Where are Producer Milk Prices Going?
- amy55735
- May 19
- 1 min read
Producer milk prices are falling. This primarily reflects the decreasing wholesale prices of butter and cheese. Class III milk makes up more than 50% of U.S. produced milk and butterfat and milk protein are both in a price decline. This post will show where prices are currently going. It will also show the impact on milk protein prices when butterfat prices change.
Next month, in June, the new USDA formulas will be implemented, and producer revenue will be lowered. See this post for details.
Chart I below shows the changes in butterfat and milk protein prices. At the beginning of 2021, butterfat and milk protein prices were equal. Butterfat prices then shot up, reaching a high of $3.71 per pound. During this time, milk protein prices fell. Butterfat prices have dropped, but they are still higher priced than milk protein and the component level of butterfat is significantly greater than milk protein. A recent study calculated that butterfat currently makes up 54% of producer revenue and milk protein makes up 35% of producer revenue.
The mirror image of butterfat and milk protein prices in Chart I are caused by the USDA pricing formulas. There are two things that influence milk protein prices, cheese prices and butterfat prices. More on this later in this post.
John Geuss
May 15, 2025
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