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Bird Flu Shows Up in More States, but Fortunately Cows Can Recover

by Lee Mielke

Published: Friday, April 19, 2024

The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."

Dairy industry attention remains on the avian influenza outbreak. North Carolina has been added to the named states that have it. Restrictions on dairy cattle movement are in place in Alabama, Arizona, Arkansas, California, Delaware, Florida, Hawaii, Idaho, Kentucky, Louisiana, Maryland, Mississippi, Nebraska, North Carolina, Pennsylvania, Tennessee, Utah and West Virginia.

The American Assn. of Bovine Practitioners says this infection in cattle is not the same as the highly pathogenic avian influenza (HPAI), and referred to it as Bovine Influenza A Virus (BIAV).

Speaking in the April 15 "Dairy Radio Now" broadcast, HighGround Dairy economist Betty Berning said dairy cows get sick but can and do recover, unlike poultry flocks where the birds are euthanized or die rapidly.

Transmission method is still unclear, according to Berning. "We know it originates in wild waterfowl and that's how the cows were getting sick, but not much is known beyond that." USDA says it may be transferred by milking equipment, people milking the cows, or both. Dairies are encouraged to limit bird exposure and all traffic into and out of farm properties. There continues to be no concern about the safety of the U.S. milk supply.

The Agriculture Department lowered its milk production forecast in its sixth consecutive World Agriculture Supply and Demand Estimates report. The 2024 forecast was reduced due to slower expected growth in milk per cow. Cow numbers were unchanged from last month's report.

2024 production and marketings were projected at 226.3 and 225.3 billion pounds, respectively, down 1 million pounds on both from last month's estimate. If realized, both would be down 100,000 pounds, or .04%, from 2023.

Fat basis imports for 2024 were raised on higher expected butter and cheese imports. Skim-solids basis imports were raised for a number of dairy products. Fat basis exports were raised on strong international demand for butter and price competitiveness of U.S. cheese. Skim-solids basis exports were lowered as fewer expected shipments of lactose and whey products more than offset higher shipments of nonfat dry milk (NDM) and cheese.

Butter prices for 2024 were raised on observed prices and continued strength in demand. Cheese, NDM and whey prices were all lowered on recent prices.

The Class III milk price forecast was lowered due to lower cheese and whey price forecasts, while the Class IV price was raised due to higher butter prices more than offsetting lower NDM prices.

The 2024 Class III price was projected to average $16.20 per hundredweight, down 95 cents from last month's estimate, and compares to $17.02 in 2023 and $21.96 in 2022.

The Class IV average, at $20.40, is up 30 cents from a month ago, and compares to the 2023 average of $19.12 and $24.47 in 2022.

This month's U.S. corn outlook is for greater use for ethanol and feed and residual use and smaller ending stocks. Corn for ethanol was raised 25 million bushels to 5.4 billion. Feed and residual use was increased 25 million to 5.7 billion. Ending stocks were lowered 50 million bushels to 2.1 billion. The season-average farm price was lowered 5 cents to $4.70 per bushel.

The soybean outlook includes lower imports, residual and exports, and higher ending stocks. Soybean trade was reduced on pace to date and expectations for future shipments. Soybean ending stocks were raised 25 million bushels to 340 million. The season-average soybean price was forecast at $12.55 per bushel, down a dime. Soybean meal and oil prices were unchanged at $380 per short ton and 49 cents per pound, respectively.

The week ending March 30 saw 56,700 dairy cows go to slaughter, down 900 from the previous week, and 10,100, or 15.1%, below a year ago. Year to date, 871,500 head have been culled, down 123,700, or 14.2%, from a year ago.

February milk production was down 1.3% from a year ago, factoring the Leap Day, and the February Dairy Products report shows how that played out.

Cheese production fell to 1.133 billion pounds, down 5.6% from January but up 3% from February 2023, down .6%, when factoring the Leap Day. The January total was revised up 10 million pounds. Production for the first two months of 2024 totaled 2.3 billion pounds, up 1.2% from 2023.

