by Andrew P. Griffith, Livestock Marketing Specialist
September 30, 2024
Milk Production
Milk production in the 24 major states during August totaled 18.1 billion pounds, up 0.1 percent from August 2023. Production per cow for August averaged 2,036 pounds. The number of milk cows was 8.88 million head, unchanged from July 2024. July production was revised down 0.1% from preliminary estimates. For milk production in the top 5 producing states, California increased 2.0% from August a year ago; Wisconsin down 2.3%; Texas up 7.8%; Idaho up 0.3%; and New York down 1.2%. Other states with large production increases were South Dakota (8.5%) and Kansas (6.6%). States with large production decreases were New Mexico (-11.3%) and Arizona (-6.5%).
Milk Price and Utilization
The Southeast Uniform milk price for August was $24.57, up $0.32 from July and $3.80 higher than August 2023. The Appalachian Uniform milk price was $23.98 up $0.26 from July and $3.85 higher than August 2023. August’s Class III price was $20.66, up $0.87 from July, and $3.47 higher than August a year ago. The Class IV price was up $0.27 at $21.58, and $2.67 higher than August 2023. The Class I Mover price for October is $23.17, up $1.57 from September. The milk/feed ratio for August was 2.79, up 0.29 from July.
Southeast Class I utilization was 79.24%, up 4.31% from July and 6.94% higher than August a year ago. The Uniform butterfat price was $3.5927, up 2.27 cents from last month and 69.08 cents higher than August 2023. The August Class I price was $25.12. September Class I price is $25.40. Appalachian Class I utilization was 72.99%, up 2.71% from July, and 0.56% lower than August a year ago. The Uniform butterfat price was $3.5911, up 2.05 cents from last month and 66.89 cents higher than August 2023. The August Class I price was $24.72.
Cheese Production and Stocks
Total cheese production in July was 1.19 billion pounds, up 1.9% from a year ago while butter production was up 2.2% to 162 million pounds. Nonfat dry milk (NDM) production was down 8.6% compared to a year ago with total production at 122 million pounds while skim milk powder (SMP) production was down 13.8% to 62.4 million pounds compared to a year ago. Total cheese stocks at the end of August were down 6% from August a year ago and down 1% from the previous month while butter stocks were down 8% from last month and up 11% from a year ago.
Cow Slaughter
Dairy cow slaughter in August was 231,300 head, up 5,400 head from July and 43,900 less than August 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. |
|---|---|---|---|---|---|---|
| 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 |
| Jun 24 | 23.23 | 23.88 | 19.87 | 21.08 | 60.11 | 3.5233 |
| Jul 24 | 24.25 | 24.91 | 19.79 | 21.31 | 74.93 | 3.5700 |
| Aug 24 | 24.57 | 25.12 | 20.66 | 21.58 | 79.24 | 3.5927 |
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. |
|---|---|---|---|---|---|---|
| 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 |
| Jun 24 | 22.84 | 23.48 | 19.87 | 21.08 | 63.13 | 3.5232 |
| Jul 24 | 23.72 | 24.51 | 19.79 | 21.31 | 70.28 | 3.5706 |
| Aug 24 | 23.98 | 24.72 | 20.66 | 21.58 | 72.99 | 3.5911 |
What is the Market Offering for Milk to be Sold in December?
Ex: It is Sep 30 and Dec. Class III milk futures are trading at $21.19. Local Dec. basis estimate is +$3.00.
| If December futures | = | 22.75 | 21.25 | 19.75 | |||
| and actual blend price | = | 25.75 | 24.25 | 22.75 | |||
| Sample Strategies | Realized Prices for December Milk | ||||||
| 1) Sold Futures | @ | 21.19 | 24.19 | 24.19 | 24.19 | ||
| 2) Bought Put | 20.25 | @ | 0.37 | 25.38 | 23.88 | 22.88 | |
| 3) Bought Put | 20.75 | @ | 0.55 | 25.20 | 23.70 | 23.20 | |
| 4) Bought Put | 21.25 | @ | 0.78 | 24.97 | 23.47 | 23.47 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 21.19 | |||||
| Bought Call | 22.25 | @ | 0.45 | 24.24 | 23.74 | 23.74 | |