by Andrew P. Griffith, Livestock Marketing Specialist
June 28, 2024
Milk Production
Milk production in the 24 major states during May totaled 18.9 billion pounds, down 0.7 percent from May 2023. Production per cow for May averaged 2,122 pounds. The number of milk cows was 8.89 million head, up 5,000 from April 2024. April production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California decreased 1.5% from May a year ago; Wisconsin up 1.1%; Texas down 0.3%; Idaho down 0.6; and New York down 0.2%. Other states with large production increases were South Dakota (10.2%) and Florida (10.5%). States with large production decreases were New Mexico (-14.7%) and Georgia (-8.3%).
Milk Price and Utilization
The Southeast Uniform milk price for May was $22.08, down $0.19 from April and $0.10 lower than May 2023. The Appalachian Uniform milk price was $21.77 down $0.03 from April and $0.05 higher than May 2023. May’s Class III price was $18.55, up $3.05 from April, and $2.44 higher than May a year ago. The Class IV price was up $0.39 at $20.50, and $2.40 higher than May 2023. The Class I Mover price for July is $21.11, up $1.03 from June. The milk/feed ratio for May was 2.24, up 0.10 from April.
Southeast Class I utilization was 70.94%, up 0.06% from April and 1.39% higher than May a year ago. The Uniform butterfat price was $3.4061, up 9.95 cents from last month and 65.44 cents higher than May 2023. The May Class I price was $22.26. June Class I price is $23.88. Appalachian Class I utilization was 70.54%, up 1.28% from April, and 0.38% higher than may a year ago. The Uniform butterfat price was $3.4093, up 10.11 cents from last month and 65.69 cents higher than May 2023. The May Class I price was $21.86.
Cheese Production and Stocks
Total cheese production in April was 1.19 billion pounds, up 1.8% from a year ago while butter production was up 5.3% to 208 million pounds. Nonfat dry milk (NDM) production was down 12.7% compared to a year ago with total production at 173 million pounds while skim milk powder (SMP) production was down 20.8% to 36.3 million pounds compared to a year ago. Total cheese stocks at the end of May were down 4% from May a year ago and down slightly from the previous month while butter stocks were up 5% from last month and up 3% from a year ago.
Cow Slaughter
Dairy cow slaughter in May was 216,100 head, down 22,100 head from April and 33,000 less than May 2023.
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 23 | 22.01 | 23.56 | 16.04 | 19.23 | 72.55 | 3.2006 |
| Jan 24 | 21.61 | 22.28 | 15.17 | 19.39 | 76.37 | 3.0069 |
| Feb 24 | 21.51 | 21.79 | 16.08 | 19.85 | 78.58 | 3.0749 |
| Mar 24 | 22.07 | 22.60 | 16.34 | 20.09 | 65.51 | 3.2099 |
| Apr 24 | 22.27 | 22.98 | 15.50 | 20.11 | 70.88 | 3.3066 |
| May 24 | 22.08 | 22.26 | 18.55 | 20.50 | 70.94 | 3.4061 |
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 23 | 21.39 | 23.16 | 16.04 | 19.23 | 67.63 | 3.1845 |
| Jan 24 | 21.10 | 21.88 | 15.17 | 19.39 | 72.50 | 3.0054 |
| Feb 24 | 21.00 | 21.39 | 16.08 | 19.85 | 71.87 | 3.0793 |
| Mar 24 | 21.60 | 22.20 | 16.34 | 20.09 | 65.73 | 3.2120 |
| Apr 24 | 21.80 | 22.58 | 15.50 | 20.11 | 69.26 | 3.3082 |
| May 24 | 21.77 | 21.86 | 18.55 | 20.50 | 70.54 | 3.4093 |
What is the Market Offering for Milk to be Sold in September?
Ex: It is June 28 and Sep. Class III milk futures are trading at $20.50. Local Sep. basis estimate is +$3.00.
| If September futures | = | 22.00 | 20.50 | 19.00 | |||
| and actual blend price | = | 25.00 | 23.50 | 22.00 | |||
| Sample Strategies | Realized Prices for September Milk | ||||||
| 1) Sold Futures | @ | 20.50 | 23.50 | 23.50 | 23.50 | ||
| 2) Bought Put | 19.50 | @ | 0.60 | 24.40 | 22.90 | 21.90 | |
| 3) Bought Put | 20.00 | @ | 0.83 | 24.17 | 22.67 | 22.17 | |
| 4) Bought Put | 20.50 | @ | 1.09 | 23.91 | 22.41 | 22.41 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 20.50 | |||||
| Bought Call | 21.50 | @ | 0.53 | 23.47 | 22.97 | 22.97 | |
What is the Market Offering for Milk to be Sold in October?
Ex: It is June 28 and Oct. Class III milk futures are trading at $20.25. Local Oct. basis estimate is +$3.00.
| If October futures | = | 21.75 | 20.25 | 18.75 | |||
| and actual blend price | = | 24.75 | 23.25 | 21.75 | |||
| Sample Strategies | Realized Prices for October Milk | ||||||
| 1) Sold Futures | @ | 20.25 | 23.25 | 23.25 | 23.25 | ||
| 2) Bought Put | 19.25 | @ | 0.51 | 24.24 | 22.74 | 21.74 | |
| 3) Bought Put | 19.75 | @ | 0.71 | 24.04 | 22.54 | 22.04 | |
| 4) Bought Put | 20.25 | @ | 0.95 | 23.80 | 22.30 | 22.30 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 20.25 | |||||
| Bought Call | 21.25 | @ | 0.61 | 23.14 | 22.64 | 22.64 | |