Source: The University of Tennessee Institute of Agriculture
Milk Production
Milk production in the 24 major states during September totaled 17.3 billion pounds, up 0.4% from September 2020. Production per cow for September averaged 1,937 pounds. The number of milk cows was 8.93 million head, down 22,000 head from August 2021. August production was revised down 0.4% from preliminary estimates. For milk production in the top 5 producing states, California was up 0.2% from September a year ago; Wisconsin up 3.3%; Idaho down 0.2%; New York up 1.8%; and Texas up 2.5%. Other states with large production increases were South Dakota (14.6%) and Georgia (3.8%). States with production decreases were New Mexico (-12.5%), Washington (-7.9%), and Florida (-6.8%).
Milk Price and Utilization
The Southeast Uniform milk price for September was $19.70, up $0.10 from August and $0.08 higher than September 2020. The Appalachian Uniform milk price was $19.37 up $0.13 from August and $0.31 lower than September 2020. September’s Class III price was $16.53, up $0.58 from August, and $0.10 higher than September a year ago. The Class IV price was up $0.44 from August to $16.36, and $3.61 higher than September 2020. The Class I Mover price for November is $17.98, up $0.80 from October. The milk/feed ratio for September was 1.69, up 0.19 from August.
Southeast Class I utilization was 71.14%, down 0.66% from August, and 3.86% higher than September a year ago. The Uniform butterfat price was $1.9201, up 2.85 cents from last month and 27.65 cents higher than September 2020. The September Class I price was $20.39. October Class I price is $20.88. Appalachian Class I utilization was 73.77%, up 1.66% from August, and 1.52% higher than September a year ago. The Uniform butterfat price was $1.9200, up 2.92 cents from last month and 27.29 cents higher than September 2020. The September Class I price was $19.99.
Cheese Production and Stocks
Total cheese production in August was 1.14 billion pounds, up 4.4% from a year ago while butter production was down 1.7% to 148 million pounds. Nonfat dry milk (NDM) production was down 17.0% compared to a year ago with total production at 122 million pounds while skim milk powder (SMP) production was down 12.7% to 60.5 million pounds compared to a year ago. Total cheese stocks at the end of September were up 8% from September a year ago and up 2% from the previous month while butter stocks were down 9% from last month and down 4% from a year ago.
Springer Prices and Cow Slaughter
At Smiths Grove, Kentucky on October 26, supreme springers were not tested while US approved springers averaged $1,100. Dairy cow slaughter in September was 264,600 head, up 3,200 head from August and 14,200 more than September 2020.
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. |
|---|---|---|---|---|---|---|
| Apr 21 | 18.46 | 19.31 | 17.67 | 15.42 | 63.14 | 1.8623 |
| May 21 | 19.52 | 20.90 | 18.96 | 16.16 | 63.80 | 1.9972 |
| June 21 | 20.39 | 22.09 | 17.21 | 16.35 | 64.50 | 1.9820 |
| July 21 | 19.80 | 21.22 | 16.49 | 16.00 | 67.87 | 1.9437 |
| Aug 21 | 19.60 | 20.70 | 15.95 | 15.92 | 71.80 | 1.8916 |
| Sep 21 | 19.70 | 20.39 | 16.53 | 16.36 | 71.14 | 1.9201 |
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. |
|---|---|---|---|---|---|---|
| Apr 21 | 18.43 | 18.91 | 17.67 | 15.42 | 69.21 | 1.8570 |
| May 21 | 19.35 | 20.50 | 18.96 | 16.16 | 67.09 | 1.9977 |
| Jun 21 | 20.19 | 21.69 | 17.21 | 16.35 | 65.70 | 1.9823 |
| July 21 | 19.61 | 20.82 | 16.49 | 16.00 | 69.24 | 1.9434 |
| Aug 21 | 19.24 | 20.30 | 15.95 | 15.92 | 72.11 | 1.8908 |
| Sep 21 | 19.37 | 19.99 | 16.53 | 16.36 | 73.77 | 1.9200 |
What is the Market Offering for Milk to be Sold in January?
Ex: It is Oct. 29 and Jan. Class III milk futures are trading at $18.46. Local Jan. basis estimate is +$3.00.
| If January futures | = | 20.00 | 18.50 | 17.00 | |||
| and actual blend price | = | 23.00 | 21.50 | 20.00 | |||
| Sample Strategies | Realized Prices for January Milk | ||||||
| 1) Sold Futures | @ | 18.46 | 21.46 | 21.46 | 21.46 | ||
| 2) Bought Put | 17.50 | @ | 0.41 | 22.59 | 21.09 | 20.09 | |
| 3) Bought Put | 18.00 | @ | 0.60 | 22.40 | 20.90 | 20.40 | |
| 4) Bought Put | 18.50 | @ | 0.84 | 22.16 | 20.66 | 20.66 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 18.46 | |||||
| Bought Call | 19.50 | @ | 0.44 | 21.52 | 21.02 | 21.02 | |
What is the Market Offering for Milk to be Sold in February?
Ex: It is Oct. 29 and Feb. Class III milk futures are trading at $16.90. Local Feb. basis estimate is +$3.00.
| If February futures | = | 18.50 | 17.00 | 15.50 | |||
| and actual blend price | = | 21.50 | 20.00 | 18.50 | |||
| Sample Strategies | Realized Prices for February Milk | ||||||
| 1) Sold Futures | @ | 16.90 | 19.90 | 19.90 | 19.90 | ||
| 2) Bought Put | 16.00 | @ | 0.81 | 20.69 | 19.19 | 18.19 | |
| 3) Bought Put | 16.50 | @ | 1.03 | 20.47 | 18.97 | 18.47 | |
| 4) Bought Put | 17.00 | @ | 1.26 | 20.24 | 18.74 | 18.74 | |
| 5) Synthetic Put | |||||||
| Sold Futures | @ | 16.90 | |||||
| Bought Call | 18.00 | @ | 0.86 | 19.54 | 19.04 | 19.04 | |
