The October issue of the National Milk Producers Federation and Dairy Management Inc. Dairy Market Report shows milk prices continued a generally solid recovery from their late-spring low through August, but subsequent changes in Class III and Class IV prices and increased milk production suggest milk prices may have reached a ceiling for the time being.

Milk prices continued a generally solid recovery from their late-spring low through August, when the U.S. average all-milk price reached $17.10 per hundredweight. The rise was powered largely by a strong increase in Class III skim milk prices, which also drove up Class I skim prices. However, Class III and Class IV prices dropped in September, and milk fat prices have been drifting downward for the past few months.That indicates milk prices may have reached a ceiling for the time being. The Margin Protection Program monthly feed cost calculation dropped steadily from June through August, and the monthly MPP margin rose by more than $3.50 per hundredweight from its low in June to $9.26 per hundredweight in August.