Monthly Dairy Comments by Dr. Andrew P. Griffith                                                April 27, 2018


 

Milk Production: Milk production in the 23 major states during March totaled 17.8 billion pounds, up 1.5% from March 2017. Production per cow for March averaged 2,038 pounds. The number of milk cows was 8.74 million head, down 2,000 head from February 2018. February production was revised down 0.1% to 15.9 billion pounds. For milk production in the top 5 producing states, California was up 2.7% from March a year ago; Wisconsin no change; Idaho up 4.0%; New York down 1.2%; and Texas up 4.8%. Other states with large production increases were Colorado (7.4%), Utah (5.5%), Washington (3.3%), and Arizona (2.8%). The states reporting a large decline in production compared to March 2017 were Virginia (-3.2%) and Florida (-2.5%).

 

Milk Price and Utilization: The Southeast Uniform milk price for March was $16.30, down $0.27 from February and $2.85 lower than March 2017. The Appalachian Uniform milk price was $16.02, down $0.29 from February and $3.04 lower than March 2017. March’s Class III price was $14.22, up $0.82 from February, and $1.59 lower than March a year ago. The Class IV price was up $0.17 from February to $13.04, and $1.28 lower than March 2017. The Class I Mover price for May is $14.44, up $0.34 from April. The milk/feed ratio for March was 1.97, 0.06 lower than February.

Southeast Class I utilization was 64.74%, down 3.32% from February, and 0.49% lower than March a year ago. The Uniform butterfat price was $2.4081, down 1.15 cents from last month and 3.35 cents lower than March 2017. The March Class I price was $17.16. April Class I price is $17.90. Appalachian Class I utilization was 66.81%, down 1.97% from February, and 2.94% lower than March a year ago. The Uniform butterfat price was $2.4084, down 0.95 cents from last month and 3.36 cents lower than March 2017. The March Class I price was $16.76.

 

Cheese Production and Stocks: Total cheese production in February was 982 million pounds, up 4.2% from a year ago while butter production was up 4.7% to 169 million pounds. Nonfat dry milk (NDM) production was up 12.1% compared to a year ago with total production at 159 million pounds while skim milk powder (SMP) production was down 8.9% to 36.5 million pounds compared to a year ago. Total cheese stocks at the end of March were up 5% from March a year ago and up 1% from the previous month while butter stocks were up 3% from last month and up slightly from a year ago.

 

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on April 24, supreme springers were not tested while US approved springers were $1,100 to $1,200 per head, down $50 from the previous month. Dairy cow slaughter in March was 286,900 head, up 26,300 head from February and 15,800 more than March 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.

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

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

 

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 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

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

 


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

Ex: It is Apr. 27 and Jul. Class III milk futures are trading at $16.02. 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


@

16.02


19.02

19.02

19.02

2) Bought Put

15.00

@

0.12


20.38

18.88

17.88

3) Bought Put

15.50

@

0.23


20.27

18.77

18.27

4) Bought Put

16.00

@

0.48


20.02

18.52

18.52

5) Synthetic Put








     Sold Futures


@

16.02





     Bought Call

17.00

@

0.11

 

19.41

18.91

18.91

 


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

Ex: It is Apr. 27 and Aug. Class III milk futures are trading at $16.33. Local Aug. basis estimate is +$3.00.

If August futures

=

17.75

16.25

14.75

and actual blend price

=

20.75

19.25

17.75

Sample Strategies

 

 

Realized Prices for August Milk

1) Sold Futures


@

16.33


19.33

19.33

19.33

2) Bought Put

15.25

@

0.16


20.59

19.09

18.09

3) Bought Put

15.75

@

0.29


20.46

18.96

18.46

4) Bought Put

16.25

@

0.51


20.24

18.74

18.74

5) Synthetic Put








     Sold Futures


@

16.33





     Bought Call

17.25

@

0.18

 

19.65

19.15

19.15