Appalachian Uniform Milk Price Down $0.45 from May 2017

Milk Production: Milk production in the 23 major states during May totaled 17.9 billion pounds, up 0.9% from May 2017. Production per cow for May averaged 2,052 pounds. The number of milk cows was 8.74 million head, up 2,000 head from April 2018. April production was revised down 0.1% to 17.3 billion pounds. For milk production in the top 5 producing states, California was up 0.5% from May a year ago; Wisconsin up 1.1%; Idaho up 0.6%; New York down 1.2%; and Texas up 6.6%. Other states with large production increases were Colorado (11.6%), Kansas (9.7%), Utah (5.2%), and South Dakota (4.0%). The states reporting a large decline in production compared to May 2017 were Virginia (-5.8%) and Florida (-5.6%).

Milk Price and Utilization: The Southeast Uniform milk price for May was $17.46, up $0.58 from April and $0.37 lower than May 2017. The Appalachian Uniform milk price was $17.20, up $0.64 from April and $0.45 lower than May 2017. May’s Class III price was $15.18, up $0.71 from April, and $0.39 lower than May a year ago. The Class IV price was up $1.09 from April to $14.57, and $0.08 higher than May 2017. The Class I Mover price for July is $15.36, up $0.11 from June. The milk/feed ratio for May was 1.90, no change from April.

Southeast Class I utilization was 67.75%, up 2.73% from April, and 4.83% higher than May a year ago. The Uniform butterfat price was $2.5813, up 8.69 cents from last month and 16.80 cents higher than May 2017. The May Class I price was $18.74. June Class I price is $19.05. Appalachian Class I utilization was 67.75%, up 1.95% from April, and 0.38% higher than May a year ago. The Uniform butterfat price was $2.5845, up 8.88 cents from last month and 16.71 cents lower than May 2017. The May Class I price was $17.84.

Cheese Production and Stocks: Total cheese production in April was 1.07 billion pounds, up 0.9% from a year ago while butter production was up 8.3% to 175 million pounds. Nonfat dry milk (NDM) production was down 3.8% compared to a year ago with total production at 166 million pounds while skim milk powder (SMP) production was down 1.8% to 49.3 million pounds compared to a year ago. Total cheese stocks at the end of May were up 6% from May a year ago and up 3% from the previous month while butter stocks were up 10% from last month and up 8% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on June 19, supreme springers were not tested while US approved springers were $1,175 to $1,275 per head, up $75 from the previous month. Dairy cow slaughter in May was 245,100 head, down 3,800 head from April and 17,900 more than May 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.

Dec 17

19.04

20.68

15.44

13.51

70.29

2.5269

Jan 18

18.00

19.24

14.00

13.13

71.54

2.4823

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

 

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.

Dec 17

18.37

20.28

15.44

13.51

65.59

2.5245

Jan 18

17.53

18.84

14.00

13.13

71.13

2.4816

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

 

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

Ex: It is Jun. 28 and Sep. Class III milk futures are trading at $15.92. Local Sep. basis estimate is +$3.00.

If September futures

=

17.50

16.00

14.50

and actual blend price

=

20.50

19.00

17.50

Sample Strategies

 

 

Realized Prices for September Milk

1) Sold Futures

 

@

15.92

 

18.92

18.92

18.92

2) Bought Put

15.00

@

0.20

 

20.30

18.80

17.80

3) Bought Put

15.50

@

0.36

 

20.14

18.64

18.14

4) Bought Put

16.00

@

0.53

 

19.97

18.47

18.47

5) Synthetic Put

             

     Sold Futures

 

@

15.92

       

     Bought Call

17.00

@

0.15

 

19.27

18.77

18.77

 

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

Ex: It is Jun. 28 and Oct. Class III milk futures are trading at $16.06. Local Oct. basis estimate is +$3.00.

If October futures

=

17.50

16.00

14.50

and actual blend price

=

20.50

19.00

17.50

Sample Strategies

 

 

Realized Prices for October Milk

1) Sold Futures

 

@

16.06

 

19.06

19.06

19.06

2) Bought Put

15.00

@

0.20

 

20.30

18.80

17.80

3) Bought Put

15.50

@

0.36

 

20.14

18.64

18.14

4) Bought Put

16.00

@

0.58

 

19.92

18.42

18.42

5) Synthetic Put

             

     Sold Futures

 

@

16.06

       

     Bought Call

17.00

@

0.25

 

19.31

18.81

18.81

 

 
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