Monthly Dairy Comments by Dr. Andrew P. Griffith                                               March 31, 2020


 

Milk Production: Milk production in the 24 major states during February totaled 17.0 billion pounds, up 2.0% from February 2019. Production per cow for February averaged 1,927 pounds. The number of milk cows was 8.84 million head, up 8,000 head from January 2020. January production was revised up 0.2% from preliminary estimates. For milk production in the top 5 producing states, California was up 6.3% from February a year ago; Wisconsin up 2.7%; Idaho up 9.3%; New York up 5.5%; and Texas up %. 10.8. Other states with large production increases were Colorado (11.3%), Kansas (9.2%), and South Dakota (8.4%). All of the 24 major states witnessed production increases from the previous year due to the extra production day compared to 2019.

Milk Price and Utilization: The Southeast Uniform milk price for February was $20.00, down $1.32 from January and $1.65 higher than February 2019. The Appalachian Uniform milk price was $19.63, down $1.40 from January and $1.63 higher than February 2019. February’s Class III price was $17.00, down $0.05 from January, and $3.11 higher than February a year ago. The Class IV price was down $0.45 from January to $16.20, and $0.34 higher than February 2019. The Class I Mover price for April is $16.64, down $0.82 from March. The milk/feed ratio for February was 2.34, 0.07 lower than January.

Southeast Class I utilization was 72.51%, up 1.18% from January, and 2.18% higher than February a year ago. The Uniform butterfat price was $2.0586, down 10.51 cents from last month and 47.62 cents lower than February 2019. The January Class I price was $21.35. March Class I price is $21.26. Appalachian Class I utilization was 70.37%, down 3.62% from January, and 1.74% lower than February a year ago. The Uniform butterfat price was $2.0586, down 10.51 cents from last month and 47.70 cents lower than February 2019. The February Class I price was $20.95.

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 0.6% to 191 million pounds. Nonfat dry milk (NDM) production was up 0.3% compared to a year ago with total production at 173 million pounds while skim milk powder (SMP) production was up 29.5% to 51.5 million pounds compared to a year ago. Total cheese stocks at the end of February were down 1% from February a year ago and up slightly from the previous month while butter stocks were up 22% from last month and up 24 from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on March 24, supreme springers were not tested and US approved springers were $1,125 to $1,275. Dairy cow slaughter in February was 266,100 head, down 32,400 head from January and 12,700 less than February 2019.


 

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 19

20.52

21.65

18.31

16.35

73.01

2.5820

Oct 19

20.65

21.64

18.72

16.39

77.91

2.4810

Nov 19

20.98

21.94

20.45

16.60

77.23

2.3705

Dec 19

21.63

23.13

19.37

16.70

72.72

2.2656

Jan 20

21.32

22.81

17.05

16.65

71.33

2.1637

Feb 20

20.00

21.35

17.00

16.20

72.51

2.0586

 

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 19

20.04

21.25

18.31

16.35

72.57

2.5784

Oct 19

20.17

21.24

18.72

16.39

75.33

2.4765

Nov 19

20.53

21.54

20.45

16.60

73.92

2.3683

Dec 19

21.11

22.73

19.37

16.70

70.07

2.2623

Jan 20

21.03

22.41

17.05

16.65

73.99

2.1639

Feb 20

19.63

20.95

17.00

16.20

70.37

2.0553

 


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

Ex: It is Mar. 31 and Jun. Class III milk futures are trading at $12.84. Local Jun. basis estimate is +$3.00.

If June futures

=

14.50

13.00

11.50

and actual blend price

=

17.50

16.00

14.50

Sample Strategies

 

 

Realized Prices for June Milk

1) Sold Futures


@

12.84


15.84

15.84

15.84

2) Bought Put

12.00

@

0.32


17.18

15.68

14.68

3) Bought Put

12.50

@

0.44


17.06

15.56

15.06

4) Bought Put

13.00

@

0.90


16.60

15.10

15.10

5) Synthetic Put








     Sold Futures


@

12.84





     Bought Call

14.00

@

0.48

 

19.46

18.96

18.96

 


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

Ex: It is Mar. 31 and Jul. Class III milk futures are trading at $16.35. Local Jul. basis estimate is +$3.00.

If July futures

=

15.25

13.75

12.25

and actual blend price

=

18.25

16.75

15.25

Sample Strategies

 

 

Realized Prices for July Milk

1) Sold Futures


@

13.62


16.62

16.62

16.62

2) Bought Put

12.75

@

0.35


17.90

16.40

15.40

3) Bought Put

13.25

@

0.52


17.73

16.23

15.73

4) Bought Put

13.75

@

0.72


17.53

16.03

16.03

5) Synthetic Put








     Sold Futures


@

13.62





     Bought Call

14.75

@

0.64

 

16.48

15.98

19.15