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Monthly Dairy Comments

by Andrew P. Griffith, Livestock Marketing Specialist

August 31, 2021

Milk Production

Milk production in the 24 major states during July totaled 18.3 billion pounds, up 2.1% from July 2020. Production per cow for July averaged 2,035 pounds. The number of milk cows was 8.99 million head, down 3,000 head from June 2021. June production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California was down 0.7% from July a year ago; Wisconsin up 4.6%; Idaho up 0.8%; New York up 2.8%; and Texas up 7.2%. Other states with large production increases were South Dakota (17.0%), Indiana (5.7%), and Iowa (5.4%). States with production decreases were Washington (-6.7%) and Virginia (-2.4%).

Milk Price and Utilization

The Southeast Uniform milk price for July was $19.80, down $0.59 from June and $0.91 higher than July 2020. The Appalachian Uniform milk price was $19.61 down $0.58 from June and $0.27 higher than July 2020. July’s Class III price was $16.49, down $0.72 from June, and $8.05 lower than July a year ago. The Class IV price was down $0.35 from June to $16.00, and $2.24 higher than July 2020. The Class I Mover price for September is $16.59, down $0.31 from August. The milk/feed ratio for July was 1.55, down 0.05 from June.

Southeast Class I utilization was 67.87%, up 3.37% from June, and 1.51% lower than July a year ago. The Uniform butterfat price was $1.9437, down 3.83 cents from last month and 3.72 cents higher than July 2020. The July Class I price was $21.22. August Class I price is $20.70. Appalachian Class I utilization was 69.24%, up 3.54% from June, and 15.61% lower than July a year ago. The Uniform butterfat price was $1.9434, down 3.89 cents from last month and 4.67 cents higher than July 2020. The July Class I price was $21.22.

Cheese Production and Stocks

Total cheese production in June was 1.12 billion pounds, up 0.2% from a year ago while butter production was up 7.8% to 161 million pounds. Nonfat dry milk (NDM) production was up 19.8% compared to a year ago with total production at 185 million pounds while skim milk powder (SMP) production was down 46.1% to 32.6 million pounds compared to a year ago. Total cheese stocks at the end of July were up 4% from July a year ago and up 1% from the previous month while butter stocks were down 4% from last month and up 7% from a year ago.

Springer Prices and Cow Slaughter

At Smiths Grove, Kentucky on August 24, supreme springers were not tested while US approved springers were not tested. Dairy cow slaughter in July was 233,700 head, down 3,800 head from June and 14,200 more than July 2020.

Southeast Federal Order Prices

MonthUniform Price $/cwt.Class I Price $/cwt.Class III Price $/cwt.Class IV Price $/cwt.Class I % UtilizationButterfat Price $/lb.
Feb 2117.7219.3415.7513.1971.371.5119
Mar 2117.9219.0016.1514.1861.791.6243
Apr 2118.4619.3117.6715.4263.141.8623
May 2119.5220.9018.9616.1663.801.9972
June 2120.3922.0917.2116.3564.501.9820
July 2119.8021.2216.4916.0067.871.9437

Appalachian Federal Order Prices

MonthUniform Price $/cwt.Class I Price $/cwt.Class III Price $/cwt.Class IV Price $/cwt.Class I % UtilizationButterfat Price $/lb.
Feb 2117.5618.9415.7513.1972.041.5115
Mar 2117.9418.6016.1514.1868.101.6170
Apr 2118.4318.9117.6715.4269.211.8570
May 2119.3520.5018.9616.1667.091.9977
Jun 2120.1921.6917.2116.3565.701.9823
July 2119.6120.8216.4916.0069.241.9434

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

Ex: It is Aug. 31 and Nov Class III milk futures are trading at $17.31. Local Nov. basis estimate is +$3.00.

If November futures=18.5017.0015.50
and actual blend price=21.5020.0018.50
Sample Strategies  Realized Prices for November Milk
1) Sold Futures@17.3120.3120.3120.31
2) Bought Put16.25@0.3721.3819.8818.88
3) Bought Put16.75@0.5521.2019.7019.20
4) Bought Put17.25@0.7920.9619.4619.46
5) Synthetic Put
     Sold Futures@17.31
     Bought Call18.25@0.42 20.3919.8919.89

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

Ex: It is Aug. 31 and Dec. Class III milk futures are trading at $17.45. Local Dec. basis estimate is +$3.00.

If December futures=19.0017.5016.00
and actual blend price=22.0020.5019.00
Sample Strategies  Realized Prices for December Milk
1) Sold Futures@17.4520.4520.4520.45
2) Bought Put16.50@0.5421.4619.9618.96
3) Bought Put17.00@0.7521.2519.7519.25
4) Bought Put17.50@1.0120.9919.4919.49
5) Synthetic Put
     Sold Futures@17.45
     Bought Call18.50@0.52 20.4319.9319.93