by Andrew P. Griffith, Livestock Marketing Specialist
January 31, 2023
Milk Production
Milk production in the 24 major states during December totaled 18.1 billion pounds, up 0.9% from December 2021. Production per cow for December averaged 2,032 pounds. The number of milk cows was 8.92 million head, down 9,000 head from November 2022. November production was revised down 0.3% from preliminary estimates. For milk production in the top 5 producing states, California was up 0.3% from December a year ago; Wisconsin up 0.6%; Idaho up 1.6; Texas up 3.3%; and New York up 2.8%. Other states with large production increases were Georgia (10.8%) and South Dakota (8.9%). States with large production decreases were Florida (-12.7%) and Virginia (-6.5%).
Milk Price and Utilization
The Southeast Uniform milk price for December was $25.29, down $1.36 from November and $3.01 higher than December 2021. The Appalachian Uniform milk price was $24.86 down $1.38 from November and $2.78 higher than December 2021. December’s Class III price was $20.50, down $0.51 from November, and $2.14 higher than December a year ago. The Class IV price was down $1.18 from November to $22.12, and $2.53 higher than December 2021. The Class I Mover price for February is $20.78, down $1.63 from January. The milk/feed ratio for December was 1.84, down 0.10 from November.
Southeast Class I utilization was 72.16%, down 2.20% from November, and 2.19% higher than December a year ago. The Uniform butterfat price was $3.2329, down 29.42 cents from last month and 99.91 cents higher than December 2021. The December Class I price was $26.38. January Class I price is $26.21. Appalachian Class I utilization was 71.91%, down 3.87% from November, and 1.46% lower than December a year ago. The Uniform butterfat price was $3.2305, down 29.48 cents from last month and 99.95 cents higher than December 2021. The December Class I price was $25.98.
Cheese Production and Stocks
Total cheese production in November was 1.15 billion pounds, up 1.6% from a year ago while butter production was up 8.9% to 170 million pounds. Nonfat dry milk (NDM) production was down 1.0% compared to a year ago with total production at 159 million pounds while skim milk powder (SMP) production was down 33.9% to 39.4 million pounds compared to a year ago. Total cheese stocks at the end of December were up slightly from December a year ago and up 1% from the previous month while butter stocks were up 8% from last month and up 9% from a year ago.
Cow Slaughter
Dairy cow slaughter in December was 266,300 head, up 15,400 head from November and 1,500 less than December 2021.
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. |
|---|---|---|---|---|---|---|
| Jul 22 | 28.71 | 29.67 | 22.52 | 25.79 | 69.88 | 3.3755 |
| Aug 22 | 28.17 | 28.93 | 20.10 | 24.81 | 77.59 | 3.4132 |
| Sep 22 | 27.17 | 27.42 | 19.82 | 24.63 | 82.91 | 3.5134 |
| Oct 22 | 26.28 | 26.51 | 21.81 | 24.86 | 78.39 | 3.6332 |
| Nov 22 | 26.65 | 27.89 | 21.01 | 23.30 | 74.36 | 3.5271 |
| Dec 22 | 25.29 | 26.38 | 20.50 | 22.12 | 72.16 | 3.2329 |
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. |
|---|---|---|---|---|---|---|
| Jul 22 | 28.14 | 29.27 | 22.52 | 25.79 | 67.94 | 3.3744 |
| Aug 22 | 27.49 | 28.53 | 20.10 | 24.81 | 72.98 | 3.4119 |
| Sep 22 | 26.53 | 27.02 | 19.82 | 24.63 | 73.88 | 3.5198 |
| Oct 22 | 25.80 | 26.11 | 21.81 | 24.96 | 71.59 | 3.6362 |
| Nov 22 | 26.24 | 27.49 | 21.01 | 23.30 | 75.78 | 3.5253 |
| Dec 22 | 24.86 | 25.98 | 20.50 | 22.12 | 71.91 | 3.2305 |
What is the Market Offering for Milk to be Sold in April?
Ex: It is Dec. 30 and Apr. Class III milk futures are trading at $18.00. Local Apr. basis estimate is +$3.00.
| If April futures | = | 19.50 | 18.00 | 16.50 | |||
| and actual blend price | = | 22.50 | 21.00 | 19.50 | |||
| Sample Strategies | Realized Prices for April Milk | ||||||
| 1) Sold Futures | @ | 18.00 | 21.00 | 21.00 | 21.00 | ||
| 2) Bought Put | 17.00 | @ | 0.30 | 22.20 | 20.70 | 19.70 | |
| 3) Bought Put | 17.50 | @ | 0.46 | 22.04 | 20.54 | 20.04 | |
| 4) Bought Put | 18.00 | @ | 0.68 | 21.82 | 20.32 | 20.32 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 18.00 | |||||
| Bought Call | 19.00 | @ | 0.33 | 21.17 | 20.67 | 20.67 | |
What is the Market Offering for Milk to be Sold in May?
Ex: It is Dec. 30 and May Class III milk futures are trading at $18.49. Local May basis estimate is +$3.00.
| If May futures | = | 20.00 | 18.50 | 17.00 | |||
| and actual blend price | = | 23.00 | 21.50 | 20.00 | |||
| Sample Strategies | Realized Prices for May Milk | ||||||
| 1) Sold Futures | @ | 18.49 | 21.49 | 21.49 | 21.49 | ||
| 2) Bought Put | 17.50 | @ | 0.40 | 22.60 | 21.10 | 20.10 | |
| 3) Bought Put | 18.00 | @ | 0.59 | 22.41 | 20.91 | 20.41 | |
| 4) Bought Put | 18.50 | @ | 0.82 | 22.18 | 20.68 | 20.68 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 18.49 | |||||
| Bought Call | 19.50 | @ | 0.44 | 21.55 | 21.05 | 21.05 | |