Milk Prices up $1.05/cwt in Southeast from November 2016
Milk Production: Milk production in the 23 major states during November totaled 16.2 billion pounds, up 1.1% from November 2016. Production per cow for November averaged 1,861 pounds. The number of milk cows was 8.73 million head, unchanged from October 2017. October production was revised down 0.2% to 16.7 billion pounds. For milk production in the top 5 producing states, California was down 1.1% from November a year ago; Wisconsin up 0.9%; Idaho down 0.6%; New York down 0.3%; and Texas up 5.9%. Other states with large production increases were Colorado (6.1%), Virginia (4.4%), Arizona (4.3%), Utah (4.0%), Illinois (4.0%), Iowa (3.7%), and Indiana (3.3%). The states reporting a large decline in production compared to November 2016 were Washington (-0.8%) and Vermont (-0.5%).
Milk Price and Utilization: The Southeast Uniform milk price for November was $19.07, down $0.05 from October and $1.05 higher than November 2016. The Appalachian Uniform milk price was $18.63, up $0.04 from October and $1.15 higher than November 2016. November’s Class III price was $16.88, up $0.19 from October, and $0.12 higher than November a year ago. The Class IV price was down $0.86 from October to $13.99, and $0.23 higher than November 2016. The Class I Mover price for January is $15.44, down $1.44 from December. The milk/feed ratio for November was 2.54, 0.09 higher than October.
Southeast Class I utilization was 74.89%, up 0.49% from October, and 3.92% lower than November a year ago. The Uniform butterfat price was $2.6246, down 13.73 cents from last month and 51.60 cents higher than November 2016. The November Class I price was $20.21. December Class I price is $20.68. Appalachian Class I utilization was 73.95%, up 2.72% from October, and 1.14% lower than November a year ago. The Uniform butterfat price was $2.6227, down 13.36 cents from last month and 52.34 cents higher than November 2016. The November Class I price was $19.81.
Cheese Production and Stocks: Total cheese production in October was 1.07 billion pounds, up 1.7% from a year ago while butter production was up 2.6% to 143 million pounds. Nonfat dry milk (NDM) production was up 6.5% compared to a year ago with total production at 149 million pounds while skim milk powder (SMP) production was down 42.5% to 23.8 million pounds compared to a year ago. Total cheese stocks at the end of November were up 6% from November a year ago and down 31% from the previous month while butter stocks were down 27% from last month and down 1% from a year ago.
Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on December 19, supreme springers were $1,375 to $1,425, down $50 while US approved springers were $1,275 to $1,325, down $25. Dairy cow slaughter in November was 243,700 head, down 17,300 head from October and 500 more than November 2016.
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 17 | 18.70 | 19.11 | 16.44 | 15.89 | 66.25 | 2.5760 |
Jul 17 | 19.64 | 20.39 | 15.45 | 16.60 | 67.51 | 2.8681 |
Aug 17 | 20.02 | 20.52 | 16.57 | 16.61 | 77.22 | 3.0111 |
Sep 17 | 19.61 | 20.51 | 16.36 | 15.86 | 76.55 | 2.9466 |
Oct 17 | 19.12 | 20.24 | 16.69 | 14.85 | 74.40 | 2.7619 |
Nov 17 | 19.07 | 20.21 | 16.88 | 13.99 | 74.89 | 2.6246 |
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 17 | 18.37 | 18.71 | 16.44 | 15.89 | 63.56 | 2.5883 |
Jul 17 | 19.35 | 19.99 | 15.45 | 16.60 | 65.92 | 2.8735 |
Aug 17 | 19.53 | 20.12 | 16.57 | 16.61 | 71.62 | 3.0120 |
Sep 17 | 19.06 | 20.11 | 16.36 | 15.86 | 72.07 | 2.9404 |
Oct 17 | 18.59 | 19.84 | 16.69 | 14.85 | 71.23 | 2.7563 |
Nov 17 | 18.63 | 19.81 | 16.88 | 13.99 | 73.95 | 2.6227 |
What is the Market Offering for Milk to be Sold in March?
Ex: It is Dec. 29 and Mar. Class III milk futures are trading at $13.74. Local Mar. basis estimate is +$3.00.
If March futures | = | 15.25 | 13.75 | 12.25 | |||
and actual blend price | = | 18.25 | 16.75 | 15.25 | |||
Sample Strategies |
|
| Realized Prices for Mar. Milk | ||||
1) Sold Futures | @ | 13.74 | 16.74 | 16.74 | 16.74 | ||
2) Bought Put | 12.75 | @ | 0.14 | 18.11 | 16.61 | 15.61 | |
3) Bought Put | 13.25 | @ | 0.27 | 17.98 | 16.48 | 15.98 | |
4) Bought Put | 13.75 | @ | 0.49 | 17.76 | 16.26 | 16.26 | |
5) Synthetic Put | |||||||
Sold Futures | @ | 13.74 | |||||
Bought Call | 14.75 | @ | 0.16 |
| 17.08 | 16.58 | 16.58 |
What is the Market Offering for Milk to be Sold in April?
Ex: It is Dec. 29 and Apr. Class III milk futures are trading at $14.05. Local Apr. basis estimate is +$3.00.
If April futures | = | 15.50 | 14.00 | 12.50 | |||
and actual blend price | = | 18.50 | 17.00 | 15.50 | |||
Sample Strategies |
|
| Realized Prices for Apr. Milk | ||||
1) Sold Futures | @ | 14.05 | 17.05 | 17.05 | 17.05 | ||
2) Bought Put | 13.00 | @ | 0.18 | 18.32 | 16.82 | 15.82 | |
3) Bought Put | 13.50 | @ | 0.33 | 18.17 | 16.67 | 16.17 | |
4) Bought Put | 14.00 | @ | 0.55 | 17.95 | 16.45 | 16.45 | |
5) Synthetic Put | |||||||
Sold Futures | @ | 14.05 | |||||
Bought Call | 15.00 | @ | 0.24 |
| 17.31 | 16.81 | 16.81 |
Wyatt Bechtel
Mon, 01/08/2018 – 13:31
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Source: Dairy Herd