Milk Prices up $1.05/cwt in Southeast from November 2016

Milk Production: Milk production in the 23 major states during November totaled 16.2 billion pounds, up 1.1% from November 2016. Production per cow for November averaged 1,861 pounds. The number of milk cows was 8.73 million head, unchanged from October 2017. October production was revised down 0.2% to 16.7 billion pounds. For milk production in the top 5 producing states, California was down 1.1% from November a year ago; Wisconsin up 0.9%; Idaho down 0.6%; New York down 0.3%; and Texas up 5.9%. Other states with large production increases were Colorado (6.1%), Virginia (4.4%), Arizona (4.3%), Utah (4.0%), Illinois (4.0%), Iowa (3.7%), and Indiana (3.3%). The states reporting a large decline in production compared to November 2016 were Washington (-0.8%) and Vermont (-0.5%).

Milk Price and Utilization: The Southeast Uniform milk price for November was $19.07, down $0.05 from October and $1.05 higher than November 2016. The Appalachian Uniform milk price was $18.63, up $0.04 from October and $1.15 higher than November 2016. November’s Class III price was $16.88, up $0.19 from October, and $0.12 higher than November a year ago. The Class IV price was down $0.86 from October to $13.99, and $0.23 higher than November 2016. The Class I Mover price for January is $15.44, down $1.44 from December. The milk/feed ratio for November was 2.54, 0.09 higher than October.

Southeast Class I utilization was 74.89%, up 0.49% from October, and 3.92% lower than November a year ago. The Uniform butterfat price was $2.6246, down 13.73 cents from last month and 51.60 cents higher than November 2016. The November Class I price was $20.21. December Class I price is $20.68. Appalachian Class I utilization was 73.95%, up 2.72% from October, and 1.14% lower than November a year ago. The Uniform butterfat price was $2.6227, down 13.36 cents from last month and 52.34 cents higher than November 2016. The November Class I price was $19.81.

Cheese Production and Stocks: Total cheese production in October was 1.07 billion pounds, up 1.7% from a year ago while butter production was up 2.6% to 143 million pounds. Nonfat dry milk (NDM) production was up 6.5% compared to a year ago with total production at 149 million pounds while skim milk powder (SMP) production was down 42.5% to 23.8 million pounds compared to a year ago. Total cheese stocks at the end of November were up 6% from November a year ago and down 31% from the previous month while butter stocks were down 27% from last month and down 1% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on December 19, supreme springers were $1,375 to $1,425, down $50 while US approved springers were $1,275 to $1,325, down $25. Dairy cow slaughter in November was 243,700 head, down 17,300 head from October and 500 more than November 2016.

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.

Jun 17

18.70

19.11

16.44

15.89

66.25

2.5760

Jul 17

19.64

20.39

15.45

16.60

67.51

2.8681

Aug 17

20.02

20.52

16.57

16.61

77.22

3.0111

Sep 17

19.61

20.51

16.36

15.86

76.55

2.9466

Oct 17

19.12

20.24

16.69

14.85

74.40

2.7619

Nov 17

19.07

20.21

16.88

13.99

74.89

2.6246

 

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.

Jun 17

18.37

18.71

16.44

15.89

63.56

2.5883

Jul 17

19.35

19.99

15.45

16.60

65.92

2.8735

Aug 17

19.53

20.12

16.57

16.61

71.62

3.0120

Sep 17

19.06

20.11

16.36

15.86

72.07

2.9404

Oct 17

18.59

19.84

16.69

14.85

71.23

2.7563

Nov 17

18.63

19.81

16.88

13.99

73.95

2.6227

 

 

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

Ex: It is Dec. 29 and Mar. Class III milk futures are trading at $13.74. Local Mar. basis estimate is +$3.00.

If March futures

=

15.25

13.75

12.25

and actual blend price

=

18.25

16.75

15.25

Sample Strategies

 

 

Realized Prices for Mar. Milk

1) Sold Futures

 

@

13.74

 

16.74

16.74

16.74

2) Bought Put

12.75

@

0.14

 

18.11

16.61

15.61

3) Bought Put

13.25

@

0.27

 

17.98

16.48

15.98

4) Bought Put

13.75

@

0.49

 

17.76

16.26

16.26

5) Synthetic Put

             

     Sold Futures

 

@

13.74

       

     Bought Call

14.75

@

0.16

 

17.08

16.58

16.58

 

 

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

Ex: It is Dec. 29 and Apr. Class III milk futures are trading at $14.05. Local Apr. basis estimate is +$3.00.

If April futures

=

15.50

14.00

12.50

and actual blend price

=

18.50

17.00

15.50

Sample Strategies

 

 

Realized Prices for Apr. Milk

1) Sold Futures

 

@

14.05

 

17.05

17.05

17.05

2) Bought Put

13.00

@

0.18

 

18.32

16.82

15.82

3) Bought Put

13.50

@

0.33

 

18.17

16.67

16.17

4) Bought Put

14.00

@

0.55

 

17.95

16.45

16.45

5) Synthetic Put

             

     Sold Futures

 

@

14.05

       

     Bought Call

15.00

@

0.24

 

17.31

16.81

16.81

 

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