13.53 for the Central Order at Jackson County, Mo. That’s up from $12.24 in May, but not nearly what farmers had been expecting given the run-up in cheese markets the past month. View the Central Order price announcement here.

For a more complete explanation of why PPDs have turned negative in June, click here.

Other Federal Order price announcements are expected in the next few days.