Southeast, Appalachia Milk Prices Down More Than $1/cwt From Last Year

In years of catastrophic price stress and low margins, reverting to original MPP margins would pay larger indemnities.

Milk Production: Milk production in the 23 major states during April totaled 17.3 billion pounds, up 0.7% from April 2017. Production per cow for April averaged 1,982 pounds. The number of milk cows was 8.74 million head, down 2,000 head from March 2018. March production was revised down 0.1% to 17.8 billion pounds. For milk production in the top 5 producing states, California was up 0.4% from April a year ago; Wisconsin down 0.6%; Idaho up 3.5%; New York down 2.4%; and Texas up 7.0%. Other states with large production increases were Colorado (9.9%), Utah (5.5%), Kansas (5.1%), and Washington (3.1%). The states reporting a large decline in production compared to April 2017 were Virginia (-3.9%) and Vermont (-3.0%).

Milk Price and Utilization: The Southeast Uniform milk price for April was $16.88, up $0.58 from March and $1.09 lower than April 2017. The Appalachian Uniform milk price was $16.56, up $0.54 from March and $1.21 lower than April 2017. April’s Class III price was $14.47, up $0.25 from March, and $0.75 lower than April a year ago. The Class IV price was up $0.44 from March to $13.48, and $0.53 lower than April 2017. The Class I Mover price for June is $15.25, up $0.81 from April. The milk/feed ratio for April was 1.90, 0.07 lower than March.

Southeast Class I utilization was 65.02%, up 0.28% from March, and 0.45.059% higher than April a year ago. The Uniform butterfat price was $2.4944, up 8.63 cents from last month and 9.52 cents higher than April 2017. The April Class I price was $17.90. May Class I price is $18.24. Appalachian Class I utilization was 65.80%, down 1.01% from March, and 2.74% lower than April a year ago. The Uniform butterfat price was $2.4957, up 8.73 cents from last month and 9.36 cents lower than April 2017. The April Class I price was $17.50.

Cheese Production and Stocks: Total cheese production in March was 1.10 billion pounds, up 2.7% from a year ago while butter production was up 4.8% to 186 million pounds. Nonfat dry milk (NDM) production was up 12.0% compared to a year ago with total production at 180 million pounds while skim milk powder (SMP) production was down 22.2% to 41.0 million pounds compared to a year ago. Total cheese stocks at the end of April were up 3% from April a year ago and up 2% from the previous month while butter stocks were up 12% from last month and up 5% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on May 29, supreme springers were not tested while US approved springers were $1,125 to $1,175 per head, no change from the previous month. Dairy cow slaughter in April was 248,900 head, down 38,000 head from March and 20,800 more than April 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.

Nov 17

19.07

20.21

16.88

13.99

74.89

2.6246

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

 

 

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.

Nov 17

18.63

19.81

16.88

13.99

73.95

2.6227

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

 

 

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

Ex: It is May 31 and Aug. Class III milk futures are trading at $16.93. Local Aug. basis estimate is +$3.00.

If August futures

=

18.50

17.00

15.50

and actual blend price

=

21.50

20.00

18.50

Sample Strategies

 

 

Realized Prices for August Milk

1) Sold Futures

 

@

16.93

 

19.93

19.93

19.93

2) Bought Put

16.00

@

0.12

 

21.38

19.88

18.88

3) Bought Put

16.50

@

0.27

 

21.23

19.73

19.23

4) Bought Put

17.00

@

0.49

 

21.01

19.51

19.51

5) Synthetic Put

             

     Sold Futures

 

@

16.93

       

     Bought Call

18.00

@

0.11

 

20.32

19.82

19.82

 

 

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

Ex: It is May 31 and Sep. Class III milk futures are trading at $17.05. Local Aug. basis estimate is +$3.00.

If September futures

=

18.50

17.00

15.50

and actual blend price

=

21.50

20.00

18.50

Sample Strategies

 

 

Realized Prices for September Milk

1) Sold Futures

 

@

17.05

 

20.05

20.05

20.05

2) Bought Put

16.00

@

0.23

 

21.27

19.77

18.77

3) Bought Put

16.50

@

0.40

 

21.10

19.60

19.10

4) Bought Put

17.00

@

0.64

 

20.86

19.36

19.36

5) Synthetic Put

             

     Sold Futures

 

@

17.05

       

     Bought Call

18.00

@

0.20

 

20.35

19.85

19.85

 

 

 
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