Based on the paper developed by:
Milk Market Administrator’s Office
Minneapolis, Minnesota & Lisle, Illinois
The following prices are released by the 23rd, using two week NASS Survey Prices. These prices apply to the following month.
The following Prices are released by the 5th using monthly average NASS survey prices. These prices apply to the previous month:
Advanced Pricing Factors are calculated using the weighted average of prices for the two most recent weeks that were released before the 23rd of the preceding month. In the folowing example, the Class III advanced butterfat pricings factor for Dec 2009 is calculated by using the bi-weekly (weighted) average of data released on Nov 07 and Nov 14. The advanced price was released on Nov 20, 2009
The advanced prices calculated in the section use biweekly average U.S. NASS survey prices. These biweekly average prices are calculated by a weighted average.
These biweekly average prices are as follows:
| AA Butter | 1.3532 |
| Cheddar Cheese | 1.5113 |
| Dry Whey | 0.3452 |
| Nonfat Dry Milk | 1.1147 |
Butter Prices
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: Week Ending
Region :-----------------------------------------------------------
: Nov 14, : Nov 7, : Oct 31, : Oct 24, : Oct 17,
: 2009 : 2009 : 2009 : 2009 : 2009
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: Dol./Lb.
Avg. Price 1/ :
US : 1.4004 1.3140 1.2950 1.2473 1.2209
:
: Pounds
Sales Volume 2/ :
US : 3,131,382 3,766,305 3,484,113 2,655,803 3,937,746
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1/ Prices weighted by volumes reported.
2/ Sales as reported by participating manufacturers
Here we demonstrate how to calculate biweekly weighted average for butter
| Week Ending | Price | Pounds | Value |
|---|---|---|---|
| Nov 07 | 1.4004 | 3,131,382 | 4385187.3528 |
| Nov 14 | 1.3140 | 3,766,305 | 4948924.7700 |
= (AA Butter Price – 0.1202) * 1.20
= (1.3532 – 0.1202) * 1.20
= 1.2330 * 1.20
= 1.4796
So, the Butterfat Advanced Pricing Factor for Dec 2009 is 1.4796
Component Prices are calculated using monthly average dairy product prices for the month in question. In the folowing example, component prices for Oct 2009 is calculated by using the monthly (weighted) average of different weekly NASS prices. They were then released on Oct 30, 2009
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 |
= ((Cheese price – 0.1682) x 1.383) + ((((Cheese price – 0.1682) x 1.572) – Butterfat price x 0.9) x 1.17).
= ((1.4110 – 0.1682) x 1.383) + ((((1.4110 – 0.1682) x 1.572) – 1.2245×0.9) x 1.17).
= 2.6092
So, the Announced True Protein Component Price for Oct 2009 is 2.6092
= (Dry Whey Price – 0.1956) * 1.03
= (0.3183 – 0.1956) * 1.03
= 0.1227 * 1.03
= 0.1264
So, the Announced Other Solids Component Price for Oct 2009 is 0.1264
= (Nonfat Dry Milk Price – 0.157) * 0.99
= (1.0270 – 0.157) * 0.99
= 0.8700 * 1.03
= 0.8613
So, the Announced Non Solids Component Price for Oct 2009 is 1.0270
Advanced Pricing Factors are calculated using the weighted average of prices for the two most recent weeks that were released before the 23rd of the preceding month. In the folowing example, the Class III advanced butterfat pricings factor for Dec 2009 is calculated by using the bi-weekly (weighted) average of the two weeks preceding it. These prices were then released on Nov 20, 2009
The advanced prices calculated in the section use biweekly average U.S. NASS survey prices. These biweekly average prices are calculated by a weighted average.
These biweekly average prices are as follows:
| AA Butter | 1.3532 |
| Cheddar Cheese | 1.5113 |
| Dry Whey | 0.3452 |
| Nonfat Dry Milk | 1.1147 |
= (Protein Price * 3.1) + (Other Solids Price * 5.9)
= (2.7698 * 3.1) + (0.1541 * 5.9)
= 9.50
So, the Advanced Class III Skim Milk Pricing Factor for Dec 2009 is 9.50
= Nonfat Solids Price * 9.0
= 0.9481 * 9.0
= 8.53
So, the Advanced Class IV Skim Milk Pricing Factor for Dec 2009 is 8.53
These Class I Prices are calculated by adding applicable Class I differentials (for varying locations throughout the country) to advanced pricing factors for the month in question. In the following example, Class I prices for Dec 2009 for Cook County, Illinois are calculated using the appropriate Class I differential and Advanced values for Dec 2009 released the previous month on Nov 20, 2009
The advanced prices calculated in the section use biweekly average U.S. NASS survey prices. These biweekly average prices are calculated by a weighted average.
These biweekly average prices are as follows:
| AA Butter | 1.3532 |
| Cheddar Cheese | 1.5113 |
| Dry Whey | 0.3452 |
| Nonfat Dry Milk | 1.1147 |
= (Higher of advanced Class III or Class IV skim milk pricing factors + applicable class1 differential)
= ($9.5 + $1.80)
= 11.3
So, the Class I Skim Milk Price for Dec 2009 is 9.5
= (Advanced Butterfat Pricing Factor + applicable class1 differential/100)
= ($1.4796 + $0.0180)
= 1.4976
So, the Class I Butterfat Price for Dec 2009 is 11.3
= (Class I Skim Milk Price x 0.965) + (Class I Butterfat Price x 3.5)
= ($11.3×0.965) + ($1.4976×3.5)
= 16.1461
So, the Class I Price for Dec 2009 for Cook County, IL is 16.1461
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 IV Skim Milk Price + $0.70)
= 7.01 + 0.70
= 7.71
=(Advanced Class IV Skim Milk Price / 9)
= 7.01 / 9
= 0.8567
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.
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 |
= (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.
= Announced Butterfat Price + $0.0070
= 1.3252 + $0.0070
= 1.3322
= (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
These Class IV Prices for any given month are computed from class and component prices for the month released by the 5th of the following month. In the following examples,the prices for Oct 2009 were based upon the class and component prices released on Oct 30, 2009
=(Nonfat Solids Price x 9)
= 1.0270×9
= 7.75
= (Class IV Skim Milke Price x 0.965) + (Butterfat Price x 3.5)
= 7.75×0.965 + 1.3252×3.5
= 12.12