U.S. milk output is simmering, not cooling yet and certainly not boiling over, but was nudged higher by stronger output per cow, especially in the Midwest. The U.S. Department of Agriculture’s latest preliminary data has May production at 19.875 billion pounds, up 120 million pounds, or 0.6%, above May 2022. The 24-state total, at 19 billion pounds, was up 146 million pounds, or 0.8%, above a year ago.
The April 50-state and top 24-state totals were revised up 22 and 23 million pounds, respectively, up 0.4%, instead of the 0.3% originally reported for the 50 states, and up 0.6% in the top 24 states, instead of the originally reported 0.5%.
May cow numbers totaled 9.43 million head, unchanged from the April count, which was not revised. The herd was up 23,000 head from January and up 13,000 from a year ago. The 24-state count was also unchanged from April and was 24,000 head above a year ago.
Output per cow averaged 2,108 pounds, up 10 pounds or 0.5% from May 2022 in the 50 states and up 11 pounds to 2,126 pounds, or 0.5%, in the top 24 states.
California was still below a year ago, at 3.64 billion pounds, down 24 million, or 0.7%. Output per cow was down 10 pounds, and cow numbers were down 3,000. Wisconsin put 2.79 billion pounds in the tank, up 35 million pounds, or 1.3%, from a year ago, thanks to a 35-pound gain per cow offsetting the loss of 4,000 cows.
Idaho edged out Texas for third place, with 1.48 billion pounds, up 44 million, or 3.1%, from a year ago, thanks to 17,000 more cows and a 10-pound gain per cow. Texas output, at 1.44 billion pounds, was up 0.8%, thanks to a 15-pound gain per cow. Cow numbers were only up 1,000, reflecting results of that devastating fire.
Michigan was up 2.1%, thanks to 8,000 more cows and a 5-pound gain per cow. Minnesota was up 2.5% on a 25-pound gain per cow and 1,000 more cows. New Mexico was down 3.8%, on 10,000 fewer cows and 10 pounds less per cow. New York was up 2.1% on 7,000 more cows and 20 pounds more per cow.
Oregon was down 2.1% on a loss of 3,000 cows, though output per cow was up 5 pounds. Pennsylvania was off 0.6% on 1,000 fewer cows and 5 pounds less per cow. South Dakota was up 6.2%, thanks to 12,000 more cows; however, output per cow was down 5 pounds. Vermont was up 0.5% on a 10-pound gain per cow. Cow numbers were unchanged.
Washington was up 0.6%, thanks to a 20-pound gain per cow offsetting the loss of 1,000 cows.
HighGround Dairy said, “The slowing of the milking herd foreshadows what is likely to come in the second half of the year: declining cow numbers on a monthly basis and potentially versus prior year, causing output to come close to parity.”
Robo Bank senior dairy analyst Lucas Fuess said in the June 26 Dairy Radio Now broadcast that farm margins are a real concern, considering the June Class III futures is just below $15 per hundredweight while cost of production nears $20. He expects that will pull milk output lower, possibly below year-ago levels.
“Hopefully, some pullbacks in U.S. milk production by the end of the year will cause a little price recovery,” Fuess said. However, with drought threatening the corn crop, relief from high feed prices may be in question.
USDA released official solicitation awards for Phase 2 of the American Agriculture to Feed Kids & Families program. Deliveries are to be made Oct. 1 through June 30, 2024, according to HGD. “The initial solicitation was for 47.696 million pounds of cheese, of which 80% has been awarded to six dairy companies that presented bids,” HGD said. HGD called it “sizable but slightly less than the solicitation and over a nine-month period, which will limit how this impacts U.S. cheese prices.”
Stressed finances are keeping dairy culling rates high. The latest Livestock Slaughter report shows an estimated 249,100 head sent to slaughter under federal inspection in May, up 5,500 head from April and 23,900, or 10.6%, above May 2022. Culling in the five-month period totaled 1.363 million head, up 75,600, or 5.9%, from the same period a year ago.
