High Class III prices, depooling lead to negative PPDs

“Milk pricing in federal marketing orders is complicated under normal circumstances, but many dairy farmers have been bewildered by milk checks that didn’t reflect the soaring Class III prices they expected in their pool’s blend price.

Negative PPDs — producer price differentials — have consumed the industry’s collective psyche for months, but they don’t necessarily mean producers are losing money.

Over the past few years, the price of Class I milk for fluid consumption has stayed well above those of manufacturing milk. The COVID-19 pandemic initially brought big decreases in demand and prices for Class III and Class IV, followed by a big recovery in Class III — primarily due to the second round of government purchases of cheese, he said.”

Be sure to check out the recent article by Capital Press’s Carol Ryan Dumas