Monthly Dairy Comments by Dr. Andrew P. Griffith                                               June 30, 2020


 

Milk Production: Milk production in the 24 major states during May totaled 18.0 billion pounds, down 1.0% from May 2019. Production per cow for May averaged 2,031 pounds. The number of milk cows was 8.84 million head, down 12,000 head from April 2020. April production was revised down 0.3% from preliminary estimates. For milk production in the top 5 producing states, California was down 1.5% from May a year ago; Wisconsin down 3.1%; Idaho up 4.8%; New York down 3.7%; and Texas up 1.9%. Other states with large production increases were South Dakota (9.7%), Colorado (4.6%), and Kansas (2.4%). Other states with production decreases were New Mexico (-7.2%), Vermont (-6.4%), Pennsylvania (-3.0%), and Utah (-3.0%).

 

Milk Price and Utilization: The Southeast Uniform milk price for May was $15.39, down $2.36 from April and $3.85 lower than May 2019. The Appalachian Uniform milk price was $15.14, down $2.35 from April and $3.79 lower than May 2019. May’s Class III price was $12.14, down $0.93 from April, and $4.24 lower than May a year ago. The Class IV price was down $0.73 from April to $10.67, and $5.62 lower than May 2019. The Class I Mover price for July is $16.56, up $5.14 from June. The milk/feed ratio for May was 1.77, 0.07 lower than April.

Southeast Class I utilization was 66.55%, down 2.87% from April, and 0.73% higher than May a year ago. The Uniform butterfat price was $1.3582, down 24.70 cents from last month and 121.50 cents lower than May 2019. The May Class I price was $16.75. June Class I price is $15.22. Appalachian Class I utilization was 68.71%, down 2.50% from April, and 1.57% higher than May a year ago. The Uniform butterfat price was $1.3591, down 23.93 cents from last month and 121.49 cents lower than May 2019. The May Class I price was $16.35.

 

Cheese Production and Stocks: Total cheese production in April was 1.07 billion pounds, down 1.7% from a year ago while butter production was up 25.1% to 216 million pounds. Nonfat dry milk (NDM) production was up 9.3% compared to a year ago with total production at 183 million pounds while skim milk powder (SMP) production was down 12.7% to 40.4 million pounds compared to a year ago. Total cheese stocks at the end of May were up 5% from May a year ago and down 2% from the previous month while butter stocks were up 2% from last month and up 21% from a year ago.

 

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on June 23, supreme springers were $1,300 to $1,575 and US approved springers were $1,100 to $1,225. Dairy cow slaughter in May was 233,300 head, down 46,100 head from April and 24,800 less than May 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.

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

Mar 20

19.64

21.26

16.25

14.87

66.16

1.9678

Apr 20

17.75

20.44

13.07

11.40

69.42

1.6052

May 20

15.39

16.75

12.14

10.67

66.55

1.3582

 

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.

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

Mar 20

19.49

20.86

16.25

14.87

70.75

1.9701

Apr 20

17.49

20.04

13.07

11.40

71.21

1.5984

May 20

15.14

16.35

12.14

10.67

68.71

1.3591

 


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

Ex: It is Jun. 30 and Sep. Class III milk futures are trading at $16.75. Local Sep. basis estimate is +$3.00.

If September futures

=

19.50

18.00

16.50

and actual blend price

=

22.50

21.00

19.50

Sample Strategies

 

 

Realized Prices for September Milk

1) Sold Futures


@

18.07


21.07

21.07

21.07

2) Bought Put

17.00

@

0.69


21.81

20.31

19.31

3) Bought Put

17.50

@

1.12


21.38

19.88

19.38

4) Bought Put

18.00

@

1.41


21.09

19.59

19.59

5) Synthetic Put








     Sold Futures


@

18.07





     Bought Call

19.00

@

0.58

 

20.99

20.49

20.49

 


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

Ex: It is Jun. 30 and Oct. Class III milk futures are trading at $14.56. Local Oct. basis estimate is +$3.00.

If October futures

=

18.50

17.00

15.50

and actual blend price

=

21.50

20.00

18.50

Sample Strategies

 

 

Realized Prices for October Milk

1) Sold Futures


@

17.11


20.11

20.11

20.11

2) Bought Put

16.00

@

0.76


20.74

19.24

18.24

3) Bought Put

16.50

@

0.99


20.51

19.01

18.51

4) Bought Put

17.00

@

1.26


20.24

18.74

18.74

5) Synthetic Put








     Sold Futures


@

17.11





     Bought Call

18.00

@

0.61

 

20.00

19.50

19.50