The week ending June 10 saw 57,300 dairy cows go to slaughter, up 5,500 head from the previous week and 6,900 head, or 13.7%, more than a year ago. Year-to-date, 1.447 million have been culled, up 72,000 head, or 5.2%, from a year ago. StoneX said, “Total cattle slaughter continues to be weak so dairy cows are holding a larger share of the beef market than it did a week ago.”
Checking the fields, the latest Crop Progress report shows 96% of U.S. corn was emerged, as of the week ending June 18, up from 93% the previous week, 2% ahead of a year ago as well as the five-year average. 55% was rated good to excellent, down from 61% the previous week, and compares to 72% a year ago.
Soybeans were 92% emerged, up from 86% the previous week, 11% ahead of a year ago and the five-year average. 54% of the crop was rated good to excellent, down from 59% the previous week, and 14% behind a year ago. Eyes are on the weather as 64% of the corn crop is now reported to be under drought.
Tuesday’s Global Dairy Trade weighted average was unchanged, after slipping 0.9% June 6 and May 16. The event saw 44.9 million pounds of product sell, down from 50.97 million June 6. The average metric ton price crept to $3,479, up $80 from June 6.
Butter saw the biggest change, up 5.5%, after inching 0.5% higher June 6. Anhydrous milkfat was up 0.5%, following a 1.8% advance. Cheddar was down 3.3%, after jumping 7.4% June 6. Skim milk powder was up 2.3%, after holding steady. Whole milk powder was unchanged, following a 3% decline.
StoneX said the GDT 80% butterfat butter price equates to $2.3802 per pound, up 12.9 cents, and compares to CME butter which closed Friday at $2.42. GDT cheddar, at $2.0563, was down 6.1 cents, and compares to Friday’s CME block cheddar at $1.4050. GDT skim milk powder averaged $1.2098 per pound, down from $1.2498, and whole milk powder averaged $1.4387 per pound, down from $1.4390. CME Grade A nonfat dry milk closed Friday at $1.1325 per pound.
Analyst Dustin Winston said North Asian purchases, which include China, fell with volume down signi?cantly from the last event and about half of the volume purchased a year ago. SE Asia volume was slightly lower from the last event, but up from last year by 43%.
Meanwhile China’s latest dairy import numbers had key commodity imports “bouncing all over the map,” according to HGD. The largest jump over prior year by volume was in whey, at 125.7 million pounds, up 27.9% from May 2022. The U.S. remained the primary supplier, according to HGD.
Whole milk powder and skim milk powder imports, at 115.8 million and 70.7 million pounds, respectively, were up 9% and 24.6%, respectively. HGD said, “While not quite as strong as the impressive volumes shown in 2021, SMP imports did remain positive against prior year, with New Zealand accounting for 36% market share versus just 19% last year. U.S. share was down 33%.”
Butter imports were down 3.1% and cheese was down 4.6%. HGD reported that “lactose imports remain elevated due to infant formula usage domestically” and “was anticipated as it was recently approved for use and the price is right.” Lactose imported from the U.S. was up, with a 76% market share.
Cooperatives Working Together members accepted 33 offers of export assistance this week to capture sales of 3.8 million pounds of American-type cheese, 22,000 pounds of anhydrous milkfat and 6.6 million pounds of whole milk powder. The product is going to customers in Asia, Middle East-North Africa, Oceania and South America and raised 2023 exports to 23.6 million pounds of cheese, 594,000 pounds of butter, 24,000 pounds of anhydrous milkfat, 31.2 million pounds of whole milk powder and 4.1 million pounds of cream cheese.
CME dairy prices remained under pressure in the Juneteenth holiday-shortened week as traders awaited Friday afternoon’s May Cold Storage report, which I will detail next week.
The cheddar blocks saw some recovery, marching to $1.41 per pound Thursday, but closed Friday at $1.4050, up 3 cents on the week, first gain in four weeks, but 68.50 cents below a year ago.
The barrels finished at $1.50 per pound, 2.50 cents lower on the week, 64.75 cents below a year ago and 9.50 cents above the blocks. CME sales totaled 14 loads of block on the week and only three of barrel.
