H5N1 May Be Hurting Milk Output
Published: Friday, July 5, 2024
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
U.S. dairy cows are putting less milk in the tank and bird flu may be part of the problem. The Agriculture Department's preliminary data showed May output at 19.68 billion pounds, down .9% from May 2023, the 11th consecutive month output fell short of a year ago. The 24-state production at 18.9 billion pounds, was down .7%.
May cow numbers totaled 9.35 million, up 27,000 head since January and up 5,000 from the April count which was revised up 5,000 head but was 68,000, or .7%, below May 2023. The 24-state count, at 8.893 million, was up 5,000 from April but 52,000 below a year ago. The April count was revised up 2,000 head.
Output per cow in the 50 states averaged 2,105 pounds, down 3 pounds, or .1%, from a year ago. The 24-state average, at 2,122 pounds, was down 3 pounds. April output per cow was revised down 6 and 3 pounds, respectively.
California production was down 55 million pounds, or 1.5%, from a year ago. Cow numbers were down 6,000 head and output per cow was down 25 pounds. That 55-million-pound drop was almost a third of the total drop in the nation's milk production, according to HighGround Dairy economist Betty Berning in the July 1 "Dairy Radio Now" broadcast.
Wisconsin output was up 30 million pounds, or 1.1%, from a year ago, thanks to a 20-pound gain per cow and 2,000 additional cows.
Dairy cows are staying in the herd longer. Cow slaughter for the week ending June 15 totaled 47,600 head, up 1,000 from the previous week but 10,100, or 17.5%, below a year ago. Year to date, 1,297,400 head have been culled, down 208,400, or 13.8%, from 2023.
U.S. butter stocks grew some more in May but not as much as expected. The USDA's latest Cold Storage report shows the May 31 inventory at 380.2 million pounds, up 18.1 million, or 5%, from the April count, which was revised up 741,000 pounds, and was up 12.4 million pounds, or 3.4%, from May 2023.
American-type cheese stocks fell to 821 million pounds, down 4.5 million, or .5%, from the April level, which was revised 13.7 million pounds lower, and were down 36 million pounds, or 4.2%, from a year ago.
The "other" cheese category holdings crept up to 599.9 million pounds, up 4 million, or .7%, from April's count, which was revised 2.5 million pounds lower. Stocks were down 16.5 million pounds, or 2.7%, from a year ago.
The total May 31 cheese inventory slipped to 1.442 billion pounds, down 720,000 pounds from the April count, which was revised 16.3 million pounds lower, and was 55.1 million pounds, or 3.7%, below a year ago.
The report is viewed as bullish for both butter and cheese. StoneX Dairy Group stated, "To get butter stocks down to this level, domestic demand must have bounced back a bit after being flat in February, March and April." They also reported, "This is the second largest year over year decline in cheese stocks for May that we've seen since 2006. The only larger decline was 2014."
HighGround's Betty Berning said the butter stock growth from April to May was at the slowest rate between the two months since 2020 (COVID-19 year) and 2013. She said the five-year average build from April to May (excluding 2020) was 27.5 million pounds, making the 2024 increase 38% below average.
Cash dairy prices were mixed in the final week of June, as traders anticipated the July 4 holiday. After dropping 12.5 cents the previous week, the Cheddar blocks closed the month of June at $1.91 per pound, up 6.50 cents on the week, 2 cents below their June 3 perch, but 57.50 cents above a year ago.
The barrels closed last Friday at $1.88 per pound, 4 cents lower on the week down 8 cents on the month, 53.50 cents above a year ago when they plunged 15.50 cents, and a typical 3 cents below the blocks. Sales totaled seven loads of block on the week and 71 for the month of June, down from 92 loads in May. Barrel sales amounted to five on the week and 55 for the month, up from 51 in May.
Midwest cheesemakers report mixed takes on demand in recent weeks, according to Dairy Market News. Some are turning away new orders as they are booked solid. Others say summer demand is meeting expectations but has slowed from a busy late spring season. Cheese production remains steady in the region, but cheesemakers and milk handlers were in preparing for the Fourth. Milk handlers are concerned that the Thursday holiday will keep some cheese lines down for a potential four-day weekend. On the other hand, some cheesemakers are holding off on purchasing extra spot milk. "Cheese markets are not bullish or bearish, but indecisive," said DMN.
Retail demand for cheese in the West picked up ahead of the holiday and contacts anticipate increased food service sales during the summer months. Export cheese demand is steady, though some traders say current prices are not competitive with internationally produced loads. Cheese is available, but inventories are not excessive. Milk output is declining in the West and some cheesemakers say this has contributed to lighter production.
Cash butter fell to $3.0325 per pound last Tuesday, lowest CME price since May 30, but it rallied last Wednesday and closed last Friday at $3.1250, up 3.50 cents on the week, up a half-cent on the month, and 68.50 cents above a year ago. There were 17 sales on the week and 44 for June, down from 91 in May.
The start of summer and high temperatures have had a negative impact on milk production and cream volumes in the West. Butter makers continue to pull heavily on cream supplies though others are shutting down their churns this week for extended maintenance. Retail butter demand is steady to lighter, but food service sales have notably softened, says DMN.
Grade A nonfat dry milk saw its Friday close at $1.1825 per pound, down 2.25 cents on the week, 1.50 cents higher on the month, and 6.50 cents above a year ago. There were 24 sales on the week and 84 for the month, same as in May.
Dry whey finished last Friday at 49 cents per pound, up 2 cents the week, highest since Feb. 26, up 7 cents on the month, and 25 cents above a year ago. There were two sales on the week and 13 for the month of June, down from 55 in May.
News remains disappointing in China's latest dairy import data. May imports saw their lowest volume since 2017, according to HighGround Dairy. Whole milk powder imports were down 32.9%, skim milk powder was down 49.9%, and whey products were down 9.4%. Cheese imports were down 6.7%, but butter was up 18.8% and anhydrous milkfat was up 138.1%.
While negative, HGD says New Zealand's market share increased to 44% versus 38% the two years prior. "The largest loss leader was whole milk powder, dropping 34% from a year ago, with other losses in skim milk powder and cheese, while fluid milk and cream and anhydrous milkfat were higher."
Skim milk powder imports fell to the lowest volume since December 2017, according to HGD, and all of the top suppliers saw declines, with the steepest fall shown from Germany and the U.S. Berning said China is becoming more self-sufficient in dairy and that is part of the reason for the poor import demand.
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