High milk prices produce high milk production and preliminary data in the USDA’s November Milk Production report proves that. Output totaled 18.0 billion pounds, up a very bearish 3.0% from November 2019, biggest gain since December 2014 with November output in the top 24 producing states hitting 17.2 billion, up 3.1%.
    Revisions lowered the October 50-state and 24-State totals 7 million pounds, putting the 50-States at 18.55 billion pounds, still up 2.3% from October 2019.
    November cow numbers totaled 9.41 million in the 50 states, up 12,000 from October’s count, which was revised up 5,000 head, and is 62,000 above a year ago. November output per cow averaged 1,916 pounds, up 43 pounds or 2.3% from a year ago.
    California milk output was up a hefty 2.6% from a year ago, thanks to a 55 pound gain per cow offsetting 5,000 fewer cows milked. Wisconsin was up 2.7%, on a 60 pound gain per cow offsetting 5,000 fewer cows. That’s a lot of extra milk.
    Idaho was up 2.0%, thanks to 11,000 more cows and 5 pounds more per cow. Michigan was up 3.6%, on a 45 pound gain per cow and 6,000 more cows. Minnesota was up 3.9%, on a 60 pound gain per cow offsetting 2,000 less cows. New Mexico was up 2.5%, on a 35 pound gain per cow and 2,000 more cows.
    New York was up 2.1%, thanks to a 40 pound gain per cow. Cow numbers were unchanged. Oregon was down 1.4% on 2,000 fewer cows but output per cow was up 5 pounds. Pennsylvania was up 0.9%, on a 25 pound gain per cow offsetting a loss of 3,000 cows from a year ago.
    South Dakota was up 13.4%, on 13,000 more cows and 55 more pounds per cow. Texas was up 9.8% on a whopping 33,000 more cows and a 75 pound gain per cow. Vermont, one of only six states showing declines, was down 3.3% on 5,000 fewer cows. Output per cow was unchanged. Washington State was off 0.4% on 2,000 less cows, with milk per cow up 5 pounds.
    In the week ending December 5, 65,900 dairy cows were sent to slaughter, up 10,800 from the previous week, but 300 or 0.5% below a year ago.
    Meanwhile, the Agriculture Department’s monthly Livestock, Dairy, and Poultry Outlook, issued December 16, mirrored milk price and production projections in the December 10 World Agricultural Supply and Demand Estimates report.
    The Outlook stated that the National Agricultural Statistics Service revised its September milk cow estimate upward by 10,000, to 9.376 million, and estimates that the average for October increased to 9.39 million. The estimate for milk per cow was 1,977 pounds, up 37 pounds from October 2019. The 2021 herd size forecast was raised to 9.395 million head, up 15,000 from last month’s estimate.
    The world still loves butter and butter led the gains in the last Global Dairy Trade (GDT) auction of 2020. The overall weighted average moved up 1.3%, following a 4.3% jump on December 1, and 1.8% on November 17. Traders brought 69.9 million pounds of product to auction, down from 70.7 million on December 1.
    Butter was up for the sixth consecutive session, jumping 6%, following a 3.8% rise December 1. Anhydrous milkfat was up 1.9%, after gaining 2.6% last time. Cheddar was up 4.2%, after gaining 2.4%, and lactose was up 1.5%, after leading the gains last time with a 13.5% jump. Skim milk powder was up 1.2% following a 3.6% rise, and whole milk powder was 0.5% higher, after a 5.0% gain.
    StoneX equated the GDT 80% butterfat butter price to $1.8680 per pound U.S., up 10.4 cents from the last event. CME butter closed Friday at a bargain $1.4550. GDT Cheddar equated to $1.7659 per pound, up 7.2 cents, and compares to Friday’s CME block Cheddar at $1.6175. GDT skim milk powder averaged $1.3290 per pound, up from $1.3103, and whole milk powder averaged $1.4560, up from $1.4435. CME Grade A nonfat dry milk closed Friday at $1.15.     
