StoneX: Milk Components Show Strength in April
Published: Friday, May 31, 2024
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
U.S. farm milk production continues to run below a year ago but the shortfall is shrinking. April was the 10th consecutive month output lagged and was due to lower cow numbers and a small change in output per cow, some of which was likely driven by the avian-bovine influenza outbreak. USDA's preliminary data shows 50-state output at 19.1 billion pounds, down .4% from April 2023. The top 24-state total, at 18.3 billion, was down .2%.
StoneX however points out, "Components in the milk were very strong, which puts component adjusted production up 1.9% year over year."
March output in the 50 states was revised up 78 million pounds but was still .7% below a year ago instead of the 1% originally reported. The 24-state total was raised 78 million pounds, down .5% from a year ago instead of .9%.
April cow numbers totaled 9.340 million head, down 8,000 from the March count which was revised up 13,000 head, but was 74,000, or .8%, below April 2023. The 24-state count, at 8.886 million, was down 6,000 from March and 55,000 below a year ago. The March count was revised up 11,000 head.
Output per cow in the 50 states averaged 2,049 pounds, up 9 pounds, or .4%, from a year ago. The 24-state average, at 2,064 pounds, was up 8 pounds, or .4%. March output per cow was revised up 5 and 7 pounds, respectively.
California production was up 7 million pounds, or .2%, from a year ago despite cow numbers being down 9,000 head. Output per cow was up 15 pounds. Wisconsin was up a spring flush enhanced 66 million pounds, or 2.5%, from a year ago, thanks to a 45-pound gain per cow and 4,000 additional cows. Idaho was off .1%, on 1,000 fewer cows and output per cow being unchanged. Michigan was up .5%. Cow numbers were up 3,000 and outweighed a 5-pound drop per cow.
A second human case of the avian flu was reported last week, this one in Michigan. Both cases are workers on dairy farms. StoneX stated, "This is not earthshattering news and will likely not impact demand for dairy or meat unless it becomes far more widespread and catastrophic." A good customer stated, "The reality is not a concern. The 'fear' is what matters."
With replacements being few and expensive, milk cows are being kept longer. The latest Livestock Slaughter report showed an estimated 238,200 head were sent to slaughter under federal inspection in April, down 6,400 from March, and 5,400 head, or 22.2%, below April 2023. As of the week ending May 11, 1,065,700 head had been culled, down 161,400, or 13.2%, from 2023.
CME cheese prices fell the second to last week of May as traders awaited last Friday afternoon's April Cold Storage report. The blocks fell to $1.84 per pound last Wednesday, but closed last Friday at $1.87, 7.25 cents lower on the week and 39.25 cents above a year ago.
The barrels saw daily losses and finished at $1.98, 14.50 cents lower, but 49 cents above a year ago and 11 cents above the blocks. CME sales totaled 37 loads of block on the week and 19 of barrel.
Midwest cheesemakers told Dairy Market News that milk availability was similar to previous weeks as the Memorial Day holiday weekend approached. Mid-week spot prices had not reached the lows of the previous week and demand remained robust.
Cheese production is strong in the West with some manufacturers saying that stronger year-over-year milk components enabled them to run full schedules. Milk is tightening in parts of the region however summer school breaks should help. Domestic cheese demand varies from stronger to steady, says DMN. Low first and second quarter prices helped strengthen exports but traders warn that may be more difficult next quarter as domestic prices lose competitiveness.
CME butter saw its Friday finish at $3.1225 per pound, up 5.25 cents on the week, highest since Nov. 1, 2023 and 69.25 cents above a year ago on five sales.
Cream availability is steady with recent weeks, says DMN. Handlers expected multiples to fall nearer to flat market closer to the holiday weekend, but at mid-week were holding in the mid/upper 1.10s. Expectation is that cream will begin its seasonal tightening by early- to mid-June. Currently, churning is active.
Butter production remains strong in the West as manufacturers work to ensure enough stock during summer equipment maintenance projects and anticipated second half demand. Cream volumes are comfortable and generally being absorbed rather than moved to spot offers. Domestic demand is reported as strong for both the retail and food service. Export demand remains moderate. Participants say the price spread between store brands and national brands has been larger than anticipated during the first half of 2024, according to DMN.
Grade A nonfat dry milk climbed to $1.1875 last Thursday, highest since March 4, but closed at $1.1750, up a penny and 50 cents above a year ago, on 24 sales.
Dry whey closed last Friday at 40 cents per pound, down 1.50 cents on the week but still 12.50 cents above a year ago, on 12 sales for the week at the CME.
Cheese price strength appeared justified in the USDA's latest Supply and Demand Utilization report. March disappearance totaled 1.25 billion pounds, up 2.1% from March 2023, mainly due to exports, which hit an all-time high for that month, according to HighGround Dairy's Cara Murphy in the May 27 "Dairy Radio Now" broadcast. Exports were up 8% while domestic use was only up .6%, spurred by American-type cheese, which was up 1%. American exports were up 19% and other-type cheese was up 5.2%. That contributed to the rise in April CME cheese prices, she said, but warned that rising prices could change that.
Butter usage totaled 201.2 million pounds, down 1.1%, though domestic use was up 1.7%. Exports were down 8.3%, due to high U.S. prices, which HGD says aren't really justified at this time of year, even by the higher domestic usage.
Nonfat dry milk and skim milk powder disappearance amounted to 189.4 million pounds, down 33.2%. Domestic use was down 56% and exports were down 18.4%. Murphy said powder exports have fallen on a year-over-year basis for six of the last eight months. That has been reflected in CME and GDT prices.
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