StoneX says cheese production was 7 million pounds lower than they expected, most of it coming in Cheddar while Mozzarella output was closer to forecasts. "Usually this large of a drop in Cheddar production is bullish for the market."

Italian cheese production was down 6.2% from January but 4.4% above a year ago, not factoring the Leap Day. American output was down 7.5% from January and 1.2% below a year ago. Mozzarella was 3.2% from a year ago.

Cheddar output plunged to 304.9 million pounds, down 25.7 million pounds, or 7.8%, from the January level, which was revised up 4.5 million pounds, and was down 12.2 million pounds, or 3.8%, from a year ago. YTD Cheddar is down 5.3%.

Butter production dropped to 197.6 million pounds, down 19.6 million pounds, or 9%, from January's total which was revised up 3 million pounds, but was up 10.4 million pounds, or 5.6%, from a year ago. Butter was up 1.9%, accounting for the Leap Day. YTD butter is at 414.9 million pounds, up 6.8% from a year ago.

Yogurt production totaled 399.1 million pounds, down .4% from a year ago, with YTD output at 796.7 million pounds, up .6%.

Dry whey production slipped to 72.1 million pounds, down 5.6 million pounds, or 7.2%, from January, but was up 5.3 million pounds, or 7.9%, from a year ago. YTD whey stands at 149.9 million pounds, up 4.4%. Stocks grew to 72.9 million pounds, up 5.4 million, or 8%, from January and 3.9 million pounds, or 5.7%, above those a year ago.

Nonfat dry milk output jumped to 147.4 million pounds, up 9.1 million, or 6.6%, from January but was 35.1 million, or 19.3%, below a year ago. YTD powder was at 285.7 million pounds, down 20.1%. Stocks fell to 209.6 million pounds, down 2.7 million, or 1.3%, from January, and down a whopping 106.2 million pounds, or 33.6%, from 2023.

Skim milk powder production dropped to 36.2 million pounds, down 20.7 million pounds, or 36.3%, from January, and 1 million, or 2.6%, below a year ago.

StoneX called the nonfat-skim milk powder production bullish. "Total powder production was down nearly 20% from last year which contributed to the 33.6% decline in inventory volume from 2023 levels." "Given the data in this report it seems February milk production may have been a bit overstated," concluded StoneX, "as there were a lot of solids that would have gone missing for these production numbers to have occurred."

CME block Cheddar climbed to $1.57 per pound last Tuesday, highest since Feb. 29, then lost 6 cents last Thursday but rallied last Friday and finished at $1.5350, up 2 cents on the week but 24 cents below a year ago.

The barrels marched to $1.5675 last Monday, then back tracked some, but also rallied last Friday to close at $1.5725, highest since March 6, up 4.25 cents on the week, 6 cents above a year ago, 3.75 cents atop the blocks. CME sales totaled 44 loads of block on the week, 21 on Friday alone, and 20 of barrel.

Milk accessibility is wide open in the Upper Midwest, says Dairy Market News, and mid-week spot milk prices were as low as $6-under class. Cheese plant downtime remains a factor. Cheesemakers' demand notes vary from slightly slow to slightly active though barrel interest has quieted. Inventories are not yet a concern in the region. Retail Cheddar and Italian-style cheesemakers say demand is somewhat steady. Customers within and outside of the region are returning as market tones were beginning to display quietly bullish indications.

Cheese makers note strong production in the West. Milk output is strengthening with the seasonal spring flush. Plenty of inventory is available. Demand is steady to lighter and some report production continues to outpace demand. Export demand is steady to moderate as international buyers are buying more for immediate to short term delivery, according to DMN.

Butter flirted with the $3 level, hitting $2.97 per pound last Monday, highest since Nov. 6, 2023's $3.01, but fell to $2.8925 last Thursday and closed last Friday at $2.92, 2 cents lower on the week and 59.25 cents above a year ago, on 14 sales.

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