The spread will eventually correct itself. In the short run however, block prices could hold for a few more weeks. Producers paid under multiple component pricing are being paid record prices per pound of fat sold. The latest figures are for the period of January through May. Although higher retail prices for dairy products remain favorable for good sales.
Retail prices are likely to increase in the near future reflecting higher farm level milk prices.
The impact on sales is yet to be seen. This has kept the supply-demand situation rather tight. This relatively small production increase is due to unfavorable hot and dry weather that has affected milk production per cow in major milk producing states in the southwest and west as well as in the south and southeast. Most all of the south and southeast had less milk production than a year ago. Most states experienced a reduction in milk cow numbers and either a decline or only a slight increase in milk per cow.