Milk Prices Fall More Than $0.60/cwt in Southeast and Appalachia

Milk Production: Milk production in the 23 major states during November totaled 16.4 billion pounds, up 0.8% from November 2017. Production per cow for November averaged 1,877 pounds. The number of milk cows was 8.72 million head, down 8,000 head from October 2018. October production was revised down 0.1% to 16.9 billion pounds. For milk production in the top 5 producing states, California was up 2.9% from November a year ago; Wisconsin up 0.1%; Idaho up 4.0%; New York down 0.3%; and Texas up 5.2%. Other states with large production increases were Colorado (7.1%), Washington (6.0%), Kansas (5.2%), South Dakota (5.2%), and Utah (5.2%). The states reporting a large decline in production compared to November 2017 were Virginia (-10.7%), Illinois (-5.8%), Indiana (-5.5%), and Florida (-4.8%).

Milk Price and Utilization: The Southeast Uniform milk price for November was $18.71, down $0.68 from October and $0.36 lower than November 2017. The Appalachian Uniform milk price was $18.12, down $0.64 from October and $0.51 lower than November 2017. November’s Class III price was $14.44, down $1.09 from October, and $2.44 lower than November a year ago. The Class IV price was up $0.05 from October to $15.06, and $1.07 higher than November 2017. The Class I Mover price for January is $15.12, up $0.07 from December. The milk/feed ratio for November was not available.

Southeast Class I utilization was 78.39%, down 0.14% from October, and 3.50% higher than November a year ago. The Uniform butterfat price was $2.5651, down 0.07 cents from last month and 5.95 cents lower than November 2017. The November Class I price was $19.32. December Class I price is $18.85. Appalachian Class I utilization was 74.77%, up 0.27% from October, and 0.82% higher than November a year ago. The Uniform butterfat price was $2.5635, down 0.19 cents from last month and 5.92 cents lower than November 2017. The November Class I price was $18.92.

Cheese Production and Stocks: Total cheese production in October was 1.12 billion pounds, up 3.0% from a year ago while butter production was down 0.3% to 144 million pounds. Nonfat dry milk (NDM) production was down 13.6% compared to a year ago with total production at 125 million pounds while skim milk powder (SMP) production was up 44.5% to 37.5 million pounds compared to a year ago. Total cheese stocks at the end of November were up 7% from November a year ago and down 1% from the previous month while butter stocks were down 33% from last month and down 3% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on December 27, supreme springers were not tested while US approved springers were not tested. Dairy cow slaughter in November was 268,000 head, down 20,200 head from October and 24,300 more than November 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.

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

Nov 18

18.71

19.32

14.44

15.06

78.39

2.5651

 

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 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

Nov 18

18.12

18.92

14.44

15.06

74.77

2.5635

 

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

Ex: It is Dec. 28 and Mar. Class III milk futures are trading at $14.93. 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

 

@

14.93

 

17.93

17.93

17.93

2) Bought Put

14.00

@

0.09

 

19.41

17.91

16.91

3) Bought Put

14.50

@

0.22

 

19.28

17.78

17.28

4) Bought Put

15.00

@

0.44

 

19.06

17.56

17.56

5) Synthetic Put

             

     Sold Futures

 

@

14.93

       

     Bought Call

16.00

@

0.08

 

18.35

17.85

17.85

 

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

Ex: It is Dec. 28 and Apr. Class III milk futures are trading at $15.40. Local Apr. basis estimate is +$3.00.

If April futures

=

17.00

15.50

14.00

and actual blend price

=

20.00

18.50

17.00

Sample Strategies

 

 

Realized Prices for April Milk

1) Sold Futures

 

@

15.40

 

18.40

18.40

18.40

2) Bought Put

14.50

@

0.14

 

19.86

18.36

17.36

3) Bought Put

15.00

@

0.29

 

19.71

18.21

17.71

4) Bought Put

15.50

@

0.52

 

19.48

17.98

17.98

5) Synthetic Put

             

     Sold Futures

 

@

15.40

       

     Bought Call

16.50

@

0.12

 

18.78

18.28

18.28

 
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