Monthly Dairy Comments by Dr. Andrew P. Griffith                                               October 31, 2019


 

Milk Production: Milk production in the 24 major states during September totaled 16.8 billion pounds, up 1.6% from September 2018. Production per cow for September averaged 1,913 pounds. The number of milk cows was 8.80 million head, 7,000 head more than August 2019. August production was revised up 0.2% from preliminary estimates. For milk production in the top 5 producing states, California was up 1.6% from September a year ago; Wisconsin up 0.6%; Idaho up 3.6%; New York up 1.7%; and Texas up 9.3%. Other states with large production increases were Colorado (5.6%) and South Dakota (5.4%). The states reporting a large decline in production compared to September 2018 were Virginia (-7.3%), Arizona (-4.9%), Utah (-4.2%), and Pennsylvania (-3.8%).

Milk Price and Utilization: The Southeast Uniform milk price for September was $20.52, down $0.33 from August and $2.58 higher than September 2018. The Appalachian Uniform milk price was $20.04, down $0.30 from August and $2.69 higher than September 2018. September’s Class III price was $18.31, up $0.71 from August, and $2.22 higher than September a year ago. The Class IV price was down $0.39 from August to $16.35, and $1.54 higher than September 2018. The Class I Mover price for November is $18.14, up $0.30 from October. The milk/feed ratio for September was 2.33, 0.07 higher than August.


Southeast Class I utilization was 73.01%, down 0.59% from August, and 1.75% lower than September a year ago. The Uniform butterfat price was $2.5820, down 10.38 cents from last month and 0.83 cents lower than September 2018. The September Class I price was $21.65. October Class I price is $21.64. Appalachian Class I utilization was 72.57%, down 0.31% from August, and 4.15% higher than September a year ago. The Uniform butterfat price was $2.5784, down 10.73 cents from last month and 0.80 cents lower than September 2019. The September Class I price was $21.25.

Cheese Production and Stocks: Total cheese production in August was 1.11 billion pounds, up 2.2% from a year ago while butter production was up 2.1% to 136 million pounds. Nonfat dry milk (NDM) production was up 2.5% compared to a year ago with total production at 132 million pounds while skim milk powder (SMP) production was up 8.0% to 51.4 million pounds compared to a year ago. Total cheese stocks at the end of September were down 1% from September a year ago and up slightly from the previous month while butter stocks were down 1% from last month and up 7% from a year ago.

Springer Prices and Cow Slaughter: At Smiths Grove, Kentucky on September 24, supreme springers were $1,400 to $1,475 and US approved springers were $1,300. Dairy cow slaughter in September was 255,700 head, down 10,900 head from August and 12,300 less than September 2018.


 

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.

Apr 19

18.70

19.56

15.96

15.72

67.16

2.5622

May 19

19.24

20.22

16.38

16.29

65.82

2.5732

Jun 19

19.58

20.87

16.27

16.83

57.17

2.6381

Jul 19

20.25

20.98

17.55

16.90

69.72

2.6885

Aug 19

20.85

21.69

17.60

16.74

73.60

2.6858

Sep 19

20.52

21.65

18.31

16.35

73.01

2.5820

 

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.

Apr 19

18.28

19.16

15.96

15.72

66.12

2.5610

May 19

18.93

19.82

16.38

16.29

67.14

2.5740

Jun 19

19.44

20.47

16.27

16.83

62.97

2.6372

Jul 19

19.84

20.58

17.55

16.90

70.71

2.6892

Aug 19

20.34

21.29

17.60

16.74

72.88

2.6857

Sep 19

20.04

21.25

18.31

16.35

72.57

2.5784


 

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

Ex: It is Oct. 31 and Jan. Class III milk futures are trading at $17.93. Local Jan. basis estimate is +$3.00.

If January futures

=

19.50

18.00

16.50

and actual blend price

=

22.50

21.00

19.50

Sample Strategies

 

 

Realized Prices for January Milk

1) Sold Futures


@

17.93


20.93

20.93

20.93

2) Bought Put

17.00

@

0.22


22.28

20.78

19.78

3) Bought Put

17.50

@

0.38


22.12

20.62

20.12

4) Bought Put

18.00

@

0.62


21.88

20.38

20.38

5) Synthetic Put








     Sold Futures


@

17.93





     Bought Call

19.00

@

0.20

 

21.23

20.73

20.73


 

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

Ex: It is Oct. 31 and Feb. Class III milk futures are trading at $17.91. Local Feb. basis estimate is +$3.00.

If February futures

=

18.75

17.25

15.75

and actual blend price

=

21.75

20.25

18.75

Sample Strategies

 

 

Realized Prices for February Milk

1) Sold Futures


@

17.19


20.19

20.19

20.19

2) Bought Put

16.25

@

0.21


21.54

20.04

19.04

3) Bought Put

16.75

@

0.37


21.38

19.88

19.38

4) Bought Put

17.25

@

0.61


21.14

19.64

19.64

5) Synthetic Put








     Sold Futures


@

17.19





     Bought Call

18.25

@

0.21

 

20.48

19.98

19.98