If you've only glanced at the milk futures board this month, the story looks almost calm. Class III and Class IV prices have been narrowing toward each other through July, which usually reads as a market settling down rather than lurching in either direction. Members who ship or buy on formula-priced contracts have told us the same thing: nothing dramatic, just a market finding a level. The federal government's monthly dairy outlook, out earlier this month, read the same way at the headline level — supply and use numbers moving in small steps, not big ones.
That calm doesn't extend to the input side of the ledger, and that's the half of the story we want to spend more time on this week.
The number under the number
For members in drought-affected states, the feed line has moved a lot more than the milk price has. Some of you have told us you're now paying close to double what you paid for rolled corn a year ago, and hay is harder to find at any price once you've exhausted what's grown within a reasonable haul of your own barn. When a third of the country's hay-growing acreage is sitting inside a drought designation, "reasonable haul" keeps getting longer, and every extra mile shows up on your feed invoice.
That's the gap our own Class III/Class IV number doesn't show: a milk check that's holding roughly steady against a cost base that isn't holding steady at all. If your margin has felt tighter this quarter than the headline price would suggest, you're reading the situation correctly, not missing something. The outlook report's supply projections assume herds stay roughly where they are; they don't have a line item for what a producer pays to keep a herd fed through a dry summer, which is exactly the number most of our affected members are watching more closely than the futures board.
What this means for pricing decisions
We're hearing from members, especially smaller farmstead operations, who are quietly rebuilding their price sheets around a feed number rather than a milk number for the first time in a while. That's a reasonable response, but it's worth doing carefully rather than by feel. A wholesale price you set to cover this month's feed bill can leave you short again in six weeks if the input keeps climbing, and a price you can't explain to a buyer is a price you'll end up negotiating away.
If you supply liquid milk into a cooperative pool, there isn't much room to act unilaterally on price — but there's real value in tracking your own cost-per-hundredweight against the pool number, month over month, so you know exactly when the math stops working for your operation and you need to have a different conversation with your buyer or your co-op.
We don't have a clean fix for a drought, and we're not going to pretend membership dues buy you rain. What we can do is point you toward the tools that make the next decision a little less guess-driven. Members working through a price reset this summer should also look at Wednesday's post on the upcoming wholesale negotiation session — it's built for exactly this kind of conversation, and it lands the same week most of you are staring at a feed invoice that doesn't match last year's.
If you want to talk through what your own feed-to-milk spread looks like against regional numbers, reach out to the Membership & Outreach Committee; several members have already been comparing notes and are happy to have one more voice in that conversation.
The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.