September 5, 2017 at 3:32 p.m.

Milk production growth appears to be slowing

By Lee Mielke- | Comments: 0 | Leave a comment

April milk production in the top 23 states hit 15.98 billion pounds, up 3.3 percent from April 2011, according to preliminary data in the Agriculture Department's latest Milk Production report. Revisions lowered the initial March estimate to 16.4 billion, still 4.3 above a year ago. The April 50-state April total was 17.19 billion pounds, up 3.2 percent.

April cow numbers in the 23 states, at 8.53 million head, were up 4,000 from March and 94,000 head more than a year ago. Output per cow averaged 1,875 pounds, up 40 from a year ago.

California was up 3.1 percent from a year ago on 23,000 more cows and a 35 pound per cow gain. Wisconsin was up 3.5 percent on a 55 pound gain per cow, thanks to the weather and 4,000 more cows. New York was up 3.6 percent on a 65 pound gain per cow. Cow numbers were unchanged from a year ago. Idaho was up 2.9 percent on a 50-pound gain per cow and 1,000 more cows. Pennsylvania was the only state showing a decline, down 1 percent on 5,000 fewer cows. Output per cow was unchanged. Minnesota was up 1.3 percent thanks to a 35 pound gain per cow but cow numbers were down 4,000 head.

Checking a few other players; Michigan was up 6.2 percent on 14,000 more cows and a 5 pound gain per cow. New Mexico was up 3.6 percent on 11,000 more cows and a 5 pound gain per cow. Texas was up 3.3 percent on a 14,000 cow increase. Output per cow was unchanged, and Washington State was up 4.1 percent on 7,000 more cows and a 25 pound per cow increase.

Mary Ledman, editor of the new Daily Dairy Report, believes the data will be read with some relief by the cash markets and will give them some underlining strength because some expected the gain to be closer to 4 percent. Add to that, the fact that the previous month's gain was over 4 percent.

More importantly, according to Ledman, is that "the tide has turned in the West." Key states like California, Washington, and Idaho, regionally, saw milk output inch 0.6 percent lower than March, "so supply management programs there are taking hold," and the peak of the milk production season has been reached as it has in the Southwest, Arizona, Texas, and New Mexico, down 0.1 percent.

Looking forward, Ledman said milk production in the Northeast and the Midwest likely has another month of incremental gain before heading lower seasonally. However, on a bearish note, she warned that the U.S. dairy herd continues to expand.
The good news is that the gain in April was only half that of the previous month and she says we could see increased slaughter in May and into June and predicts the U.S. dairy herd will be trending lower by midyear. For a weekly recap of the dairy markets and a sneak into the following week's listen to the new Audio File of the Daily Dairy Report at .

The latest Livestock Slaughter report issued Friday morning shows an estimated 239,800 culled dairy cows were slaughtered under federal inspection in April, down 38,200 from the 278,000 culled in March but 2,000 more than April 2011. Dairy Profit Weekly (DPW) points out that, based on April's Milk Production report, the April culling rate represented about 2.6 percent of the nation's herd. Through the first four months of 2012, cull cow slaughter totaled 1.043 million, up 24,200 from the same period in 2011.

Cash block cheese closed the week of May 21 at $1.57 per pound, up 7 cents on the week (most of it coming on Friday) but still 24 cents below a year ago when the blocks jumped 10 1/4-cents to $1.81. Barrel closed at $1.47, up a penny on the week and 34 3/4-cents below a year ago. Four cars of block traded hands on the week and none of barrel. The AMS-surveyed block price averaged $1.5271, down slightly, while the barrels averaged $1.4887, down a half-cent.

Milk supplies across the U.S. remain above year ago levels and much of that milk is finding its way to cheese plants, according to USDA's Dairy Market News. Discounts are being offered to plants to encourage higher production but cheese stocks are up, as evidenced in April Cold Storage data. Plants are keeping a close eye on inventories as demand is "moderate," according to USDA. Increased features in retail advertising are helping to move additional supplies and exports are being aided by the Cooperatives Working Together (CWT).

CWT accepted 24 requests for export assistance this week to sell a total of 3.578 million pounds of cheese and 1.642 million pounds of butter to customers in Asia, Africa, Central America, and the Middle East. CWT's 2012 cheese exports now stand at 53.8 million pounds plus 44.4 million of butter and anhydrous milk fat.

April 30 American cheese stocks totaled 628.4 million pounds, up 1 percent from March and 1 percent above April 2011, according to the latest Cold Storage data. The total cheese inventory, at 1.02 billion pounds, was up 2 percent from March but down 1 percent from a year ago. Butter stocks amounted to 253.9 million, up 22 percent from March and a whopping 79 percent above those a year ago.

Bill Van Dam, of the Alliance of Western Milk Producers, points out in his May 18 newsletter that, when considering prices in the U.S. compared to the rest of the world, "we need to keep in mind the percentage of each product made in this country that is sold into the export trade." Only 5.8 percent of the cheese made here is exported, he said. The opposite side is that 94.2 percent is sold domestically.

