Calculation of Class II Skim Milk and Nonfat Solids Price

These Class Prices are based on Advanced Pricing factors released in the month preceding the month in question. In the following example, the Class prices for Oct 2009 are calculated using the advanced values, released on Sep 18, 2009

Advanced Class III Skim Milk Pricing Factor

= (Advanced Class IV Skim Milk Price + $0.70)

= 7.01 + 0.70

= 7.71

Class II Nonfat Solids Price

=(Advanced Class IV Skim Milk Price / 9)

= 7.01 / 9

= 0.8567

Calculation of Class II Butterfat Price

Class II Butterfat Price is based upon announced component prices (butterfat price) which are obtained by a monthly average of NASS weekly prices over 4 or 5 different weeks. These are released on a Friday on or before the 5th of every month, for the previous month. For example, the component prices for Oct 2009 was announced on Oct 30, 2009.

NASS Monthly Average Prices

The component prices calculated in the section use monthly average U.S. NASS survey prices. These monthly average prices are calculated by a weighted average.

The monthly average prices used in this section are calculated from NASS prices for each week.

These monthly average prices are as follows:

AA Butter 1.2245
Cheddar Cheese 1.4110
Dry Whey 0.3183
Nonfat Dry Milk 1.0270

Butterfat Price

(used for Class III and Class IV prices and in making payment to producers)

= (AA Butter Avg – 0.1202) *1.2

= (1.2245 – 0.1202) * 1.2

= 1.1043 * 1.2

= 1.3252

So, the Announced Butterfat Component Price for Oct 2009 is 1.3252 $/lb.

Class II Butterfat Price

= Announced Butterfat Price + $0.0070

= 1.3252 + $0.0070

= 1.3322

So, the Announced Class II Butterfat Price for Oct 2009 is 1.3322

Class II Price

= (Class II Skim Milk Price x 0.965) + (Class II Butterfat Price x 3.5)

= (7.71×0.965) + (1.3322×3.5)

= 12.10

So, the Announced Class II Price for Oct 2009 is 12.10