Class III, Class IV Spread Widens
USDA announced January milk prices this week and it was a good news, bad news scenario. The good news - Class IV prices continue to strengthen. The bad news - Class III prices continue a gradual decline.
USDA pegged Class IV prices for February at $15.86 per cwt, up 38 cents from January. The Class III price sits at $13,89, down 7 cents from last month.
Class IV prices have been higher than Class III since October 2018, due mostly to stronger prices for powder and weaker cheese markets. Class IV prices are based primarily on butter and powder markets, while cheese prices have a greater impact on Class III prices. A tighter global powder supply has kept prices high, while larger cheese inventories have tempered cheese prices.
Despite the depressed trend for Class III prices, futures prices for nearby contracts have trended upward over the past week. You can track Class III futures and other dairy product futures prices by clicking here.