Milk Output Down for Fifth Straight Month, as Farms Liquidate Cows
Published: Friday, December 29, 2023
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
Milk flow on U.S. farms is stubbornly remaining below that of a year ago, especially in the West and Southwest. The Agriculture Department's preliminary data shows November output was down for the fifth month in a row, estimated at 18.1 billion pounds, down .6% from November 2022. The top 24-state total, at 17.3 billion pounds, was down .5%.
The October 50-state total was revised down 35 million pounds from last month's estimate, which put output down .7% from 2022 instead of the .1% reported. The 24-state revision was down 37 million pounds, down .6%, instead of the .04% loss originally reported.
Cow numbers totaled 9.36 million, down 10,000 from the October count which was unchanged from a month ago, but is down 44,000 head, or .5%, from a year ago and the smallest herd since June 2020. The 24-state count was down 9,000 from October, which was revised down 5,000 head, 26,000 below a year ago.
The cow loss was more than expected, says StoneX, given how weak dairy cow slaughter has been, and the decline in milk output was more than expected. However, fat and protein content was up strongly, "so component adjusted production was up .8%, which is an acceleration from plus .3% in October."
The Dec. 18 Daily Dairy Report stated, "Today's Milk Production report makes clear that producers have no appetite for expansion. There simply are not enough heifers available to keep head counts steady at historical slaughter rates."
Output per cow in the 50 states averaged 1,932 pounds, 2 pounds, or .1%, below November 2022. The 24-state output averaged 1,948 pounds, 3 pounds, or .15%, below a year ago. Revisions lowered October output by 4 pounds in the 50 states and 3 pounds in the 24 state data.
California milk totaled 3.27 billion pounds, down 55 million, or 1.7%, from a year-ago. Cow numbers were down 11,000 and output per cow was down 20 pounds. The last time the Golden State topped year-ago output was August 2022.
Wisconsin cows put 2.6 billion pounds in the tank, up just 4 million, or .2%, from a year ago, thanks to a 5-pound gain per cow offsetting the loss of 1,000 cows. Idaho was up .3%, thanks to an additional 2,000 cows. Output per cow was unchanged. Michigan was up 1.9% on 8,000 more cows. Output per cow was unchanged. Minnesota was off .7% on 3,000 fewer cows, with output per cow unchanged.
The latest Livestock Slaughter report showed an estimated 229,700 head were sent to slaughter under federal inspection in November, down 13,200 head from the October count, which was revised down 100 head, and was 21,200, or 8.4%, below November 2022.
The week ending Dec. 9 saw 57,700 cows go to slaughter, up 2,500 head from the previous week but 6,900 or 10.7% below a year ago, the largest year-over-year decline since December 2021. Year to date, 2,920,800 head have been retired from the dairy business, up 47,100, or 1.6%, from a year ago.
Cash block Cheddar closed the second to the last Friday of 2023 at $1.39 per pound, down 13 cents on the week, lowest since July 6, as traders anticipated the afternoon's November Cold Storage report. The blocks are 73.25 cents below a year ago when they jumped 14.50 cents and were trading at $2.1225.
The barrels finished at $1.3925, down 5.75 cents on the week, 40.25 cents below a year ago, and a quarter-cent above the blocks. 30 cars of block were sold on the week at the CME and 62 of barrel, biggest weekly total since early July.
StoneX stated in its Dec. 19 Early Morning Update; "We seem to be dealing with the commercial realities of fresh cheese looking for a home following somewhat subdued holiday demand this year."
Cheesemakers tell Dairy Market News that milk is available, but a number say it's not at typical holiday amounts. There have been some below class spot prices reported, but some have been some slightly above. Cheese demand is meeting seasonal expectations. Holiday orders have been fulfilled, but there are expectations that Mozzarella and pizza cheese orders will hold steady and/or increase as the collegiate and professional football seasons culminate. Midwest cheese stocks are generally balanced, says DMN. Some contacts say extra loads are available here and there, but typically do not last long.
Retail cheese demand remains steady in the West, with food service steady to moderate. Export demand is steady to moderate though U.S. prices are more competitive, says DMN. Cheesemakers report "comfortable inventories."
Spot butter climbed to $2.6050 per pound last Tuesday but saw its Friday close at $2.54, 5 cents higher on the week and 14.50 cents above a year ago when it plunged 46 cents to $2.3950. There were 13 sales reported on the week.
Butter plants are working on butter and cream contracts for 2024, says DMN. Midwest cream availability this week was wide open, with spots reported at flat market multiples. As Class II demand continues its seasonal decline, cream handlers say butter manufacturers are taking lots of cream.
Western cream is also plentiful. Butter makers anticipated more milk clearing to Class IV with the upcoming holiday weekend. Butter makers note strong to steady retail production. Retail butter demand is mixed with some reporting that ordering is largely fulfilled. Demand from food service and industrial bakers is strong, with mixed interest for first quarter bookings, according to DMN.
Grade A nonfat dry milk closed last Friday at $1.16 per pound, unchanged on the week but 17 cents below a year ago, with 10 sales reported on the week.
Dry whey closed at 38 cents per pound, 1.50 cents lower and a half-cent below a year ago when it fell 7 cents. There were 11 sales reported for the week.
China's, November import data showed a lot of negatives. Whole milk powder imports dropped 35.7% from November 2022. Skim milk powder imports were down 6.6%.
But, after four months of year-on-year losses, whey imports were up 4.%, with more product coming from Belarus and Poland, according to HighGround Dairy. Belarus has become the second largest trading partner with China for whey, says HGD, right behind the U.S., while Poland has risen to third overall.
Cheese imports, at 37 million pounds, climbed to the highest November volume on record, according to HGD, up 64.1%, with New Zealand remaining the top supplier. The U.S. has climbed to the second highest in cheese market share. Butter imports totaled 11.8 million pounds, down 21.3% from a year ago.
HGD said, "Chinese demand for cheese will continue expanding, with domestic brands increasingly emphasizing its high protein and calcium content as a key marketing strategy. However, as dietary preferences evolve in China, we anticipate a shift in demand patterns. China's reliance on ingredients like lactose and skim milk powder, alongside finished dairy products, is expected to grow into the second half of 2024, while whole milk powder is likely to face challenges."
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