Most Dairies Cutting Milk Output
Published: Friday, May 15, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Many dairy farmers are being asked by their cooperative or milk handler to reduce their milk production in view of the current market upset from the COVID pandemic. Reporting on the May 4 Dairy Radio Now broadcast, Hoards Dairyman managing editor Corey Geiger talked about a poll taken on their website's new "Dairy LiveStream" feature which asked farmers how much they have been asked to reduce their output.
Of over 200 online respondents, 30 percent said they were asked to cut milk output by 0-10 percent, 28 percent stated they had not been asked to cut back at all, and 27 percent said they had been given an 11-15 percent mandate. Another 7 percent said they had been asked to reduce milk output by over 15 percent, according to Geiger.
When asked which management changes they were considering to reduce their output, 70 percent said drying cows off early was their choice. Culling more heavily was chosen by 67 percent, and 63 percent said they would do it by adjusting the ration. Thirty-eight percent will switch from three times a day to two times a day milking, and 14 percent said they would not reduce milk flow at all, Geiger said.
Cornell's Jason Carszes cautioned, "Minimize loss, do not minimize cost," and "Use good people as a sounding board for making those decisions," Geiger stated, and nutritionist Mike Hutjens advised, "Do no harm, as your first strategy, but really work on your fresh cows because they are a vulnerable group, you can't cut from them."
Cash dairy prices continued their upward trend the first week of May. The Cheddar blocks closed last Friday at $1.3050 per pound, up 10 cents on the week, up 29.25 cents in three weeks, but still a whopping 37.5 cents below a year ago. The barrels finished at $1.27, up 8 cents on the week and 44 cents below a year ago. Eight cars of block traded hands on the week at the CME and 50 of barrel.
Cheese producers are busier, says Dairy Market News, as "food service pipelines, which in some cases had gone completely dry during COVID-19 slowdowns, are being refilled." "Buyers have reacted to the increase in market prices, as continued bullishness is expected, at least in the short term." Milk remains widely available with spot prices similar to previous weeks but a number of contacts have relayed that milk dumping has ceased.
Western cheese makers say demand is stable to slightly higher and lower market prices have spurred buyer interest. Contacts speculate that food service distributors, after using up their cheese stocks, are placing new orders, taking advantage of lower prices. Retail sales have slowed from the peak but are still above normal. Cheese output has been active and inventories are growing.
Spot butter also moved higher, gaining 10.25 cents on the week with a $1.29 per pound close, but $1.05 below a year ago. Fifteen cars found new homes on the week.
Cream remains available, according to Central churners, but multiples are stronger. Food service has perked up but the numbers remain well below previous years. Retail is quite a bit stronger and inventories have been moving well, as unexpected market prices and grocery store demand have spurred on buyers. Market tones are "resolutely positive when compared to the past month."
Western markets are steady to firming a bit, says DMN, as some states are slowly going back to normal activities post-quarantine. Retail demand is mostly stable compared to the previous week and the food service and the ingredient industries continue to see limited movements. However, sales have increased a bit. Many processors are churning butter to clear the abundant supplies of cream, but butter inventories are growing and storage space has tightened up.
Grade A nonfat dry milk finished last Friday at 82.50 cents per pound, 3.25 cents higher on the week but 24.25 cents below a year ago, on five sales.
Dry whey hit 40 cents per pound last Tuesday, a CME price not seen since August 2019, but closed last Friday at 39.75 cents per pound, a quarter-cent higher on the week and 5 cents above a year ago. Two cars were traded on the week at the CME.
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