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Milk Output Rises After Several Months of Declines


by Lee Mielke

Published: Friday, November 1, 2024

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

U.S. dairy farmers eked out small increases in milk production in August and September, according to USDA's preliminary data, after seeing output lag year ago levels in 12 of the previous 13 months.

September output was reported at 18.2 billion pounds, up .1% from September 2023. The 24-state total, at 17.5 billion pounds, was up .2%. Component adjusted production was up 1.6%, according to StoneX Dairy Group.

September cows totaled 9.328 million head, unchanged from the August count which was revised up 3,000 head, but was 38,000, or .4%, below September 2023. The 24-state count, at 8.887 million, was also unchanged from August, which was revised up 9,000 head, but was 20,000, or .2%, below a year ago.

Output per cow in the 50 states averaged 1,950 pounds, up 9 pounds, or .5%, from a year ago. The 24-state average, at 1,966 pounds, was up 8 pounds, or .4%, from a year ago.

HighGround Dairy points out "the most substantial growth came from Texas and Kansas, where cheese capacity is being added, plus Idaho and South Dakota. Idaho's totals have been up for three consecutive months, recovering from the year-on-year decreases earlier in 2024 due to avian influenza."

California, where the influenza has spread rapidly, saw milk production rise 1 million pounds, virtually unchanged from a year ago. Cow numbers were down 4,000 head, but output per cow was up 5 pounds. Next month's report will likely show some revision to this data as well as a marked decrease in October milk output due to the bird flu.

Wisconsin milk was down 14 million pounds, or .5%, from a year ago, on 4,000 fewer cows and 5 pounds less per cow. The Daily Dairy Report blamed poor forage quality for the decline. Michigan was down .9% on 3,000 fewer cows and a 5-pound drop.

September output was higher than StoneX expected, according to broker Dave Kurzawski in the Oct. 28 "Dairy Radio Now" broadcast. Output had been negative for 13 months, he said, and the last positive number before that was in June 2023, "So we were lapping over negative numbers. It's not going to be that hard to push that number positive."

The surprise was the August revision of 89 million pounds which pushed the resulting total above August 2023, indicating that USDA was under reporting milk output. He said he suspected that after seeing the dairy product production numbers but "these are aged reports. The milk production data is 45 days old."

The report impacted the future markets somewhat, he said, "As people's perceptions became reality and that played out this week with some decent selling on the futures market," but the October report will be more revealing. California's data will reflect the impact of avian influenza there as well as the heat factor, he concluded. Output is expected to be down anywhere from 2-4.5%.

The USDA's latest Livestock Slaughter report showed an estimated 210,400 head of dairy cows were slaughtered under federal inspection in September, down 20,300 from August, and 30,100 head, or 12.5%, below September 2023.

Dairy cow slaughter for the week ending Oct. 12 totaled 51,400 head, unchanged from the previous week, but 4,200, or 7.6%, below a year ago. Year to date, 2,151,900 dairy cows had been culled, down 338,900 head, or 13.6%, from 2023.

The Agriculture Department's latest Livestock, Dairy and Poultry Outlook reported, "As of Oct. 15, Highly Pathogenic Avian Influenza (HPAI) was confirmed in 14 states and 319 dairy herds. However, since the beginning of October, HPAI has been detected in 76 herds, all located in California. The affected cows and herds are quarantined until they recover. Once they recover, most cows return to producing milk."

The Daily Dairy Report's Monica Ganley Quarterra wrote, however, in the Oct. 18 Milk Producers Council newsletter, "Additional information is emerging about the impact of avian influenza in California dairy herds and indicates that mortality among infected animals may be higher than originally believed."

China's September dairy import data didn't show much change from what we've seen all year. However, HighGround Dairy said, "Volumes are set to improve into the end of the year as shown by North Asia's active presence on recent GDT events. Of the top four suppliers, New Zealand, the U.S., the EU and Australia, the EU was the only region to report growth from prior year on stronger whey and infant formula volumes."

Imports of whole milk powder were down 45.2% from a year ago. Skim milk powder was down 51% and whey products were off .8%. Butter was down 8% but cheese imports were up 5.9%.

