The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department last week reported annual milk production for 2014 in the U.S. hit 206 billion pounds, up 2.4 percent from 2013. Revisions to 2013 output increased the annual total by 13 million pounds and 2014 output was revised up 52 million from last month's projection.
Output per cow in 2014 averaged 22,258 pounds, up 442 pounds from 2013. USDA says the average annual rate of milk production per cow has increased 13.9 percent from 2005.
The average number of milk cows on U.S. dairy farms totaled 9.26 million head, up .4 percent from 2013. The average number was revised up 2,000 head for 2014, according to USDA.
January Numbers
U.S. milk production continued to top year ago levels for the 13th consecutive month, according to preliminary data in the December Milk Production report. The Agriculture Department estimates January output in the top 23 producing states at 16.5 billion pounds, up 2.1 percent from January 2014. The 50-state total, at 17.6 billion pounds, was also up 2.1 percent from a year ago. Revisions raised the original December 23-state estimate by 14 million pounds, now reported at 16.3 billion pounds, up 3.4 percent from a year ago.
January cow numbers in the 23 states, at 8.62 million head, were up 8,000 head from December and 103,000 more than a year ago. The 50-state count, at 9.3 million head, is up 51,000 from December and 96,000 more than a year ago.
January output per cow in the 23 states averaged 1,918 pounds, up 17 pounds from January 2013, and the highest production per cow for the month of January since the 23-state series began in 2003.
Continued increasing cow numbers and higher output per cow fueled the gains in January, though California was down 2.6 percent on a drop of 2,000 cows from a year ago and output per cow was down 50 pounds. Wisconsin was up 2.1 percent, thanks to a 55-pound gain per cow and 5,000 more cows. Idaho was up 1.4 percent on 14,000 more cows, but output per cow was down 20 pounds. New York posted a 3.7 percent increase on 65 pounds more per cow and 1,000 more cows. Pennsylvania was up 3 percent on a 55-pound per cow gain, but cow numbers were down 1,000. Minnesota registered a 3 percent increase on a 50-pound gain per cow, but cow numbers were unchanged.
The biggest gain was in Michigan, up 9.6 percent, thanks to 22,000 more cows and 75 pounds more per cow. South Dakota was next, up 8.7 percent, followed by Utah up 6.9 percent, and Colorado and Indiana both up 6.2 percent. Two states showed declines, California and New Mexico where a 40-pound drop per cow put less milk in the tank even though cow numbers were unchanged.
Dairy Product Reports
Meanwhile, Jan. 31 butter stocks totaled 148.1 million pounds, according to preliminary data from the Agriculture Department's latest Cold Storage report, up a whopping 43.4 million pounds, or 41 percent, from December and 4.2 million pounds, or 3 percent, above January 2014. It's been some time since butter stocks exceeded month-ago and year-ago levels.
American type cheese, at 632.5 million pounds, was up 4.7 million pounds, or 1 percent, from December and 1.7 million or virtually unchanged from a year ago. The total cheese inventory stood at 1.04 billion pounds, up 24.6 million pounds, or 2 percent, from December and 27.5 million, or 3 percent, above a year ago. Revisions added 6.1 million pounds of butter to the original December estimate and 4 million pounds of American cheese.
The block Cheddar cheese price closed the last week of February at $1.5450 per pound, unchanged on the week but 67¾ cents below a year ago and 1¼ cents higher on the month. The Cheddar barrels finished at $1.4925, up three-quarter cents on the week, 70¾ cents below a year ago, and down 1¼ cents on the month. Seven cars of block traded hands on the week and 10 of barrel. The NDPSR-surveyed U.S. average block price inched up .9 cent, to $1.5325 per pound, while the barrels averaged $1.5282, up .3 cent.
Midwest cheese markets are in a "curious calm position," says USDA's Dairy Market News. Even with more milk going into cheese than would be typical in past years, discounted milk being available, and expectations of more milk arriving soon during the spring flush, cheese markets have been quite stable. The potential impact of uncertainty involving near future cheese production is minimized for the present as markets seem to reflect a comfortable balance between demand and supply of cheese.
Manufacturers have strong cheese production schedules, but cheese buyers are stepping up and adding to inventory levels. Buying interest is spread between retail buyers, brokers and resellers, as well as cut and wrap operations. Cheese is going into inventories for retail sale as well as aging programs. Market prices are remaining quite stable as this buying process continues.
Whatever impact the likely spring milk flush will have on cheese prices is not something that was curtailing cheese buying last week. Plants with varied dairy manufacturing options tend to continue favor directing milk into cheese vats over other product production. In the Midwest, if you want cheese you can find it and if you make cheese you can sell it, DMN concludes.
Cash butter started heading south this week but rallied last Thursday and Friday and closed last Friday at $1.6950, still down 2¾ cents on the week, 18½ cents below a year ago, and 5½ cents lower on the month. Twenty-three cars were sold on the week, up from 12 the previous week. NDPSR butter averaged $1.7119, up a penny and a half.
Butter sales are increasing, according to DMN. Inventory levels are average and increasing. Demand is moving up as the spring holidays near. Cream levels are mixed as some reports indicate a tight market, while others are showing surplus.
Cash Grade A nonfat dry milk continued the slide that began Feb. 19 but rallied some last Wednesday, slipped last Thursday, and then rebounded last Friday, closing at $1.1550 per pound, up 7 cents on the day, 4½ cents on the week, 8½ cents higher on the month, and the highest it has been since Nov. 19, 2014. Thirty-five cars were sold this week, 19 on Friday, up from 24 the previous week and 44 the week before that. NDPSR powder averaged $1.0189 per pound, down .4 cent, and dry whey averaged 51.06 cents per pound, down 1.6 cents, and the lowest level in three years.
Dry dairy product markets are mixed. Nonfat dry milk markets are firm, despite building inventories, and prices moved up. Production is trending higher in most regions. The dry whey market is weak as production is active, stocks are building and the usual outlet of exporting to the Far East is currently at a standstill. Although work has resumed at Western ports, the backlog of ships to be unloaded and reloaded translates to further delays in serving offshore customers.
Steady Milk Production
Farm milk production across the southern tier of states is increasing from week to week as warmer weather patterns settle into those areas, according to USDA's weekly update. Northwest states are also showing upward trends. Producers in the North Central and Northeast areas report steady milk production, unfazed by recent subzero temperatures. Bottler demand is very strong in the Northeast and Mid-Atlantic areas, spurred by consumer demand ahead of recent winter storms. Most other areas also report a decent uptick in fluid milk demand for the week, especially where stores are offering gallon or half-gallon weekly feature items. Fieldwork has begun in many Southern states. Weather is determining progress toward planting. Northern states are a few weeks away from turning any soil.