Southeast Milk Prices Up $1.78/cwt from Last Year

Stock photo of milk bulk tanks. ( Wyatt Bechtel )

By: Andrew P. Griffith, University of Tennessee

Milk Production: Milk production in the 23 major states during February totaled 16.0 billion pounds, up 0.6% from February 2018. Production per cow for February averaged 1,838 pounds. The number of milk cows was 8.72 million head, unchanged from January 2019. January production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California was up 0.1% from February a year ago; Wisconsin up 1.5%; Idaho up 2.1%; New York up 2.8%; and Texas up 7.7%. Other states with large production increases were Colorado (8.3%), Oregon (7.3%), and South Dakota (6.4%). The states reporting a large decline in production compared to February 2018 were Virginia (-11.7%), Illinois (-7.1%), Florida (-6.2%), and Pennsylvania (-6.0).

Milk Price and Utilization: The Southeast Uniform milk price for February was $18.35, up $0.08 from January and $1.78 higher than February 2018. The Appalachian Uniform milk price was $18.00, up $0.18 from January and $1.69 higher than February 2018. February’s Class III price was $13.89, down $0.07 from January, and $0.49 higher than February a year ago. The Class IV price was up $0.38 from January to $15.86, and $3.01 higher than February 2018. The Class I Mover price for April is $15.76, down $0.22 from March. The milk/feed ratio for February was 2.07, 0.02 higher than January.

Southeast Class I utilization was 70.33%, down 5.61% from January, and 2.27% higher than February a year ago. The Uniform butterfat price was $2.5348, up 0.99 cents from last month and 11.52 cents higher than February 2018. The February Class I price was $19.10. March Class I price is $19.78. Appalachian Class I utilization was 72.11%, down 3.72% from January, and 3.33% higher than February a year ago. The Uniform butterfat price was $2.5356, up 1.16 cents from last month and 11.77 cents higher than February 2019. The February Class I price was $18.70.

Cheese Production and Stocks: Total cheese production in January was 1.10 billion pounds, up 0.4% from a year ago while butter production was up 4.2% to 190 million pounds. Nonfat dry milk (NDM) production was up 7.7% compared to a year ago with total production at 173 million pounds while skim milk powder (SMP) production was down 33.5% to 30.4 million pounds compared to a year ago. Total cheese stocks at the end of February were up 4% from February year ago and up slightly from the previous month while butter stocks were up 15% from last month and down 9% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on March 26, supreme springers were not tested and US approved springers brought $1,025 to $1,050. Dairy cow slaughter in February was 278,900 head, down 19,500 head from January and 18,300 more than February 2018.

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.

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

Dec 18

18.00

18.85

13.78

15.09

70.02

2.5328

Jan 19

18.27

18.92

13.96

15.48

75.94

2.5249

Feb 19

18.35

19.10

13.89

15.86

70.33

2.5348

 

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.

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

Dec 18

17.45

18.45

13.78

15.09

66.57

2.5311

Jan 18

17.82

18.52

13.96

15.48

75.83

2.5240

Feb 18

18.00

18.70

13.89

15.86

72.11

2.5356

 

 

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

Ex: It is Mar. 29 and Jun. Class III milk futures are trading at $15.67. Local Jun. basis estimate is +$3.00.

If June futures

=

17.25

15.75

14.25

and actual blend price

=

20.25

18.75

17.25

Sample Strategies

 

 

Realized Prices for June Milk

1) Sold Futures

 

@

15.67

 

18.67

18.67

18.67

2) Bought Put

14.75

@

0.09

 

20.16

18.66

17.66

3) Bought Put

15.25

@

0.21

 

20.04

18.54

18.04

4) Bought Put

15.75

@

0.42

 

19.83

18.33

18.33

5) Synthetic Put

             

     Sold Futures

 

@

15.67

       

     Bought Call

16.75

@

0.08

 

19.09

18.59

18.59

 

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

Ex: It is Mar. 29 and Jul. Class III milk futures are trading at $15.48. Local Jul. basis estimate is +$3.00.

If July futures

=

17.50

16.00

14.50

and actual blend price

=

20.50

19.00

17.50

Sample Strategies

 

 

Realized Prices for July Milk

1) Sold Futures

 

@

16.04

 

19.04

19.04

19.04

2) Bought Put

15.00

@

0.11

 

20.39

18.89

17.89

3) Bought Put

15.50

@

0.23

 

20.27

18.77

18.27

4) Bought Put

16.00

@

0.43

 

20.07

18.57

18.57

5) Synthetic Put

             

     Sold Futures

 

@

16.04

       

     Bought Call

17.00

@

0.14

 

19.40

18.90

18.90

 
Comments