New Zealand accounted for 54% of the cheese market share, according to HGD. U.S. cheese imports nearly doubled, capturing a 5.5% share.

HighGround said, "Beijing is attempting to fix lackluster consumer confidence. While economic stimulus and measures announced by the People's Bank of China at the end of last month are a step in the right direction, they fall short of significantly boosting growth in a meaningful way. During the same timeframe, Beijing also announced that it would be supporting beef and dairy farmers, but is it too little, too late?" asks HGD.

The November federal order Class I base milk price was announced by the USDA at $22.53 per hundredweight, down 64 cents from October, $2.78 above a year ago, and equates to $1.94 per gallon, up from $1.70 a year ago. The 11-month Class I average stands at $20.25, up from $19.15 at this time a year ago, but compares to $23.76 in 2022.

CME block Cheddar closed Oct. 25 at $1.90 per pound, down 2.50 cents on the week but 17 cents above a year ago, as traders anticipated last Friday afternoon's September Cold Storage report. The barrels finished at $1.87, 14 cents lower, 18.75 cents above a year ago, and a typical 3 cents below the blocks. Sales totaled five loads of block and nine of barrel for the week.

Midwestern cheesemakers report retail cheese demand remains wholly bullish, according to Dairy Market News. Customers are adding to orders and some are oversold. Others say ordering patterns are in line with seasonal expectations. Cheese plant downtime remains part of the story for scheduled maintenance. Milk availability is steady and mid-week prices ranged from Class III to $2-over. A year ago, they ranged 25 cents to $2-over, according to DMN.

Demand for Class III milk is generally strong from Western cheese makers. Some continue requesting additional loads. However, fewer loads are available in some parts of the region. Cheese production is steady to strong. Sellers convey domestic demand is neither robust nor sluggish. Export demand is steady as domestic prices continue to hold some competitiveness against global prices.

The Oct. 24 Daily Dairy Report had good news for U.S. cheesemakers, stating that "Mexico will continue to expand milk production next year, but most of the additional milk will be processed by bottlers." "Cheese imports will continue to grow, according to a Global Agricultural Information Network report," the DDR said, and "Mexico buys nearly all its imported cheese from the United States."

Pizza is the second-most consumed food item in Mexico, behind tacos, according to the report and U.S. shredded cheeses are the most popular topping. Cheese consumption in Mexico is forecast to grow 2% this year, according to the DDR, and 4% next year. Mexico is already the U.S. No. 1 cheese customer.

CME butter climbed to $2.73 per pound last Monday, highest since Oct. 1, then fell to $2.65 last Thursday, and closed last Friday at $2.6950, up 3.50 cents on the week but 49.75 cents below a year ago. There were only 15 loads traded on the week.

Seasonal butter plant downtime continues. Some is scheduled downtime while others are dealing with unexpected maintenance issues. Plenty of cream is moving through the region and multiples last week as low as 1, had not been reported last week, but are still relatively low for this time of the year. Cream contracts for next year are being worked through and are reportedly mixed on pricing. Butter demand is steady to increasing seasonally for retail, says DMN, as "the market is volleyed between bulls and bears after a notably busy week."

Butter production is steady to strong in the West. Some manufacturers were running heavier due to churn maintenance slotted to start in November. In some cases, butter manufacturers prefer to sell excess cream, if possible, rather than put it into churns. Cream is readily available. Domestic demand is mostly steady.

Export demand is steady as domestic prices continue to be competitive with international prices, according to DMN.

Nonfat dry milk closed last Friday at $1.3750 per pound, down a half-cent on the week but 17.75 cents above a year ago, on 32 sales for the week.

The dry whey price saw its Friday close at 60.50 cents per pound, up a half-cent and 20.50 cents above a year ago, with 13 sales put on the board for the week.

The DDR's Monica Ganley Quarterra said, "The high protein space continues to exert dominance over the whey stream, constricting the amount of raw whey available for the production of dry whey. Limited supplies are expected to keep a floor under the dry whey market in the coming months."

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