Milk Price Jumps $1.45/cwt Month-over-Month in Southeast for October

Milk Semi Tank Trailer
( Wyatt Bechtel )

Milk Production: Milk production in the 23 major states during October totaled 16.9 billion pounds, up 1.0% from October 2017. Production per cow for October averaged 1,934 pounds. The number of milk cows was 8.72 million head, down 1,000 head from September 2018. September production was revised down less than 0.1% to 16.4 billion pounds. For milk production in the top 5 producing states, California was up 3.2% from October a year ago; Wisconsin down 0.3%; Idaho up 2.1%; New York up 1.0%; and Texas up 7.5%. Other states with large production increases were Colorado (10.1%), Kansas (6.1%), South Dakota (4.1%), and Utah (3.7%). The states reporting a large decline in production compared to October 2017 were Virginia (-10.6%), Florida (-5.5%), Indiana (-4.8%), and Illinois (-4.5%).

Milk Price and Utilization: The Southeast Uniform milk price for October was $19.39, up $1.45 from September and $0.27 higher than October 2017. The Appalachian Uniform milk price was $18.76, up $1.41 from September and $0.17 higher than October 2017. September’s Class III price was $15.53, down $0.56 from September, and $1.16 lower than October a year ago. The Class IV price was up $0.20 from September to $15.01, and $0.16 higher than October 2017. The Class I Mover price for December is $15.05, down $0.47 from November. The milk/feed ratio for October was 2.20, up 0.10 from September.

Southeast Class I utilization was 78.53%, up 3.77% from September, and 4.13% higher than October a year ago. The Uniform butterfat price was $2.5658, down 2.45 cents from last month and 19.61 cents lower than October 2017. The October Class I price was $20.13. November Class I price is $19.32. Appalachian Class I utilization was 74.50%, up 5.08% from September, and 3.27% higher than October a year ago. The Uniform butterfat price was $2.5654, down 2.10 cents from last month and 19.09 cents lower than October 2017. The October Class I price was $19.73.

Cheese Production and Stocks: Total cheese production in September was 1.06 billion pounds, up 3.1% from a year ago while butter production was down 0.1% to 134 million pounds. Nonfat dry milk (NDM) production was down 21.0% compared to a year ago with total production at 106 million pounds while skim milk powder (SMP) production was up 67.3% to 48.7 million pounds compared to a year ago. Total cheese stocks at the end of October were up 8% from October a year ago and down slightly from the previous month while butter stocks were down 19% from last month and up 6% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on November 27, supreme springers were $1,400 per head while US approved springers were not tested. Dairy cow slaughter in October was 288,200 head, up 40,800 head from September and 27,200 more than October 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.

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

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

 

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.

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

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

 

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

Ex: It is Nov. 30 and Feb. Class III milk futures are trading at $14.73. Local Feb. basis estimate is +$3.00.

If February futures

=

16.25

14.75

13.25

and actual blend price

=

19.25

17.75

16.25

Sample Strategies

 

 

Realized Prices for February Milk

1) Sold Futures

 

@

14.73

 

17.73

17.73

17.73

2) Bought Put

13.75

@

0.07

 

19.18

17.68

16.68

3) Bought Put

14.25

@

0.20

 

19.05

17.55

1705

4) Bought Put

14.75

@

0.41

 

18.84

17.34

17.34

5) Synthetic Put

             

     Sold Futures

 

@

14.73

       

     Bought Call

15.75

@

0.07

 

18.16

17.66

17.66

 

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

Ex: It is Nov. 30 and Mar. Class III milk futures are trading at $14.98. Local Mar. basis estimate is +$3.00.

If March futures

=

16.50

15.00

13.50

and actual blend price

=

19.50

18.00

16.50

Sample Strategies

 

 

Realized Prices for March Milk

1) Sold Futures

 

@

14.98

 

17.98

17.98

17.98

2) Bought Put

14.00

@

0.11

 

19.39

17.89

16.89

3) Bought Put

14.50

@

0.25

 

19.25

17.75

17.25

4) Bought Put

15.00

@

0.47

 

19.03

17.53

17.53

5) Synthetic Put

             

     Sold Futures

 

@

14.98

       

     Bought Call

16.00

@

0.11

 

18.37

17.87

17.87

 
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