BUTTERFAT
The butterfat price increases and decreases follow the butter prices pattern in the prior post. The formula for this calculation is shown above of Chart I. The change in price using the new formulas reduces the value of butterfat. The price of butterfat is also falling in 2025 as inventories of butter have increased and are reaching balance with supply and demand. From mid 2024 to the end of 2025 the decrease in butterfat prices is $.94 per pound.
NONFAT SOLIDS
Nonfat Solids (Chart II) are what is left after the butterfat has been removed from the milk. It is used in Class IV milk pricing. The pricing of Nonfat Solids is based on the Nonfat Dry Milk commodity pricing covered in the prior post. The pricing follows the same pattern as the Nonfat Dry Milk. The current “make allowances” reduced the producer revenue by $.07 per pound compared to the old formula. For reasons covered in the prior post the value of Nonfat Dry milk was already declining and changes in the “Make Allowance has added to the decline. Prices of Nonfat Solids have settled into a range from $.99 to $1.10 per pound for the last three years
PROTEIN
As seen in the formulas below, the formula for protein pricing is influenced by both the wholesale prices of cheese and butterfat. As cheese prices go up, the value of protein will also go up, and as butterfat prices go up, the value of protein will go down (see the formulas above Chart III). In 2025, cheese prices went down and butterfat prices went down as well. In the middle of 2025, the make allowances for cheese price went up by 26%, reducing the value of protein. Butterfat pricing decreased (Chart I above). As the butterfat prices declined in 2024 and 2025 the value of protein increased. The net impact was an increase of 74% in protein during 2024 and 2025 or $1.04 per pound. This is financially significant.
Yes, it is complicated.
OTHER SOLIDS
SUMMARY
The positive trends of protein prices come primarily from the decline in butterfat prices. Butterfat pricing is in a decline and has lost $.94 per pound. Cheese prices decreased by 50% decreasing protein value. Because butterfat ($2.44 per pound) is worth more than Cheese ($1.79 per pound), Protein pricing has gained by $1.04 per pound.
There is a higher percentage butterfat in milk than protein. Also, butterfat is paid for all milk, and protein is paid for only in Class III. Overall, the changes in revenue from butterfat and protein have decreased total producer milk revenue. The change in the USDA pricing of components has also decreased producer revenue.
The price of Nonfat Solids and Other Solids seem to be leveling out in 2025.
The next post will cover the impact of milk Class index prices.
