Southeast Milk Prices Jump $2.40/cwt Compared to Last March

Milk Production: Milk production in the 23 major states during March totaled 17.8 billion pounds, down 0.1% from March 2018. Production per cow for March averaged 2,044 pounds. The number of milk cows was 8.71 million head, 9,000 head less than February 2019. February production was revised down 0.2% from preliminary estimates. For milk production in the top 5 producing states, California was up 0.7% from March a year ago; Wisconsin up 0.4%; Idaho up 1.4%; New York up 2.3%; and Texas up 5.8%. Other states with large production increases were Oregon (4.2%), Colorado (3.9%), and South Dakota (3.5%). The states reporting a large decline in production compared to March 2018 were Virginia (-12.5%), Illinois (-9.8%), Pennsylvania (-6.9), Ohio (-5.1%), Arizona (-4.9%), and Florida (-4.7%).

Milk Price and Utilization: The Southeast Uniform milk price for March was $18.70, up $0.35 from February and $2.40 higher than March 2018. The Appalachian Uniform milk price was $18.31, up $0.31 from February and $2.29 higher than March 2018. March’s Class III price was $15.04, up $1.15 from February, and $0.82 higher than March a year ago. The Class IV price was down $0.15 from February to $15.71, and $2.67 higher than March 2018. The Class I Mover price for May is $16.42, up $0.66 from April. The milk/feed ratio for March was 2.14, 0.07 higher than February.
Southeast Class I utilization was 64.70%, down 5.63% from February, and 0.04% lower than March a year ago. The Uniform butterfat price was $2.5694, up 3.46 cents from last month and 16.13 cents higher than March 2018. The March Class I price was $19.78. April Class I price is $19.56. Appalachian Class I utilization was 64.69%, down 7.42% from February, and 2.12% lower than March a year ago. The Uniform butterfat price was $2.5680, up 3.24 cents from last month and 15.96 cents higher than March 2019. The March Class I price was $19.38.

Cheese Production and Stocks: Total cheese production in February was 991 million pounds, up 0.5% from a year ago while butter production was down 2.9% to 165 million pounds. Nonfat dry milk (NDM) production was down 2.6% compared to a year ago with total production at 154 million pounds while skim milk powder (SMP) production was down 4.8% to 35.8 million pounds compared to a year ago. Total cheese stocks at the end of March were up 4% from March a year ago and up 1% from the previous month while butter stocks were up 11% from last month and down 1% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on April 23, supreme springers were not tested and US approved springers brought $1,050. Dairy cow slaughter in March was 302,400 head, up 22,500 head from February and 15,500 more than March 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.

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

Mar 19

18.70

19.78

15.04

15.71

64.70

2.5694

 
 

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.

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 19

17.82

18.52

13.96

15.48

75.83

2.5240

Feb 19

18.00

18.70

13.89

15.86

72.11

2.5356

Mar 19

18.31

19.38

15.04

15.71

64.69

2.5680

 
 

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

Ex: It is Apr. 30 and Jul. Class III milk futures are trading at $16.55. Local Jul. basis estimate is +$3.00.

If July futures

=

18.00

16.50

15.00

and actual blend price

=

21.00

19.50

18.00

Sample Strategies

 

 

Realized Prices for July Milk

1) Sold Futures

 

@

16.55

 

19.55

19.55

19.55

2) Bought Put

15.50

@

0.06

 

20.94

19.44

18.44

3) Bought Put

16.00

@

0.15

 

20.85

19.35

18.85

4) Bought Put

16.50

@

0.35

 

20.65

19.15

19.15

5) Synthetic Put

             

     Sold Futures

 

@

16.55

       

     Bought Call

17.50

@

0.07

 

19.98

19.48

19.48

 

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

Ex: It is Apr. 30 and Aug. Class III milk futures are trading at $15.48. Local Aug. basis estimate is +$3.00.

If August futures

=

18.25

16.75

15.25

and actual blend price

=

21.25

19.75

18.25

Sample Strategies

 

 

Realized Prices for August Milk

1) Sold Futures

 

@

16.85

 

19.85

19.85

19.85

2) Bought Put

15.75

@

0.11

 

21.14

19.64

18.64

3) Bought Put

16.25

@

0.23

 

21.02

19.52

19.02

4) Bought Put

16.75

@

0.43

 

20.82

19.32

19.32

5) Synthetic Put

             

     Sold Futures

 

@

16.85

       

     Bought Call

17.75

@

0.15

 

20.20

19.70

19.70

 

 
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