    Cooperatives Working Together member cooperatives accepted 23 offers of export assistance this week to capture sales of 753,981 pounds of Cheddar, Gouda, and Monterey Jack cheese, 723,116 pounds of cream cheese, and 6.7 million pounds of whole milk powder. The product will go to customers in Asia, the Middle East, Oceania, Central and South America through April 2021.
    U.S. commercial disappearance in October was below year ago levels on most products. Total cheese, at 1.18 billion pounds, was off 2.5% from a year ago. HighGround Dairy however points out American-style cheese saw the strongest demand on record but non-American demand pulled the overall category lower.
    Butter totaled 214.9 million pounds, down 4.8% and the lowest October since 2017, according to HGD.
    Nonfat dry milk/skim milk powder totaled 194.4 million pounds, down 7.2%, and dry whey disappearance amounted to 91.4 million pounds, down 2.7%.
    October fluid milk sales did not fare well. The latest data shows 3.7 billion pounds of packaged fluid products sold, down 1.8% from October 2019. Conventional sales totaled 3.7 billion pounds, down 2.1%. Organic products, at 237 million pounds, were up 2.8%, and represented 6.0% of total sales for the month.
    Whole milk sales totaled 1.3 billion pounds, down 1.6% from a year ago. Sales for the 10 month period totaled 12.9 billion pounds, up 3.5% from 2019, and made up 32% of total milk sales for October and 33.7% thus far for the year.
    Skim milk sales, at 232 million pounds, were down 16.3% from a year ago and down 14.6% year to date.
    Total packaged fluid milk sales, January through October, amounted to 38.4 billion pounds, up 0.2% from 2019. Conventional product sales so far, totaled 36.0 billion pounds, down 0.5%. Organic products, at 2.4 billion pounds, were up 11% and represented 6.2% of total fluid milk sales so far for the year.
    CME dairy prices showed little reaction to the Milk Production report. The Cheddar blocks marched to $1.6525 per pound Tuesday but closed Friday at $1.6175, unchanged on the week and 24.25 cents below a year ago.
    The barrels finished at $1.4750, up 3.25 cents, but 19 cents below a year ago and 14.25 cents below the blocks. 17 cars of block traded hands at the CME the week before Christmas and 16 of barrel.
    StoneX Dairy says Food-service data from Black Box Intelligence showed sales in the last week of November down 16% from a peak of about negative 6.5% in early October. It was the 3rd consecutive week of negative growth and all regions it collected data from saw negative growth, clear that the winter weather is taking its toll on foodservice on top of many cities banning indoor dining.
    StoneX calculated domestic sales disappearance year-over-year levels without government purchases and warned; “It paints a grim picture. Without a renewal of government purchases we could likely see a movement towards the trend that our milk, butter, and cheese figures are presenting. Over the course of the pandemic we have seen a decline in non-government domestic sales compared to 2019 levels. It isn’t a factor of consumers not wanting dairy products as much as it is an issue of demand disappearing due to the removal of normal school and restaurant purchases,” says StoneX Dairy.
    Dairy Market News reports that Midwest cheese market tones have “steadied.” Mozzarella and or pizza style cheesemakers say buyers are returning. Curd and barrel producers say interest remains but sales have slowed. Food service demand is “tricky at best.” Spot milk is widely available and offers remain well below Class but production is steady. Cheesemakers also report that employees are returning after COVID quarantines but staffing remains a concern in plants.
    Western cheesemakers have no issue getting milk, thus cheese output is active. Retail and pizza cheese sales have been adequate to solid but food service demand is disappointing, says DMN. “As schools enter their winter breaks and pockets of the region face tighter restrictions on sit down dining, food service demand could diminish into the abysmal category.” One positive note is that with the lower market prices, buyers, including those from export markets, are more interested in seeking cheese deals, says DMN.
