Milk Market Comments
By John Campbell
The Milk Market News is a monthly newsletter published by John Campbell, Area Farm Management Specialist, to help producers stay up-to-date on what’s happening in the milk market and how it can impact their operations.
Milk Market Comments
U. T. EXTENSION -November 18, 2009
Milk production in the 23 major states during October totaled 14.3 billion pounds, down 1.1% from October 2008. Production per cow was 1,721 pounds in October, up 21 pounds from October a year ago. There were 8.32 million cows, 196,000 less than October 2008, and 22,000 less than September. September production has been revised to down 0.5% from September 2008. For milk production in the top 5 producing states, California was down 5.3% from September a year ago; Wisconsin up 3.5%; New York down 1.5%; Idaho down 1.4%; and Pennsylvania no change. Indiana was up 4.4%, the largest state increase; Illinois up 3.3%; and Texas up 2.0%. Eight of the 23 states had production higher than a year ago, 13 states were lower, and two states had production equal to a year ago. Arizona was down 10.6%; Colorado down 8.9%; Missouri down 5.4%; and Florida down 2.7%. At Smith Grove, Kentucky on November 17 supreme springers sold $1,280 to $1,500, near last month’s prices. US #1 springers sold $1,275 to $1,400 at Thomasville, Georgia on November 8.
The Southeast Uniform milk price for October was $15.55, up $1.43 from September and $3.40 lower than October 2008. October’s Class III price was $12.82, up 71 cents from September, and $4.24 lower than October a year ago. The Class IV price was up 71 cents from September to $11.86, and $1.76 under October 2008. Class I utilization was 74.01%, up 1% from September. The butterfat price was $1.2622, up one cent from last month. The October Class I price was $16.15. The November Class I price is $16.66, up 51 cents from October and $4.47 lower than November 2008. Class III futures prices on November 18: November $14.05, up 53 cents from a month ago; December $14.34, up 28 cents; January 2010 $14.49, up 33 cents; February $14.60, up 21 cents; March $15.00, up 32; April $15.18, up 53 cents; May $15.40, up 65 cents; June $15.64, up 76 cents; July $15.83, up 68 cents; August $15.95, up 59 cents; and September $15.95, up 45 cents. From January through September, the number of U. S. dairy cows has dropped 208,000 (2.2%). California is down 68,000 cows during this period while Arizona, Texas, and New Mexico are down a combined total of 54,000. Wisconsin, Michigan, and Minnesota are up a combined total of 7,000 for the first nine months of the year. Milk production in California has been below year ago levels for five straight months. September cow slaughter was 236,500 head. Through September, cow slaughter is up 12.5% compared to the same period last year. The latest CWT Herd Retirement will remove 26,412 cows (517 million pounds of milk), a smaller number than anticipated. Four hundred sixty-five heifers will also be removed. The three herd retirements in 2009 removed a total of 201,565 cows and 4 billion pounds of milk. Cheese and butter inventories were down seasonally in September but still above year ago levels. September butter stocks were the largest for September since 1993. Commercial disappearance of butter during July through August was down 12.8% from a year ago, mainly from declines in export sales. Total cheese use was up 1.7% for July-August. NDM/SMP disappearance was up 2.0% from stronger domestic use. The global market for powder is good with U. S. prices up 40 cents per pound since early August. Total cheese production in September was up 4.4% from September a year ago. Cheddar production was up 8.0%. September butter production was down 21.9% from a year ago and the lowest monthly production since August 2006. This was also the first time since 1979 that September butter production was lower than August. Since more powder and butter are produced in the West, lower milk supplies in this area have decreased production of these products. Increased milk supplies in the Midwest have bumped cheese production. September exports of NDM/SMP were down 32.3% from a year ago, while cheese exports were down 17.7%, dry whey down 7.8%, and butterfat down 64.9%. Fluid milk sales were up 0.9% in the third quarter when compared to the same quarter of 2008.
FSA has announced the MILC payment for September at $1.242. Preliminary October feed prices released on October 30 were $3.54 per bushel for corn, $9.74 per bushel for soybeans, and $109.00 per ton for alfalfa hay, resulting in a preliminary MILC estimate for October at $0.60 (no feed adjustment expected). The base price for November has been announced at $12.86. November MILC payment will be minimum of $0.3735.
Technically speaking – December futures $14.34 up 28 cents from a month ago. Support at $14.20 and $14.00. Resistance at $14.80 and $15.00. The RSI is 45.21. January futures $14.49 up 33 cents from a month ago. Support at $14.25 and $14.05. Resistance at $14.90 and $15.25. The RSI is 45.91. March futures $15.00 up 32 cents from a month ago. Support at $14.60 and $14.40. Resistance at $15.00 and $15.50. The RSI is 53.28.
