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Department of Agricultural and Resource Economics

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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 – JOHN CAMPBELL – U. T. EXTENSION
(1/23/12)

Milk production in the 23 major states during December totaled 15.4 billion pounds, up 2.7% from December 2010.  Production per cow was 1,818 pounds in December, up 27 pounds from December a year ago.  There were 8.49 million cows, 99,000 more than December 2010, and 12,000 more than November.  Revised November production was up 2.2% from November 2010, an increase of less than 0.1% from the previous estimate.  For milk production in the top 5 producing states, California was up 3.8% from December a year ago; Wisconsin up 2.6%; Idaho up 3.4%; New York up 0.2%; and Pennsylvania down 0.2%.  Production in the western states showed lower year-to-year increases than in previous months.  Indiana was up 6.3%; Colorado up 4.9%; Washington up 4.7%; Utah up 4.6%; Michigan up 4.2%; Texas up 4.1%; and Florida up 1.6%.  Missouri was down 1.7%; Kansas down 0.5%; and Vermont down 0.5%.  U.  S. milk production for the fourth quarter of 2010 was up 2.3% from a year ago.  For the year, the 23-state production total was up 2.0% from 2010.  At Smith Grove, Kentucky on January 17, supreme springers sold $1,410 to $1,630, up $35 from a month ago.  US #1 springers sold from $1,500 to $1,875 on the Georgia Dairy Auction on January 9, up $50 from a month ago. 

The Southeast Uniform milk price for December was $20.92, down 71 cents from November and $2.59 higher than December 2010.  December’s Class III price was $18.77, down 30 cents from November, and $4.94 higher than December a year ago.  The Class IV price was down $1.00 from November to $16.87, and $1.84 higher than December 2010.  Class I utilization was 66.15%, down 4.05% from November, and 1.48% higher than December a year ago.  The butterfat price was $1.8583, down 9.5 cents from last month and 14 cents lower than December 2010.  The December Class I price was $22.27.  The January 2012 Class I price is $22.60, up 33 cents from December, and $3.60 higher than January 2011.  The Class I Mover price for January is $18.80, up 33 cents from December.   Last year brought record U. S. milk production, record export value, and record milk prices, but also record feed prices.  The USDA all-milk average for 2011 was above $20.00 for the first time.  The Southeast blend price averaged $21.79 for the year, also a record.  This average price was $3.72 higher than 2010 and $7.54 higher than 2009.  The average Southeast blend price is $16.01 for the last twelve years.  Corn prices were rising in late December from drought concerns in Argentina.  Argentina is the world’s second largest corn exporter behind the U. S.  However, corn prices fell sharply last week when the stocks estimate was higher than expected.  Class III futures for 2012 averaged $16.99 today, 7 cents lower than a month ago.  Futures prices had been stronger, but over the last eight trading sessions February through May is down an average of 99 cents.  February is down $1.07, March down $1.16 and April down $1.02 during that period.  Prices were 5 to 31 cents lower for the rest of the year.  Cheese prices have been weaker.  Class III milk futures prices on January 20:  January $17.10, down 14 cents from a month ago; February $16.41, down 95 cents; March $16.69, down 51 cents; April $16.71, down 33 cents; May $16.78, down 19 cents; June $17.15, up 13 cents; July $17.24, up 9 cents; August $17.26, up 4 cents; September $17.23, up 2 cents; October $17.14, up 7 cents; November $17.12, up 12 cents; and December 17.15, up 22 cents.  Butter production in November was up 14.2% from November 2010, while NDM/SMP production was up 17.5% and whey production down 2.5%.  Total cheese production in November was up 0.3% with cheddar production down 1.7%, mozzarella down 1.5%, and all other varieties up 3.4%.  American cheese stocks on November 30 were down 4.7% from October, the largest November draw down since 2004.  Total cheese stocks were also lower.  The butter inventory was one-half of three-month earlier levels.  Cheese and butter sales were higher in October.  NDM stocks on November 30 were up 14.4% from a year ago and the most for November since 2008.  However, the stocks-to-use ratio was near last year’s level.  For January through October total cheese sales were up 3.1% and butter sales were up 10.7% from last year.  Fluid milk sales were down 1.4% for January through October.  Fluid sales for September through November were down 1.6% from the same period in 2010.  Organic milk sales were up 15% while conventional sales were down 2.2%.  Exports reached a record high monthly dollar volume of $434 million in November.  The export value of cheese was up 53% from October with the NDM/SMP value up 11%, and WPC up 34%.  Total volume in weight was up 11.2% from October and 9.2% higher than November a year ago.  During November, 52% of U. S. powder production was exported along with 5.0% of the cheese and 5.7% of the butterfat.  November cow slaughter was 253,000 head, 10,000 more than October and 12,000 more than November a year ago.  Culling activity so far this year is up for the fifth time in six years, up 109,000 head for the first eleven months of 2011.

Technically Speaking – January 20. February futures $16.41 down 95 cents from a month ago.  Support at $16.70 and $16.30.  Resistance at $17.50 and $17.90.  The RSI is 32.42.  March futures $16.69 down 51 cents from a month ago.  Support at $16.70 and $16.50.  Resistance at $17.70 and $18.00.  The RSI is 35.60.  May futures $16.78 down 19 cents from a month ago.  Support at $16.80 and $16.60.  Resistance at $17.10 and $17.60.  The RSI is 34.74.