Increased cow numbers and increased output per cow drove December milk production well above December 2019.
Preliminary data in USDA’s latest Milk Production report shows output at 18.94 billion pounds, up a very bearish 3.1% from a year ago. December output in the top 24 states hit 18.1 billion, up 3.2%.
Revisions raised the November 50-state total by an eye-grabbing 73 million pounds, to 18.1 billion, up 3.4% from November 2019, instead of the originally reported 3.0%.
December cow numbers increased for the sixth consecutive month, totaling 9.44 million in the 50 states, up 12,000 from November’s count, which was revised up 24,000 head. The December herd was at a whopping 100,000 head above December 2019 and the largest dairy herd in over 20 years.
December output per cow averaged 2,006 pounds, up 40 pounds or 2.0% from a year ago.
Fourth Quarter milk output in the 50 states totaled 55.6 billion pounds, up 3.0% from a year ago, with cow numbers at 9.43 million head, up 59,000 from the Third Quarter and 81,000 more than a year ago.
The preliminary data would peg 2020 total milk output at 223.06 billion pounds, up 2.1% from 2019, with cow numbers at 9.38 million head, up 46,000 or 0.5%.
California’s December milk output was up a tank busting 110 million pounds or 3.2% from a year ago, thanks to a 70-pound gain per cow offsetting 5,000 fewer cows. Wisconsin was up 2.6%, on a 55-pound gain per cow offsetting 2,000 fewer cows.
Idaho was up 1.2%, on 11,000 more cows, though output per cow was down 10 pounds. Michigan was up 4.9%, on a 45-pound gain per cow and 12,000 more cows. Minnesota was up 4.7%, on a 45-pound gain per cow and 10,000 more cows, and New Mexico was up 3.7%, on a 30-pound gain per cow and 7,000 more cows milked than a year ago.
New York was up 2.2%, thanks to a 45-pound gain per cow. Cow numbers were unchanged. Oregon was down 0.5% on 2,000 fewer cows but output per cow was up 15 pounds. Pennsylvania was up 1.5%, on a 45-pound gain per cow offsetting a loss of 5,000 cows.
South Dakota continues to show the biggest increases, up 11.9%, on 14,000 more cows and 15 more pounds per cow. Texas was up 7.5%, on 33,000 more cows than a year ago and 35 more pounds per cow.
Vermont was again one of only six states showing a decline, down 3.1% on 4,000 fewer cows, though output per cow was up 5 pounds. Washington state was off 0.9% on 3,000 less cows, with milk per cow up 5 pounds.
Lots of product
Give no thought of any shortage of butter or cheese anytime soon in the U.S. The December Cold Storage report put that to rest and no doubt sent shivers throughout the industry as stocks grew markedly, a result of restaurant and food service shortfalls and slowing government buying opposite rising milk output.
Dec. 31 butter stocks swelled to 273.8 million pounds, up 22 million pounds or 8.7% from November and a scale breaking 84.1 million pounds or 44.4% above December 2019, 18th consecutive month they topped the year ago level.
American type cheese hit 801.2 million pounds, up 39.2 million pounds or 5.1% from November and 51.3 million pounds or 6.8% above a year ago.
The “other” cheese category climbed to 576.9 million pounds, up 12.2 million pounds or 2.2% from November and 28.8 million pounds or 5.3% above a year ago.
The total cheese inventory amounted to 1.398 billion pounds, up 51.1 million pounds or 3.8% from November and the biggest inventory since June 2020, and 75.9 million pounds or 5.7% above a year ago.
HighGround Dairy says butter stocks typically build in December, as production climbs and holiday buying ends, but the build exceeded the five-year average.
As to the cheese build, HGD says it is a concern, “as strong milk production is expected to result in heavy cheese output in the coming months to drive stocks even higher.” The build was nearly ten times than the five-year average, according to HGD.
Cheese & butter plunge
Dairy prices were mixed in the Martin Luther King Day holiday-shortened week, as traders awaited yesterday’s release of the December Milk Production and Cold Storage reports.
The Cheddar blocks tumbled daily last week, as disappointment over Food Box program particulars were considered. They closed Friday at $1.61 per pound, down 22 cents on the week and 38.50 cents below a year ago.
