U.S. milk output is stalling as cow numbers and output per cow continues to fall. Production fell below that of a year ago for the first time since May 2020, the result of restrictions imposed by several cooperatives. The USDA’s latest preliminary data shows October output at 18.52 billion pounds, down 0.5% from Oct. 2020. The 24-State total, at 17.7 billion, was down 0.3% from a year ago. Revisions lowered the September 50-State estimate by 37 million pounds from last month’s report to 18.0 billion, virtually unchanged from 2020.
Cow numbers totaled 9.40 million head, down 14,000 from September, fifth consecutive month they were down from the previous month, and the September head count was revised 8,000 head lower. The October herd was 14,000 head below a year ago and down a whopping 103,000 since June.
StoneX Dairy Group says “The only time we’ve seen that in the past 23 years was late 2009 when we lost 178,000 head over 5 months with the help of CWT and truly devastating margins.”
Output per cow averaged 1,970 pounds, down 6 pounds or 0.3% from a year ago
California was down 43 million pounds or 1.3% from a year ago, on a 25 pound drop per cow. Cow numbers were unchanged. Wisconsin was up 69 million pounds or 2.7%, on a 20 pound gain per cow and 21,000 more cows. Idaho was up 0.9%, on 6,000 more cows. Output per cow was unchanged.
Michigan was off 0.4% on a 30 pound drop per cow, though cow numbers were up 4,000. Minnesota was up 2.8% on 9,000 more cows and a 15 pound gain per cow. New Mexico again had the biggest drop, down 12.2%, after falling 12.5% in September. Depleted finances shuttered several operations in the state. Cow numbers were down 34,000 head and output per cow was down 45 pounds.
New York was up 1.0%, thanks to 2,000 more cows and a 15 pound gain per cow. Oregon was unchanged across the board. Pennsylvania was down 3.1%, on 7,000 fewer cows and 30 pounds less per cow. South Dakota was up 15.3%, on 21,000 more cows and a 5 pound gain per cow. Vermont was off 0.5% on a 5 pound drop per cow. Cow numbers were unchanged. Texas was up 3.9%, with 22,000 more cows milked and a 5 pound gain per cow.
The Daily Dairy Report says Texas increase in cows was likely due producer purchases of cows and production bases from shuttered dairies in New Mexico.
The DDR adds that a similar phenomenon has been happening in Idaho as an exodus of dairies occurs in Washington State which scored the second biggest decline in October, down 6.9%, following a 6.8% drop in September. Cow numbers were down 15,000 and output per cow was down 30 pounds.
Farm profit margins have been taking a beating, especially between August and October, according to StoneX, “as longer-term feed contracts expired and many producers went from $180 per ton corn contracts to $275-$300 per ton. They culled animals because of it and we’re losing animals at a near record clip,” says StoneX, though some of it may be attributed to poorer feed or poorer weather.
The Agriculture Department’s latest Livestock, Dairy, and Poultry Outlook projects the U.S. dairy herd will continue decreasing in the first two quarters of 2022. Consequently, the annual 2022 forecast was lowered to 9.395 million head, 55,000 head below the last month’s forecast, and 60,000 less than 2021.
The 2022 forecast for milk per cow is 24,280 pounds, 25 pounds lower than last month’s forecast. The 2022 milk production estimate was lowered to 228.1 billion pounds, 1.6 billion below last month’s forecast but 1.7 billion pounds above 2021.
In the week ending Nov. 6, 59,900 dairy cows were sent to slaughter, up 300 from the previous week and 2,100 head or 3.6% above that week a year ago.
There is still plenty of milk available in this country and commercial dairy product disappearance slipped a little in September. USDA’s latest data shows total cheese disappearance at 1.15 billion pounds, down 0.3% from Sept. 2020, though year to date is up 3.9%. Exports were up 20.5%. Butter totaled 186.6 million pounds, down 0.4%, with YTD up 5.2%, and exports up 111.5%.
Dry whey disappearance, at 79.7 million pounds, was down 6.3%, with YTD off 2.2%. Nonfat dry milk-skim milk powder disappearance totaled 226.9 million pounds, down 8.0% from a year ago, with YTD up 0.4%. Exports were up 16.2% and on track for a record year, according to HighGround Dairy.
