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Monthly Dairy Comments

by Andrew P. Griffith, Livestock Marketing Specialist

January 29, 2021

Milk Production

Milk production in the 24 major states during December totaled 18.1 billion pounds, up 3.2% from December 2019. Production per cow for December averaged 2,027 pounds. The number of milk cows was 8.92 million head, up 12,000 head from November 2020. November production was revised up 0.3% from preliminary estimates. For milk production in the top 5 producing states, California was up 3.2% from December a year ago; Wisconsin up 2.6%; Idaho up 1.2%; New York up 2.2%; and Texas up 7.5%. Other states with large production increases were South Dakota (11.9%), Indiana (9.8%), Colorado (6.3%), Ohio (5.3%), and Kansas (5.1%). Other states with large production decreases were Florida (-5.0%) and Vermont (-3.1%).

Milk Price and Utilization

The Southeast Uniform milk price for December was $20.99, up $1.33 from November and $0.64 lower than December 2019. The Appalachian Uniform milk price was $20.61 up $0.89 from November and $0.50 lower than December 2019. December’s Class III price was $15.72, down $7.62 from November, and $3.65 lower than December a year ago. The Class IV price was up $0.06 from November to $13.36, and $3.34 lower than December 2019. The Class I Mover price for January is $15.54, up $0.40 from December. The milk/feed ratio for December was 2.18, 0.40 lower than November.

Southeast Class I utilization was 68.29%, down 0.60% from November, and 4.43% lower than December a year ago. The Uniform butterfat price was $1.5709, down 3.32 cents from last month and 69.47 cents lower than December 2019. The December Class I price was $23.67. January Class I price is $18.94. Appalachian Class I utilization was 68.06%, down 8.25% from November, and 2.01% lower than December a year ago. The Uniform butterfat price was $1.5711, down 3.79 cents from last month and 69.12 cents lower than December 2019. The December Class I price was $23.27.

Cheese Production and Stocks

Total cheese production in November was 1.10 billion pounds, up 0.6% from a year ago while butter production was up 4.0% to 168 million pounds. Nonfat dry milk (NDM) production was up 9.2% compared to a year ago with total production at 152 million pounds while skim milk powder (SMP) production was up 6.8% to 54.4 million pounds compared to a year ago. Total cheese stocks at the end of December were up 6% from December a year ago and up 4% from the previous month while butter stocks were up 9% from last month and up 44% from a year ago.

Springer Prices and Cow Slaughter

At Smiths Grove, Kentucky on January 26, supreme springers were $1,350 to $1,575 and US approved springers were $1,100 to $1,150. Dairy cow slaughter in December was 273,500 head, up 44,100 head from November and 8,100 less than December 2019.

Southeast Federal Order Prices

MonthUniform Price $/cwt.Class I Price $/cwt.Class III Price $/cwt.Class IV Price $/cwt.Class I % UtilizationButterfat Price $/lb.
Jul 2018.8920.3624.5413.7669.381.9065
Aug 2020.1823.5819.7712.5368.011.7899
Sep 2019.6222.2416.4312.7567.281.6436
Oct 2017.8619.0021.6113.4770.521.6364
Nov 2019.6621.8423.3413.3068.891.6041
Dec 2020.9923.6715.7213.3668.291.5709

Appalachian Federal Order Prices

MonthUniform Price $/cwt.Class I Price $/cwt.Class III Price $/cwt.Class IV Price $/cwt.Class I % UtilizationButterfat Price $/lb.
Jul 2019.3419.9624.5413.7684.851.8967
Aug 2020.2523.1819.7712.5370.861.7980
Sept 2019.6821.8416.4312.7572.251.6471
Oct 2017.8218.6021.6113.4780.771.6365
Nov 2019.7221.4423.3413.3076.311.6090
Dec 2020.6123.2715.7213.3668.061.5711

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

Ex: It is Jan. 29 and Apr. Class III milk futures are trading at $17.75. Local Apr. basis estimate is +$3.00.

If April futures=18.5017.0015.50
and actual blend price=21.5020.0018.50
Sample Strategies  Realized Prices for April Milk
1) Sold Futures@16.9019.9019.9019.90
2) Bought Put16.00@0.6120.8919.3918.39
3) Bought Put16.50@0.8320.6719.1718.67
4) Bought Put17.00@1.1020.4018.9018.90
5) Synthetic Put
     Sold Futures@16.90
     Bought Call18.00@0.51 19.8919.3919.39

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

Ex: It is Jan. 29 and May Class III milk futures are trading at $17.10. Local May basis estimate is +$3.00.

If May futures=18.5017.0015.50
and actual blend price=21.5020.0018.50
Sample Strategies  Realized Prices for May Milk
1) Sold Futures@17.1020.1020.1020.10
2) Bought Put16.00@0.6220.8819.3818.38
3) Bought Put16.50@0.8320.6719.1718.67
4) Bought Put17.00@1.0920.4118.9118.91
5) Synthetic Put
     Sold Futures@17.10
     Bought Call18.00@0.62 19.9819.4819.48