Appalachian Milk Price Falls $1.83/cwt Since July 2017

Milk Production: Milk production in the 23 major states during July totaled 17.3 billion pounds, up 0.4% from July 2017. Production per cow for July averaged 1,980 pounds. The number of milk cows was 8.74 million head, down 8,000 head from June 2018. June production was revised up 0.2% to 17.2 billion pounds. For milk production in the top 5 producing states, California was down 2.5% from July a year ago; Wisconsin up 1.2%; Idaho up 0.8%; New York up 0.6%; and Texas up 7.3%. Other states with large production increases were Colorado (8.9%), Kansas (7.6%), Utah (5.1%), and South Dakota (3.6%). The states reporting a large decline in production compared to July 2017 were Florida (-5.9%) and Virginia (-5.0%).

Milk Price and Utilization: The Southeast Uniform milk price for July was $18.12, no change from June and $1.52 lower than July 2017. The Appalachian Uniform milk price was $17.52, down $0.29 from June and $1.83 lower than July 2017. July’s Class III price was $14.10, down $1.11 from June, and $1.35 lower than July a year ago. The Class IV price was down $0.77 from June to $14.14, and $2.46 lower than July 2017. The Class I Mover price for August is $14.85, up $0.70 from August. The milk/feed ratio for July was 1.91, down 0.07 from June.

Southeast Class I utilization was 73.31%, up 5.48% from June, and 5.80% higher than July a year ago. The Uniform butterfat price was $2.6108, down 4.89 cents from last month and 25.73 cents lower than July 2017. The July Class I price was $19.16. August Class I price is $17.95. Appalachian Class I utilization was 69.06%, up 2.06% from June, and 3.14% higher than July a year ago. The Uniform butterfat price was $2.6030, down 5.77 cents from last month and 27.05 cents lower than July 2017. The July Class I price was $18.76.

Cheese Production and Stocks: Total cheese production in June was 1.06 billion pounds, up 1.8% from a year ago while butter production was up 3.1% to 143 million pounds. Nonfat dry milk (NDM) production was down 9.0% compared to a year ago with total production at 148 million pounds while skim milk powder (SMP) production was up 49.2% to 58.9 million pounds compared to a year ago. Total cheese stocks at the end of July were up 3% from July a year ago and up 2% from the previous month while butter stocks were down 6% from last month and up 3% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on August 28, supreme springers were not tested while US approved springers were $1,175 per head, down $25 from the previous month. Dairy cow slaughter in July was 239,600 head, up 2,100 head from June and 13,800 more than July 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.

Feb 18

16.57

18.05

13.40

12.87

68.06

2.4196

Mar 18

16.30

17.16

14.22

13.04

64.74

2.4081

Apr 18

16.88

17.90

14.47

13.48

65.02

2.4944

May 18

17.46

18.74

15.18

14.57

67.75

2.5813

Jun 18

18.12

19.05

15.21

14.91

67.83

2.6597

Jul 18

18.12

19.16

14.10

14.14

73.31

2.6108

   

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.

Feb 18

16.31

17.65

13.40

12.87

68.78

2.4179

Mar 18

16.02

16.76

14.22

13.04

66.81

2.4084

Apr 18

16.56

17.50

14.47

13.48

65.80

2.4957

May 18

17.20

17.84

15.18

14.57

67.75

2.5845

Jun 18

17.81

18.65

15.21

14.91

67.00

2.6607

Jul 18

17.52

18.76

14.10

14.14

69.06

2.6030

 

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

Ex: It is Aug. 31 and Nov. Class III milk futures are trading at $16.52. Local Nov. basis estimate is +$3.00.

If November futures

=

18.00

16.50

15.00

and actual blend price

=

21.00

19.50

18.00

Sample Strategies

 

 

Realized Prices for November Milk

1) Sold Futures

 

@

16.52

 

19.52

19.52

19.52

2) Bought Put

15.50

@

0.14

 

20.86

19.36

18.36

3) Bought Put

16.00

@

0.27

 

20.73

19.23

18.73

4) Bought Put

16.50

@

0.49

 

20.51

19.01

19.01

5) Synthetic Put

             

     Sold Futures

 

@

16.52

       

     Bought Call

17.50

@

0.17

 

19.85

19.35

19.35

 

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

Ex: It is Aug. 31 and Dec. Class III milk futures are trading at $16.31. Local Dec. basis estimate is +$3.00.

If December futures

=

17.75

16.25

14.75

and actual blend price

=

20.75

19.25

17.75

Sample Strategies

 

 

Realized Prices for December Milk

1) Sold Futures

 

@

16.31

 

19.31

19.31

19.31

2) Bought Put

15.25

@

0.18

 

20.57

19.07

18.07

3) Bought Put

15.75

@

0.33

 

20.37

18.92

18.42

4) Bought Put

16.25

@

0.54

 

20.21

18.71

18.71

5) Synthetic Put

             

     Sold Futures

 

@

16.31

       

     Bought Call

17.25

@

0.23

 

19.58

19.08

19.08

 
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