Appalachian Milk Price Up $0.37/cwt Since December

Milk tanker.
( Rick Mooney )
Milk Production: Milk production in the 23 major states during December totaled 17.1 billion pounds, up 0.9% from December 2017. Production per cow for December averaged 1,966 pounds. The number of milk cows was 8.72 million head, down 2,000 head from November 2018. November production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California was up 1.7% from December a year ago; Wisconsin up 1.4%; Idaho up 4.9%; New York up 2.1%; and Texas up 4.8%. Other states with large production increases were Colorado (6.0%), South Dakota (5.5%), Kansas (5.3%), and Washington (4.8%). The states reporting a large decline in production compared to December 2017 were Virginia (-12.3%), Illinois (-9.7%), Florida (-7.2%), and Pennsylvania (-6.0).

Milk Price and Utilization: The Southeast Uniform milk price for January was $18.27, up $0.27 from December and $0.27 higher than January 2018. The Appalachian Uniform milk price was $17.82, up $0.37 from December and $0.29 higher than January 2018. January’s Class III price was $13.96, up $0.18 from December, and $0.04 lower than January a year ago. The Class IV price was up $0.39 from December to $15.48, and $2.35 higher than January 2018. The Class I Mover price for March is $15.98, up $0.68 from February. The milk/feed ratio for January was 2.05, 0.01 higher than December.
Southeast Class I utilization was 75.94%, up 5.92% from December, and 4.40% higher than January a year ago. The Uniform butterfat price was $2.5249, down 0.79 cents from last month and 4.26 cents higher than January 2018. The January Class I price was $18.92. February Class I price is $19.10. Appalachian Class I utilization was 75.83%, up 9.26% from December, and 4.70% higher than January a year ago. The Uniform butterfat price was $2.5240, down 0.71 cents from last month and 4.24 cents higher than January 2019. The January Class I price was $18.52.

Cheese Production and Stocks: Total cheese production in December was 1.09 billion pounds, down 1.2% from a year ago while butter production was down 0.1% to 171 million pounds. Nonfat dry milk (NDM) production was down 13.0% compared to a year ago with total production at 143 million pounds while skim milk powder (SMP) production was up 1.8% to 50.8 million pounds compared to a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on February 26, supreme springers and US approved springers were not tested. Dairy cow slaughter in December was 261,200 head, down 6,800 head from November and 13,900 more than December 2017.

Southeast Federal Order Prices

Month

Uniform Price $/cwt.

Class I Price $/cwt.

Class III Price $/cwt.

Class IV Price $/cwt.

Class I

% Utilization

Butterfat Price $/lb.

Aug 18

17.53

17.95

14.95

14.63

75.65

2.5897

Sep 18

17.94

18.65

16.09

14.81

74.76

2.5903

Oct 18

19.39

20.13

15.53

15.01

78.53

2.5658

Nov 18

18.71

19.32

14.44

15.06

78.39

2.5651

Dec 18

18.00

18.85

13.78

15.09

70.02

2.5328

Jan 19

18.27

18.92

13.96

15.48

75.94

2.5249

 

Appalachian Federal Order Prices

Month

Uniform Price $/cwt.

Class I Price $/cwt.

Class III Price $/cwt.

Class IV Price $/cwt.

Class I

% Utilization

Butterfat Price $/lb.

Aug 18

17.03

17.55

14.95

14.63

72.47

2.5914

Sep 18

17.35

18.25

16.09

14.81

69.42

2.5864

Oct 18

18.76

19.73

15.53

15.01

74.50

2.5654

Nov 18

18.12

18.92

14.44

15.06

74.77

2.5635

Dec 18

17.45

18.45

13.78

15.09

66.57

2.5311

Jan 18

17.82

18.52

13.96

15.48

75.83

2.5240

 

 

What is the Market Offering for Milk to be Sold in May?

Ex: It is Feb. 28 and May Class III milk futures are trading at $15.16. Local May basis estimate is +$3.00.

If May futures

=

16.75

15.25

13.75

and actual blend price

=

19.75

18.25

16.75

Sample Strategies

 

 

Realized Prices for May Milk

1) Sold Futures

 

@

15.16

 

18.16

18.16

18.16

2) Bought Put

14.25

@

0.07

 

19.68

18.18

17.18

3) Bought Put

14.75

@

0.18

 

19.57

18.07

17.57

4) Bought Put

15.25

@

0.37

 

19.38

17.88

17.88

5) Synthetic Put

             

     Sold Futures

 

@

15.16

       

     Bought Call

16.25

@

0.09

 

18.57

18.07

18.07

 

What is the Market Offering for Milk to be Sold in June?

Ex: It is Feb. 28 and Jun. Class III milk futures are trading at $15.48. Local Jun. basis estimate is +$3.00.

If June futures

=

17.00

15.50

14.00

and actual blend price

=

20.00

18.50

17.00

Sample Strategies

 

 

Realized Prices for June Milk

1) Sold Futures

 

@

15.48

 

18.48

18.48

18.48

2) Bought Put

14.50

@

0.10

 

19.90

18.40

17.40

3) Bought Put

15.00

@

0.21

 

19.79

18.28

17.79

4) Bought Put

15.50

@

0.40

 

19.60

18.10

18.10

5) Synthetic Put

             

     Sold Futures

 

@

15.48

       

     Bought Call

16.50

@

0.14

 

18.84

18.34

18.34

 

 
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