Milk Market Comments

Milk production in the 23 major states during December totaled 15.7 billion pounds, up 1.7% from December 2011. Production per cow was 1,848 pounds in December, up 30 pounds from December a year ago. There were 8.49 million cows, 5,000 more than December 2011, and 16,000 more than November. Revised November production was revised to up 1.3% from November 2011, an increase 0.2% from the previous estimate. For milk production in the top 5 producing states, California was down 2.3% from December a year ago; Wisconsin up 5.5%; Idaho up 1.0%; New York up 4.2%; and Pennsylvania up 1.2%. Kansas was up 10%; Colorado up 6.3%; and Michigan up 5.5%. Missouri was down 0.9%; Texas down 0.7%; Arizona down 0.3%; and New Mexico down 0.3%. Florida, Oregon, and Virginia had production equal to December 2011. At Smith Grove, Kentucky on January 22, supreme springers sold $1,480 to $1,580, down $30 from a month ago. US #2 springers sold from $1,400 to $1,625, up $175 from a month ago, on the Georgia Dairy Auction on January 15.

The Southeast Uniform milk price for December was $22.72, down 75 cents from November and $1.80 higher than December 2011. The Southeast price averaged $20.10 in 2012, down from 2011’s average of $21.79. December’s Class III price was $18.66, down $2.17 from November, and 11 cents lower than December a year ago. The Class IV price was down 83 cents from November to $17.83, and 96 cents higher than December 2011. Class I utilization was 63.23%, down 10.85% from November, and 2.92% lower than December a year ago. The butterfat price was $1.8616, down 21 cents from last month and a fraction lower than December 2011. The December Class I price was $25.19. The January 2013 Class I price is $22.77, down $2.42 from December, and 17 cents higher than January 2012. The Class I Mover price for January is $18.97, down $2.42 from December. Milk production for all of 2012 was 1.8% higher than 2011. Production in the first quarter was up 4.1%, but then drought and higher feed costs resulted in second quarter production increasing 2.1% with production down in the second half of the year. Preliminary data indicates U. S. dairy exports were a record at high at 13.6% of production on a total solids basis. There are still many questions surrounding the extension of the 2008 Farm Bill. It appears MILC will be reinstated, but there are no definite answers at this time as to when and how sign up will be done. While feed prices have declined to some extent, the milk/feed ratio remains at historically low levels due a decline in the milk price. The Class III price average for 2012 was $17.44, down from $18.37 in 2011. The Class III futures average today for 2013 was $18.11, down 40 cents from a month ago. Class III futures are mostly lower than a month ago for 2013 with near $1.00 or more declines for February, March, and April. January is down $2.00 from the contract high in October, with February down $2.50, March $1.75, and April $1.50. Class III milk futures prices on January 23: January $18.12, down 25 cents from a month ago; February $17.21, down $1.24; March $16.92, down $1.52; April $17.50, down 98 cents; May $18.09, down 42 cents; June $18.50, down 11 cents; July $18.71, up 11 cents; August $18.77, up 2 cents; September $18.65, down 1 cent; October $18.45, up 5 cents; November $18.26, down 3 cents; and December $18.15, down 8 cents. Total cheese production in November was up1.8% from November a year ago. Butter production was down 6% from November 2011. The seasonal increase in butter production from October to November was the lowest in six years. NDM/SMP production in November was up 0.3% from a year ago, but up 17.8% from October. November dry whey production reached the lowest monthly level in more than ten years. Production of whey protein concentrate and whey protein isolate were on pace for record production in 2012. Lactose production in 2012 is expected to be the highest ever due to increased export demand. Cheese and butter stocks declined by less than typical volumes in November. The October to November drawdown was the smallest since 1998. November butter stocks were 36% higher than a year ago. November dairy cow slaughter was 269,000 head, 16,000 less than October, and 16,000 more than November 2011. Culling rates are still higher in the western states than in the rest of the U.S. January through November slaughter was 191,000 head more than the same period in 2011.

Technically speaking – February futures $17.21 down $1.24 from a month ago. Support at $17.90 and $17.20. Resistance at $18.70 and $19.00. The RSI is 28.04. March futures $16.92 down $1.52 from a month ago. Support at $17.60 and $17.00. Resistance at $17.80 and $18.60. The RSI is 19.15. May futures $18.09 down 42 cents from a month ago. Support at $18.20 and $17.95. Resistance at $18.50 and $18.80. The RSI is 29.11.