The corn and soybean harvest is all but completed. The latest Crop Progress report shows 91% of the corn was harvested, as of the week ending Nov. 7, down from 94% a year ago, but 5% ahead of the five year average. Soybeans were at 92%, down 3% from a year ago, and 1% behind of the five year average.
This week’s Global Dairy Trade auction saw its weighted average jump 1.9%, following the 4.3% jump on Nov. 2. Traders brought 67.0 million pounds of product to market, up from 66.0 million last time, and the most since Dec.15.
Butter led the gains, up 3.5%, following the 4.7% advance on Nov. 2. Anhydrous milkfat was up 1.3%, after gaining 4.2% last time, and GDT Cheddar was up 2.2%, after leading the gains last time with a 14.1% advance. Whole milk powder was up 1.9%, following a 2.7% gain, and skim milk powder was up 1.4%, after a 6.6% gain last time.
StoneX says the GDT 80% butterfat butter price equates to $2.4491 per pound U.S., up 8.2 cents, after gaining 10.6 cents last time, and compares to CME butter which closed Friday at $2.0475. GDT Cheddar, at $2.3416, was up 4.8 cents, after jumping 28.7 cents last time, and compares to Friday’s CME block Cheddar at $1.8575. GDT skim milk powder averaged $1.6676 per pound, up from $1.6450. Whole milk powder averaged $1.8086 per pound, up from $1.7785. CME Grade A nonfat dry milk closed Friday at $1.5550 per pound.
North Asia’s market share of purchases continued to be below year-ago levels but rose above the last event, according to StoneX. “GDT volume was nearly ?at from last event. With increased purchases in North Asia from the last event most other regions experienced a decline in purchases but still maintained a market share greater than year-ago levels.”
We do have stiff competition on the global market. StoneX says “Despite weak milk production, September EU exports came out stronger than expected, up 4.1% YoY, with August revised up to 6.6%.”
“Cheese exports remain strong with the U.S. being the top destination. Fat-?lled exports have really taken off in the last two months. We would guess we’re seeing some substitution away from whole milk powder given the fat prices. Overall the data was bullish. Global demand was a little better than expected for September, and since we know production isn’t doing great in Europe, the strong exports are likely coming from inventory. Given the stronger exports, we had to pull EU 2021 milk equivalent ending stocks from being down 3% to 5% lower.”
Exports were a key topic at this week’s joint annual meeting of the National Milk Producers Federation (NMPF), United Dairy Industry Association, and Dairy Management Incorporated (DMI) in Las Vegas.
Hoards Dairyman’s Corey Geiger said NMPF’s Jim Mulhern said the U.S. is on track for a record year in exports, meaning we will export about 17% of our milk solids or all of the country’s milk output for five days per month from 9 million cows. He said 75% of the new milk we produced is in effect being exported.
The USDEC’s Krysta Harden said no one is going to give us market share, we have to go out and get it, according to Geiger. Mexico is our biggest market, he said, but DMI’s Barbara O’Brien pointed out that the 16 countries of Southeast Asia, not including China, have a growing middle class that want dairy products.
NMPF’s Mulhern added that New Zealand is the world’s largest dairy exporter, followed by the EU, and the U.S., but he believes we can become Number 2, and ultimately Number 1, “but our work is cut out for us.”
Meanwhile, NMPF First Vice Chairman Simon Vander Woude called on the U.S. government to prioritize expanded market access opportunities for U.S. dairy exports at a House Subcommittee for Livestock and Foreign Agriculture hearing this week. He stressed the urgency of expanding access to dairy markets like the UK, Asia (Japan, Southeast Asia, China) and the Middle East to catch up with competitors whose countries have aggressively sought trade agreements the past decade. He highlighted other policy priorities impacting U.S. operations, including the current supply chain crisis, securing long-term relief from Chinese retaliatory tariffs, and implementation and enforcement of existing trade agreements, including the USMCA.