He points out that Cheddar cheese traded last week on the Global Dairy Trade (gDT) sold for as low as $1.27 per pound. "There are many reasons that our cheese prices may not react quickly (or at all) to the dip in cheese prices at the gDT," Van Dam wrote, "for example our largest export customer is Mexico."

Meanwhile; FC Stone's May 22 eDairy Insider Opening Bell reported that "New Zealand's Fonterra believes world dairy prices have likely reached bottom and are expected to begin recovering when Oceania's new production season starts in August. The co-op plans to pay its suppliers $4.21 (U.S.) per kilogram of milk solids in the year ending May 31, 2013, a 9 percent drop from the current year."

The May 24 edition also warned that "Mounting concern over a possible exit by Greece from the euro zone has been lifting the U.S. dollar. If Greece does leave the currency zone, the U.S. dollar could strengthen further, which could hurt exports of dairy products and dampen economic growth in the United States."

Cash butter at the CME closed May 25 at $1.3875, up another 3 1/4-cents on the week and the third consecutive week of gain, but is still 79 1/4-cents below a year ago when butter peaked for 2011 at $2.18. Only two cars were sold on the week, and the AMS butter price averaged $1.3352, down 3 1/2-cents.

USDA reports that many butter producers and handlers are surprised that the strength in the butter price is occurring at a time when butter production is seasonally strong and inventories are building. Cream volumes available to the churn remain seasonally heavy although some producers are reporting lighter surplus cream offerings than in recent weeks.

Lighter surplus offerings are attributed to increased Class II demand, especially for ice cream and mix needs. Although lighter surplus cream offerings are occurring, many butter producers expect heavier volumes as the Memorial Day weekend approaches which usually generates additional cream for the churn. Overall butter demand is fair with some reports of good movement.

Cash Grade A nonfat dry milk jumped 3 cents, hitting $1.1550, on an unusual 15 sales. Extra Grade inched three-quarters higher, to $1.09. AMS powder averaged $1.1449, down 0.2 cent. Dry whey averaged 54.36 cents, up 1.6 cents.

Cheese demand is good, according to Stewart Peterson's Matt Mattke in Tuesday's DairyLine. He agreed the Milk Production report indicates the growth in milk production is slowing. He reported that March saw record exports of cheese and total dairy products plus commercial disappearance through February in the U.S. was doing "extremely well." Weekly cheese sales data shows "we're moving a lot of cheese (20-23 million pounds) on a weekly basis," he said, but acknowledged that feed prices remain high.

Milk production in most of the U.S. has peaked but holding at high levels. Reports of declines in the southern regions are common. As schools and colleges recess for summer, surplus milk may become more available, thus manufacturers and handlers indicate they're "not out of the water yet."

The June Federal order Class I base milk price is $15.24 per cwt., down 61 cents from May, $5.08 below June 2011, and equates to about $1.31 per gallon. The 2012 average now stands at $16.48, down from $18.14 at this time a year ago, and compares to $14.42 in 2010 and $11.22 in 2009.

The University of Wisconsin's Dr. Brian Gould predicts the June Milk Income Loss Contract Payment (MILC) will be about 88 cents per cwt. He predicts the July Class I at $15.58, with an MILC of about 68 cents. He expects a turnaround in August, projecting $16.08 for the base price and an MILC of 25 cents. That will be the last MILC payment for the foreseeable future, according to Gould.

The AMS butter price averaged $1.3506 per pound, down 11.2 cents from May. Nonfat dry milk averaged $1.1460, down 11.8 cents. Cheese averaged $1.5243, down 1.9 cents, and dry whey averaged 53.55 cents, down 6.7 cents from May.

Dairy Profit Weekly reports that, in preparation for a May 31-June 1 hearing on petitions to revise the whey factor in California's Class 4b milk pricing formula, the California Department of Food & Agriculture hosted a public workshop, May 15, to review economic analysis of the proposals. According to that analysis, a proposal from Western United Dairymen (WUD) and a coalition of other dairy producer groups would have raised the Class 4b price paid to California dairy farmers by about 79 cents per cwt. over the five-year period, 2007-2012. The annual average range of the impact would have been a low of -2 cents in 2009, to a high of $1.58/cwt. this year.

In contrast, a proposal from Farmdale, a California cheese maker, would lower the 5-year average Class 4b price about 18 cents per cwt., including a 35 cent drop in 2011-2012.

If implemented, the WUD/dairy coalition proposal would close the gap between annual average California Class 4b prices and federal order Class III milk prices, according to DPW. Estimates show the gap using current formulas would leave the Class 4b price $1.05 per cwt. less than the Class III price over the five-year average, with the largest gap of $2.18 occurring in 2011-2012. Implementing the WUD/dairy coalition change would reduce the five-year gap to an average of -26 cents per cwt., with the gap of -61 cents cwt. in 2011-2012.

The Farmdale proposal would widen the Class 4b/Class III gap beyond current levels, with a difference of -$2.53 per cwt. in 2011-2012 and a five-year average of -$1.23 per cwt. The analysis and hearing information is posted on the CDFA's "hearing matrix" website ( .[[In-content Ad]]


You must login to comment.

Top Stories

Today's Edition



27 28 29 30 31 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30

To Submit an Event Sign in first

Today's Events

No calendar events have been scheduled for today.