by Andrew P. Griffith, Livestock Marketing Specialist
March 28, 2024
Milk Production
Milk production in the 24 major states during February totaled 17.4 billion pounds, up 2.4 percent from February 2023. Production per cow for February averaged 1,955 pounds. The number of milk cows was 8.88 million head, up 8,000 from January 2024. January production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California increased 2.7% from February a year ago; Wisconsin up 4.2%; Texas up 2.9%; Idaho up 0.8; and New York up 2.5%. Other states with large production increases were South Dakota (14.8%) and Florida (9.0%). States with large production decreases were New Mexico (-9.9%) and Oregon (-7.0%).
Milk Price and Utilization
The Southeast Uniform milk price for February was $21.51, down $0.10 from January and $1.81 lower than February 2023. The Appalachian Uniform milk price was $21.00 down $0.10 from January and $1.89 lower than February 2023. February’s Class III price was $16.08, up $0.91 from January, and $1.70 lower than February a year ago. The Class IV price was up $0.46 at $19.85, and $0.99 higher than February 2023. The Class I Mover price for April is $19.18, up $0.38 from March. The milk/feed ratio for February was 2.13, up 0.15 from January.
Southeast Class I utilization was 78.58%, up 2.21% from January and 9.40% higher than February a year ago. The Uniform butterfat price was $3.0749, up 6.80 cents from last month and 30.85 cents higher than February 2023. The February Class I price was $21.79. March Class I price is $22.60. Appalachian Class I utilization was 71.87%, down 0.63% from January, and 1.30% higher than February a year ago. The Uniform butterfat price was $3.0793, up 7.39 cents from last month and 31.36 cents higher than February 2023. The February Class I price was $21.39.
Cheese Production and Stocks
Total cheese production in January was 1.19 billion pounds, down 1.2% from a year ago while butter production was up 6.4% to 214 million pounds. Nonfat dry milk (NDM) production was down 20.4% compared to a year ago with total production at 139 million pounds while skim milk powder (SMP) production was up 27.7% to 56.9 million pounds compared to a year ago. Total cheese stocks at the end of February were up 2% from February a year ago and up slightly from the previous month while butter stocks were up 19% from last month and up 1% from a year ago.
Cow Slaughter
Dairy cow slaughter in February was 252,700 head, up 2,500 head from January and 13,800 less than February 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. |
|---|---|---|---|---|---|---|
| Sep 23 | 22.37 | 22.70 | 18.39 | 19.09 | 77.94 | 3.0933 |
| Oct 23 | 23.64 | 23.27 | 16.84 | 21.49 | 77.02 | 3.4275 |
| Nov 23 | 22.94 | 23.55 | 17.15 | 20.87 | 85.87 | 3.5751 |
| 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 |
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 23 | 21.68 | 22.30 | 18.39 | 19.09 | 70.58 | 3.0972 |
| Oct 23 | 23.05 | 22.78 | 16.84 | 21.49 | 71.59 | 3.4526 |
| Nov 23 | 22.19 | 23.15 | 17.15 | 20.87 | 72.15 | 3.5557 |
| 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 |
What is the Market Offering for Milk to be Sold in June?
Ex: It is Mar. 28 and Jun. Class III milk futures are trading at $16.64. Local Jun. basis estimate is +$3.00.
| If June futures | = | 18.25 | 16.75 | 15.25 | |||
| and actual blend price | = | 21.25 | 19.75 | 18.25 | |||
| Sample Strategies | Realized Prices for June Milk | ||||||
| 1) Sold Futures | @ | 16.64 | 19.64 | 19.64 | 19.64 | ||
| 2) Bought Put | 15.75 | @ | 0.27 | 20.98 | 19.48 | 18.48 | |
| 3) Bought Put | 16.25 | @ | 0.43 | 20.82 | 19.32 | 18.82 | |
| 4) Bought Put | 16.75 | @ | 0.66 | 20.59 | 19.09 | 19.09 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 16.64 | |||||
| Bought Call | 17.75 | @ | 0.32 | 19.82 | 19.32 | 19.32 | |
What is the Market Offering for Milk to be Sold in July?
Ex: It is Mar. 29 and Jul. Class III milk futures are trading at $17.39. Local Jul. basis estimate is +$3.00.
| If July futures | = | 19.00 | 17.50 | 16.00 | |||
| and actual blend price | = | 22.00 | 20.50 | 19.00 | |||
| Sample Strategies | Realized Prices for July Milk | ||||||
| 1) Sold Futures | @ | 17.39 | 20.39 | 20.39 | 20.39 | ||
| 2) Bought Put | 16.50 | @ | 0.37 | 21.63 | 20.13 | 19.13 | |
| 3) Bought Put | 17.00 | @ | 0.56 | 21.44 | 19.94 | 19.44 | |
| 4) Bought Put | 17.50 | @ | 0.80 | 21.20 | 19.70 | 19.70 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 17.39 | |||||
| Bought Call | 18.50 | @ | 0.46 | 20.43 | 19.93 | 19.93 | |