After jumping 16.50 cents the previous week, the Cheddar blocks fell to $1.66 per pound Tuesday but closed Friday at $1.8575, up 10.75 cents on the week, highest since Sept. 30, and 21.25 cents above a year ago when they tumbled 27.25 cents.
The barrels fell to $1.4450 Wednesday but finished Friday at $1.52, 2.25 cents higher, 9.75 cents above a year ago but 33.75 cents below the blocks. Sales included 5 cars of block and 28 of barrel in the week before Thanksgiving.
Spot milk offers remained somewhat quiet this week, according to Dairy Market News, with Central prices around $1 over class at midweek. Cheese production remains similar to recent weeks, with plants running full schedules, if they can, though some are cutting back. Cheese demand is strong in most cases for Midwestern producers. Some reported lighter customer interest this week but many have been in catchup mode for weeks with labor shortages and orders.
Western retail cheese demand is strong as buyers prepare for the holidays. Food service demand is steady and prices are favorable for international buys but loads intended for export face delays due to port congestion. That may be causing buyers to hesitate, not knowing when or if they would get product from the U.S. Delays are also occurring due to a shortage of truck drivers. Cheese stocks are tightening and output is mixed. Milk is available to run at or near capacity, though some say staffing shortages are limiting output. Uncle Sam announced a cheese solicitation for 19.2 million pounds from March to July.
Butter climbed to $2.0475 per pound Friday, up 9.75 cents on the week, highest since Nov. 19, 2019, and 70.25 cents above a year ago, on 12 sales.
Cream supplies are tight, says DMN, so microfixing is occurring, taking frozen blocks, thawing them, and cutting into consumer ready sticks, but the process requires additional hands which are in short supply. Butter demand is very strong and cream tightness is expected to continue potentially into 2022, says DMN.
Western cream availability is mixed. Some contacts report availability while others say inventories are tight. Demand for cream is strong in retail and food service and international demand remains strong. A shortage of truck drivers is causing delays to cream and butter loads.
Spot nonfat dry milk closed Friday at $1.5550 per pound, up a half-cent on the week and 47 cents above a year ago, with 12 sales reported on the week.
The whey continued to climb, closing at 70 cents per pound, up 3 cents on the week, highest since April 20, and 26.25 cents above a year ago, on 2 sales.
The Agriculture Department announced the December Federal order Class I base milk price at $19.17 per hundredweight, up $1.19 from November, 70 cents below December 2020, and the highest Class I since December 2020. It equates to about $1.65 per gallon, down from $1.71 a year ago. The 2021 Class I average is $16.83, down from $16.91 in 2020, and compares to $16.99 in 2019.
U.S. fluid sales remain below a year ago. September sales of packaged fluid products totaled 3.7 billion pounds, down 1.3% from Sept. 2020. Conventional product sales, at 3.4 billion pounds, were down 1.1% from a year ago. Organic products, at 227 million pounds, were down 4.1%, and represented 6.2% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, down 3.4% from a year ago, with year to date consumption down 6.6%. Whole milk represented 33.2% of total milk sales for the nine month period.
Skim milk sales, at 203 million pounds, were down 9.8% from a year ago, and down 13.2% year to date.
Total packaged fluid milk sales for the nine months amounted to 32.9 billion pounds, down 4.5% from 2020. Conventional product sales totaled 30.8 billion pounds, down 4.6%. Organic products, at 2.1 billion, were down 2.3%, and represented 6.4% of total milk sales for the period.
The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.
U.S. per capita consumption of fluid cow’s milk has been decreasing for over 70 years, according to the USDA’s Economic Research Service (ERS). During the previous decade, it fell at a faster rate than it did during each of the previous six decades. ERS data show that the average rate of decrease was 1.0% per year over the 2000s. During the 2010s, it was 2.6% per year.
About 90% of the U.S. population does not consume enough dairy products to meet Federal dietary recommendations, and declining per capita consumption of fluid cow’s milk prevents these individuals from consuming a diet more line in with those recommendations,” says the ERS.
Lastly, thoughts and prayers to many here in my own backyard in northwest Washington and the lower mainland of British Columbia, Canada which received a month’s worth of rain in under 72 hours causing historic flooding for thousands to flee their homes, farms, businesses, and at least one life was lost.
