Monthly Dairy Comments

by Andrew P. Griffith, Livestock Marketing Specialist

May 28, 2021

Milk Production

Milk production in the 24 major states during April totaled 18.4 billion pounds, up 3.5% from April 2020. Production per cow for April averaged 2,051 pounds. The number of milk cows was 8.98 million head, up 15,000 head from March 2021. March production was revised up 0.2% from preliminary estimates. For milk production in the top 5 producing states, California was up 4.1% from April a year ago; Wisconsin up 4.6%; Idaho up 1.0%; New York up 2.2%; and Texas up 7.7%. Other states with large production increases were South Dakota (13.4%), Indiana (11.4%), Minnesota (6.9%), and Colorado (6.0%). Other states with large production decreases were Florida (-5.3%), Vermont (-2.7%), and Virginia (-2.3%).

Milk Price and Utilization

The Southeast Uniform milk price for April was $18.46, up $0.54 from March and $0.71 higher than April 2020. The Appalachian Uniform milk price was $18.43 up $0.49 from March and $0.94 higher than April 2020. April’s Class III price was $17.67, up $1.52 from March, and $4.60 higher than April a year ago. The Class IV price was up $1.24 from March to $15.42, and $4.02 higher than April 2020. The Class I Mover price for June is $18.29, up $1.19 from May. The milk/feed ratio for April was 1.75, no change from March.

Southeast Class I utilization was 63.14%, up 1.35% from March, and 6.28% lower than April a year ago. The Uniform butterfat price was $1.8623, up 23.80 cents from last month and 25.71 cents higher than April 2020. The April Class I price was $19.31. May Class I price is $20.90. Appalachian Class I utilization was 69.21%, up 1.11% from March, and 2.00% lower than April a year ago. The Uniform butterfat price was $1.8570, up 24.00 cents from last month and 25.86 cents higher than April 2020. The April Class I price was $18.91.

Cheese Production and Stocks

Total cheese production in March was 1.18 billion pounds, up 4.8% from a year ago while butter production was down 0.6% to 199 million pounds. Nonfat dry milk (NDM) production was up 14.1% compared to a year ago with total production at 198 million pounds while skim milk powder (SMP) production was down 31.4% to 38.3 million pounds compared to a year ago. Total cheese stocks at the end of April were down 2% from April a year ago and down 1% from the previous month while butter stocks were up 8% from last month and up 3% from a year ago.

Springer Prices and Cow Slaughter

At Smiths Grove, Kentucky on May 25, supreme springers were not tested while US approved springers brought $850. Dairy cow slaughter in April was 257,500 head, down 44,700 head from March and 21,900 less than April 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.
Nov 2019.6621.8423.3413.3068.891.6041
Dec 2020.9923.6715.7213.3668.291.5709
Jan 2117.5918.9416.0413.7567.911.5722
Feb 2117.7219.3415.7513.1971.371.5119
Mar 2117.9219.0016.1514.1861.791.6243
Apr 2118.4619.3117.6715.4263.141.8623

Appalachian Federal Order Prices

MonthUniform Price $/cwt.Class I Price $/cwt.Class III Price $/cwt.Class IV Price $/cwt.Class I % UtilizationButterfat Price $/lb.
Nov 2019.7221.4423.3413.3076.311.6090
Dec 2020.6123.2715.7213.3668.061.5711
Jan 2117.4218.5416.0413.7570.571.5730
Feb 2117.5618.9415.7513.1972.041.5115
Mar 2117.9418.6016.1514.1868.101.6170
Apr 2118.4318.9117.6715.4269.211.8570

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

Ex: It is May 28 and Aug. Class III milk futures are trading at $18.72. Local Aug. basis estimate is +$3.00.

If August futures=20.2518.7517.25
and actual blend price=23.2521.7520.25
Sample Strategies  Realized Prices for August Milk
1) Sold Futures@18.7221.7221.7221.72
2) Bought Put17.75@0.4822.7721.2720.27
3) Bought Put18.25@0.6722.5821.0820.58
4) Bought Put18.75@0.9122.3420.8420.84
5) Synthetic Put
     Sold Futures@18.72
     Bought Call19.75@0.50 21.7221.2221.22

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

Ex: It is May 28 and Sep. Class III milk futures are trading at $19.01. Local Sep. basis estimate is +$3.00.

If September futures=20.5019.0017.50
and actual blend price=23.5022.0020.50
Sample Strategies  Realized Prices for September Milk
1) Sold Futures@19.0122.0122.0122.01
2) Bought Put18.00@0.5622.9421.4420.44
3) Bought Put18.50@0.7622.7421.2420.74
4) Bought Put19.00@1.0022.5021.0021.00
5) Synthetic Put
     Sold Futures@19.01
     Bought Call20.00@0.61 21.9021.4021.40