The barrels rolled to $1.39 per pound last Thursday but closed Friday at $1.3925, 18 cents lower on the week, 21.75 cents below a year ago, and 21.75 cents below the blocks; 13 cars of block exchanged hands on the week and 28 of barrel.
Cheese was unchanged Monday, with only 2 cars of barrel exchanging hands.
Tuesday’s traders took the blocks down 1.75 cents, on an uncovered offer, to $1.5925, lowest since Dec. 21. The barrels inched up 0.75 cents, on 4 trades, and hit $1.40, still 19.25 cents below the blocks.
Foodservice cheese sales improved dramatically in the first half of January with growth hitting the highest level since the start of the pandemic, according to the StoneX Jan. 21 Early Morning Update. “This is pretty amazing given the tight lock-down in California and the Northeast,” the Update added. “The big growth component has been take-out from full service restaurants and the spike in sales has come as the latest stimulus payments were sent out. It looks like we all decided to treat ourselves to a mid-winter meal from a fancier restaurant using stimulus money.”
But, StoneX asked, “Quick-service has been doing well. If the increase is from consumers switching from quick-service to sit-down, is demand really growing?”
Midwest cheesemakers told Dairy Market News that milk supplies remain readily available and spot prices had met the previous week's lows of $8.50 under Class.
Curd producers say restaurant orders moved higher, something they haven’t seen in months. Cheddar producers are hopeful the government awards will assist in putting a dent in their growing inventories. Stocks are not overtly concerning, says DMN, but producers say that could change day-to-day.
The plentiful milk supply in the West has resulted in plenty of cheese, and DMN says, “an unsettled feeling persists within the market.” The announcement of more government food box program purchases created an initial push upward on cheese prices but the momentum seemed to wane. Forecasting market direction has been difficult and neither buyers, nor sellers, want to overextend themselves, says DMN.
Cheese inventories are abundant, and contacts confirm that foodservice and institutional demand have remained weak. Retail demand is better than last year but not able to offset the reduction in cheese sales to other channels and, “Until sit-down dining returns, contacts expect the cheese market may be challenging,” concluded DMN.
Cash butter was buoyed by last Tuesday’s Global Dairy Trade auction and marched to $1.4550 per pound on Wednesday, highest since Dec. 29, but it headed south from there to a Friday finish of $1.4025, still up 11.25 cents on the week but 45.75 cents below a year ago. There were 8 carloads that found new homes last week.
The butter dropped 4.25 cents Monday, on 4 sales, and plunged 8 more cents Tuesday, on a trade, to $1.28, lowest CME price since May 5, 2020.
Midwest churning is busy, as cream remains readily available regionally and from the West. Retail butter demand remains steady, as holiday pipelines have been refilled, but foodservice demand has “seen better days,” says DMN. Contacts expect the food box programs to assist the markets but they still have concerns about inventories, which are growing along with milk-butterfat yields.
Western butter output is generally heavy and includes unsalted product for export. Domestic butter interest typically declines after the holidays and plants experience increases in inventory. Cream is highly sufficient. Bulk butter production is active and stocks continue to build.
Retail sales are fair and expected to increase as some outlets are already discussing orders for the upcoming holiday. Export trading continues to be good, says DMN.
Grade A nonfat dry milk finished last week 2.75 cents lower, closing at $1.1725 per pound, 11.50 cents below a year ago, with 33 sales reported for the week.
Monday’s powder was down a penny and it lost 2.50 cents Tuesday, with 13 cars being unloaded, dipping to $1.1375 per pound, lowest since Dec. 29.
CME dry whey inched up a half-cent last Tuesday and Thursday and closed Friday at 54 cents per pound, highest since Oct. 19, 2018, and 17.50 cents above a year ago, with only 2 cars sold on the week at the CME.
The whey, which hadn’t seen a drop since Dec. 31, was unchanged Monday but lost 4.25 cents Tuesday, slipping back to 49.75 cents per pound.
Class I up 40 cents
The February Federal order Class I base milk price was announced at $15.54 per hundredweight, up 40 cents from January, $2.01 below February 2020, and equates to about $1.34 per gallon, down from $1.51 a year ago.
