Appalachian Region Milk Price Comes Down $2.50/cwt Since Last August
Milk Production: Milk production in the 23 major states during August totaled 17.2 billion pounds, up 1.4% from August 2017. Production per cow for August averaged 1,974 pounds. The number of milk cows was 8.74 million head, up 4,000 head from July 2018. July production was revised up 0.1% to 17.3 billion pounds. For milk production in the top 5 producing states, California was up 1.2% from August a year ago; Wisconsin up 1.4%; Idaho up 0.9%; New York up 1.7%; and Texas up 9.5%. Other states with large production increases were Colorado (8.6%), Kansas (8.6%), Utah (2.6%), and South Dakota (2.6%). The states reporting a large decline in production compared to August 2017 were Florida (-7.3%) and Virginia (-5.7%).
Milk Price and Utilization: The Southeast Uniform milk price for August was $18.12, down $0.59 from July and $2.49 lower than August 2017. The Appalachian Uniform milk price was $17.03, down $0.49 from July and $2.50 lower than August 2017. July’s Class III price was $14.95, up $0.85 from July, and $1.62 lower than August a year ago. The Class IV price was up $0.49 from July to $14.63, and $1.98 lower than August 2017. The Class I Mover price for October is $16.33, up $1.48 from September. The milk/feed ratio for August was 2.03, up 0.12 from July.
Southeast Class I utilization was 75.65%, up 2.34% from July, and 1.57% lower than August a year ago. The Uniform butterfat price was $2.5897, down 2.11 cents from last month and 42.14 cents lower than August 2017. The August Class I price was $17.95. September Class I price is $18.65. Appalachian Class I utilization was 72.47%, up 3.41% from July, and 0.85% higher than August a year ago. The Uniform butterfat price was $2.5914, down 1.16 cents from last month and 41.16 cents lower than August 2017. The July Class I price was $17.55.
Cheese Production and Stocks: Total cheese production in July was 1.09 billion pounds, up 3.7% from a year ago while butter production was up 0.5% to 136 million pounds. Nonfat dry milk (NDM) production was down 3.4% compared to a year ago with total production at 147 million pounds while skim milk powder (SMP) production was down 0.5% to 47.6 million pounds compared to a year ago. Total cheese stocks at the end of August were up 2% from August a year ago and down 4% from the previous month while butter stocks were down 9% from last month and up 4% from a year ago.
Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on September 25, supreme springers were not tested while US approved springers were $1,125 to $1,275 per head, up $25 from the previous month. Dairy cow slaughter in August was 279,700 head, up 39,900 head from July and 14,100 more than August 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.
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
May 18
17.46
18.74
15.18
14.57
67.75
2.5813
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
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.
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
May 18
17.20
17.84
15.18
14.57
67.75
2.5845
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
What is the Market Offering for Milk to be Sold in December?
Ex: It is Sep. 28 and Dec. Class III milk futures are trading at $16.09. Local Dec. basis estimate is +$3.00.
If December futures
=
17.50
16.00
14.50
and actual blend price
=
20.50
19.00
17.50
Sample Strategies
Realized Prices for December Milk
1) Sold Futures
@
16.09
19.09
19.09
19.09
2) Bought Put
15.00
@
0.05
20.45
18.95
17.95
3) Bought Put
15.50
@
0.13
20.37
18.87
18.37
4) Bought Put
16.00
@
0.30
20.20
18.70
18.70
5) Synthetic Put
Sold Futures
@
16.09
Bought Call
17.00
@
0.12
19.47
18.97
18.97
What is the Market Offering for Milk to be Sold in January?
Ex: It is Sep. 28 and Jan. Class III milk futures are trading at $15.98. Local Jan. basis estimate is +$3.00.
If January futures
=
17.50
16.00
14.50
and actual blend price
=
20.50
19.00
17.50
Sample Strategies
Realized Prices for January Milk
1) Sold Futures
@
15.98
18.98
18.98
18.98
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
@
0.44
20.06
18.56
18.56
5) Synthetic Put
Sold Futures
@
15.98
Bought Call
17.00
@
0.15
19.33
18.83
18.83
Wyatt Bechtel
Tue, 10/02/2018 – 10:36
Category
Dairy (General)
Milk Prices
Comments
Milk Prices
Southeast (U.S.)
News Article
Image Caption
Southeast Milk Truck Trailer Tank Semi
Image Credit
Wyatt Bechtel
Source: Dairy Herd