    Cash butter got a small boost from the GDT, climbing to $1.4750 per pound Tuesday, but it was short-lived and closed the week at $1.4550, 2.50 cents lower and 55 cents below a year ago, with 36 cars finding new homes.
    Bulk butter is available according to most contacts but plant managers report continued interest in keeping supplies in check, says DMN. Cream availability is wide and putting stress on suppliers, particularly in trying to find homes Christmas and New Year’s Week. Butter market tones are “uncertain.”
    Western butter output shows no sign of slowing as cream supplies are heavy. Butter makers’ concerns have pivoted to processing bulk butter for storage and use for near term 2021 needs, says DMN. Interest is following normal seasonal patterns as a few buyers assess near term needs. The domestic butter price remains competitive in the export market, as evidenced in the latest GDT, and “industry representatives are keeping a close watch on the global butter price.”
    Grade A nonfat dry milk closed Friday at $1.15 per pound, up 2.25 cents on the week but 10 cents below a year ago. 11 sales were reported on the week.
    Spot dry whey finished at 45.50 cents per pound, 1.25 cents lower on the week but 14 cents above a year ago, with 3 sales for the week at the CME.
    Dairy farm margins strengthened over the first half of December following higher milk prices with feed costs holding mostly steady, says the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC.
    “Class III Milk prices are drawing support from expectations for another round of government buying to extend into first quarter,” the MW stated, and “Much of this speculation stems from optimism that Congress will reach agreement on a new COVID-19 relief bill with Senate Republicans and House Democrats moving closer on terms for a new stimulus package totaling $748 billion.”
    Congress also needed to pass a budget bill to fund the government for fiscal year 2021 as the current Continuing Resolution ran out December 18.
    Some in the dairy industry applauded the pick of Tom Vilsack as Secretary of Agriculture in a Biden Administration, due to his current position heading the U.S. Dairy Export Council. That may or may not be totally positive, says Matt Gould, analyst and editor of the “Dairy and Food Market Analyst.”
    Speaking in the December 21 “Dairy Radio Now” broadcast, Gould discussed the expectation of government intervention in the markets due to the ongoing COVID devastation. He said that restaurant lockdowns and even the snowstorm that hit the East Coast this week is affecting demand, especially for butter and cheese.
    “We’re past the rush of holiday orders, so we’re seeing the fundamentals of dairy products deteriorating,” Gould warned. “You look at that and say that’s got to be price negative. But that sits in the backdrop of a government that’s looking to intervene in markets, funding more food purchases.”
    He said it remains to be seen what the new Secretary’s priorities would be in terms of market intervention (but it’s likely he will be intervening.) But, he added that, while Vilsack would come to the job with a better understanding of the dairy industry than previous Secretaries, “He is particularly sensitive about doing anything that would disrupt U.S. dairy exports.”
    “Traditionally, dairy policy has focused on the domestic market,” Gould charged, “but Vilsack is going to be concerned the U.S. remains export competitive which might mean policy that creates lower domestic prices some of the time, or at least sensitive to not wanting to spike U.S. prices and make us not competitive.”
    In other news from the Hill; Senate Agriculture Committee Chairman Pat Roberts announced he is leaving Congress after 40 years in January. The National Milk Producers Federation praised Roberts, stating that he was the only person to lead both the House and Senate agriculture committees and “takes with him a wealth of wisdom in agriculture policy, but also holds optimism for agriculture’s ability to get things done in an environment of difficult challenges.”
    And, an Administrative Law Judge in California has ruled that California dairy producers will vote on a petition to terminate the state’s “Quota” program.
    Last but not least; I would like to take this opportunity to extend my best wishes to you and your family for a blessed and joy-filled Christmas. Though COVID-19 may affect the day, it cannot affect the Spirit and the joy this day truly represents, the “reason for the season.” As the Proverb says “A joyful heart, makes a cheerful face.” I hope you have both this year and on into 2021.