Midwest cheesemakers reported a boost in demand this week to Dairy Market News. Italian-style producers said slower orders in the first half of the year have begun to improve. Cheese is steadily moving though customers are less hesitant to hold some inventory at prices at or below $1.50 per pound. Milk remains available with some suppliers selling into cheese plants to avoid milk disposal, essentially looking for processors to cover freight costs. “There is a clear shift in tone regarding the recently voluminous offerings,” DMN said. Some cheesemakers say that recent weeks were much busier with calls from milk handlers, and some said this was the first week of the year that there were no extra spot milk loads offered.
Western cheese demand is steady from food service although some noted downticks. Retail demand is relatively steady. Sources indicate steady demand from Mexican purchasers and moderate to flatter demand from Asian buyers.
Cash butter slid to $2.3475 per pound Wednesday, lowest since April 14, but closed Friday at $2.42, up 5.50 cents on the week but 49.50 cents below a year ago. There were 10 sales on the week.
Midwest butter makers report demand is steadily, seasonally and slowly ticking higher. Cream multiples are holding generally steady, and butter plants say offers have quieted noticeably but they expect more selling of cream in the near-term.
Western cream multiples moved higher this week, though some stakeholders expect slight near-term tightness in cream, while plenty is currently available. Butter manufacturing is strong to steady. Food service and retail demand are steady and export activity is “moderate,” DMN said.
Grade A nonfat dry milk closed at $1.1325 per pound Friday, lowest since April 18, and 65.75 cents below a year ago, with five sales reported on the week.
Dry whey fell to 26.50 cents per pound Thursday, lowest since June 2, down a penny on the week and 21 cents below a year ago, with 31 sales on the board.
Dairy margins slid further the first half of June on a combination of lower milk prices and higher projected feed costs, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. The MW said, “The USDA’s ERS reported April dairy exports totaled 482.2 million pounds, a decline of 68 million pounds or 12.4% from last year.”
“It was the third consecutive month of year-over-year declines following a full year of growth in which dairy exports achieved all-time highs,” the MW said. “Slowing demand, particularly from Asia, has weighed on the export market. Cheese exports to South Korea of 7.9 million pounds were down 53.9% from last year and the lowest April volume since 2016. Dairy exports to Mexico however of 124.6 million pounds were a record for April and up 15% from last year.”
“Continued appreciation in the peso relative to the dollar to a seven-year high has stimulated demand,” the MW said. “Conversely, a slowdown in China’s economy has weighed on demand there. The slowdown in powder demand is shifting production to butter and cheese.”
The July federal order Class I base milk price was announced by the USDA at $17.32 per hundredweight, down 69 cents from June, $8.55 below July 2022, and the lowest Class I since October 2021. It equates to $1.55 per gallon, down from $2.22 a year ago. The Class I average stands at $19.42, down from $23.69 a year ago, and compares to $16.31 in 2021.
Speaking of fluid milk, April sales took a beating. The USDA’s latest data shows packaged fluid sales totaled 3.4 billion pounds, down 6.7% from April 2022, biggest drop since March 2021, and followed a 0.7% slippage in March.
Conventional product sales totaled 3.2 billion pounds, down 6.5% from a year ago. Organic products, at 219 million pounds, were down 8.8%, and represented 6.4% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, down 2.7% from a year ago, but up 0.2% year-to-date, and represented 34.3% of total milk sales for the four months. Skim milk sales, at 173 million pounds, were down 11.3% from a year ago and down 7.9% year-to-date.
Total packaged fluid sales for the four months amounted to 14.3 billion pounds, down 2.7% from 2022. Conventional product sales totaled 13.4 billion pounds, down 2.8%. Organic products, at 951 million, were down 1.4%, and represented 6.6% of total milk sales for the period.
The figures represent consumption in Federal Milk Marketing Order areas, which account for about 92% of total fluid sales in the U.S. Competition from a variety of newly introduced beverages, including the plant-based varieties, lifestyle changes in general, plus the spring flush and school closings all result in more milk going to the vat, churn or dryer, adding to the income woes of dairy farmers.
In politics, the nation’s largest dairy cooperative, Dairy Farmers of America, announced it will end its membership with the International Dairy Foods Association. At issue is IDFA’s decision to proceed with its single-issued petition to modify the FMMO system.
-page-001.jpg)
