The Agriculture Department announced the March Federal order Class III milk price at $15.04 per hundredweight, up $1.15 from February, 82 cents above March 2018, and the highest Class III price since October 2018. It equates to $1.29 per gallon, up from $1.19 in February and $1.22 a year ago.
    The three-month Class III average is at $14.30, up from $13.87 a year ago but compares to $16.49 in 2017. Incidentally, the March California 4b cheese milk price a year ago was $13.96, with the 4a butter-powder price at $13.01.
    Late Friday morning Class III futures portended an April price at $15.88; May, $15.78; and June at $15.89, with a peak at $16.58 in September.
    The March Class IV price is $15.71, down 15 cents from February but $2.67 above a year ago and the highest March Class IV since 2014. Its three month average stands at $15.68, up from $13.01 a year ago and $15.37 in 2017.
    The April 2 Global Dairy Trade auction registered its ninth consecutive session of gain but rose just 0.8 percent on the weighted average of products offered. That compares to the March 19 gain of 1.9 percent and 3.3 percent on March 5. Sellers brought 17.9 million pounds of product to the market, down from 47.9 million on March 19 and the smallest total since April 3, 2018.
    The gains were again led by rennet casein, up 7.5 percent, followed by butter, up 5.8 percent, after seeing a 9.3 percent jump on March 19. Buttermilk powder was up 5 percent, anhydrous milkfat was up 3.7 percent, after it dipped 3.1 percent in the last event, and GDT Cheddar was up 3.2 percent, after it gained 3.9 percent. Skim milk powder was up 1.8 percent, following a 2.4 percent decline last time.
    Lactose was down 5.3 percent and whole milk powder was off 1.3 percent, following a 4 percent rise last time.
    FC Stone equates the GDT 80 percent butterfat butter price to $2.3782 per pound U.S., up 12.6 cents from the last session. CME butter closed Friday at $2.27 per pound. GDT Cheddar cheese equated to $1.9269 per pound, up 9.6 cents from the last event and compares to Friday’s CME block Cheddar at $1.66. GDT skim milk powder averaged $1.1194 per pound, up from $1.0908 last time. Whole milk powder averaged $1.4910, down from $1.5046. CME Grade A nonfat dry milk closed Friday at 98 3/4-cents per pound.
    Preliminary data pegged February 50-State milk output at 17.0 billion pounds, up 0.2 percent from 2018. The April 3 Dairy Products report shows that less milk went to butter powder and more to cheese.
    February cheese output totaled 991.4 million pounds, down 9.7 percent from January and 0.5 percent above February 2018. Year-to-date output hit 2.1 billion pounds, up 0.3 percent from a year ago.                              
    Wisconsin contributed 258.9 million pounds of that total, down 6.4 percent from January and 1.6 percent below a year ago. California produced 201.2 million pounds, down 5.9 percent from January but 1.2 percent above a year ago. Idaho provided 71.6 million pounds, down 17.4 percent from January and 1.1 percent below a year ago. Minnesota, with 57.8 million, was down 11.5 percent from January but 0.4 percent above a year ago. New Mexico produced 71.2 million pounds, down 11.2 percent from January but 9.9 percent above a year ago.
    Italian cheese output totaled 440.5 million pounds, down 8.3 percent from January but 3.3 percent above a year ago. YTD Italian stands at 920.6 million pounds, up 2.2 percent. Mozzarella, at 348.1 million pounds, was up a hefty 6.3 percent from a year ago, with YTD at 727.7 million pounds, up 4.8 percent.
    American cheese totaled 393.6 million pounds, down 10.4 percent from January and 0.9 percent below a year ago, with YTD at 832.9 million, up 0.2 percent.
    Cheddar, the cheese traded at the CME, totaled 280.6 million pounds, down 42.6 million pounds or 15.2 percent from January and 12.7 million pounds or 4.5 percent below a year ago. YTD Cheddar is at 603.8 million, down 1.3 percent.
    U.S. churns produced 165.2 million pounds of butter, down 24.4 million pounds or 12.9 percent from January and 4.9 million pounds or 3.0 percent below a year ago. YTD butter output is at 354.9 million pounds, up 0.8 percent.
    Yogurt, at 359.2 million pounds, was down 4.4 percent from a year ago, with YTD at 719.3 million pounds, down 2.9 percent.
    Dry whey totaled 74.9 million pounds, down 16.4 percent. Dry whey for human consumption was at 73.7 million pounds, down 7.6 percent from January and 17.1 percent below a year ago. YTD whey output is down 13.2 percent. Stocks hit 85.9 million pounds, up 9.2 percent from January but 1.1 percent below 2018.
    Nonfat dry milk production totaled 153.7 million pounds, down 11 percent from January and 2.6 percent above a year ago. YTD powder is at 326.4 million pounds, up 2.6 percent. Stocks climbed to 308.9 million pounds, up 22.5 million pounds or 7.9 percent from January and are 10.5 million pounds or 3.5 percent above the 2018 level.
    Skim milk powder totaled 35.8 million pounds, down 9.9 percent from January and 4.8 percent below a year ago. YTD skim powder is at 75.6 million pounds, down 9.3 percent from a year ago. The overall report is viewed as mildly bullish.
    Dairy prices started April with some hesitation. The block Cheddar closed the first Friday of the month at $1.66 per pound, up 1 1/2-cents on the week and 5 3/4-cents above a year ago. The barrels closed at $1.5750, down 2 3/4-cents but 12 1/2-cents above a year ago, with 11 cars of block sold and 27 of barrel.
    Central cheesemakers tell Dairy Market News that demand is edging up due to seasonal shifts and the upcoming holidays. Some have said winter buying was particularly dismal in recent months and winter weather in the Midwest and Northeast was far from complementary to retail/restaurant cheese buying. Cheese production is steady to increasing, meeting newly increasing demand. There is still plenty of cheese in the country but a number of Midwestern contacts report that their inventories have been held in check with lower production during fall and winter. Contacts view the markets with a “somewhat bullish lens.”
    Cheese offers in the West are abundant as manufacturers have a lot in stock. Cheese processing is stable to increasing due to strong milk output but it seems like there have been some shifts in the types of cheese produced. A few manufacturers are also refraining from making too much cheese as they try to control supplies. Export and domestic sales are a bit higher.
    Butter closed at $2.27 per pound, up 1 1/2-cents on the week but 1 3/4-cents below a year ago when it jumped 7 1/4-cents. 4 cars traded hands this week.
    Central butter plant managers suggest variances on cream access. Some report availability has tapered down noticeably while others continue to see sufficient to plentiful amounts for the churn. Some contacts are increasing their organic production, as they receive organic cream from outside the region. Butter demand is strong and the markets remain “interminably steady,” says DMN.
    Western butter demand is also strong as spring baking and holidays are around the corner. Interest in bulk butter is also considerable. Butter makers are actively churning cream but a few suggest that cream has tightened greatly over the last couple weeks. Class II processors have also started ramping up production and soaked up extra cream but butter inventories are growing.
     Grade A nonfat dry milk closed Friday at 98 3/4-cents per pound, up 2 1/2-cents on the week and 26 cents above a year ago, with 3 sales reported for the week.
    Spot dry whey saw a close at 34 1/2-cents per pound, 2 1/4-cents higher on the week and 2 1/2-cents above a year ago, on 20 reported sales for the week.
    Exports remain a vital key to increasing product prices and thus milk prices. Cooperatives Working Together members accepted six offers of export assistance from CWT to help capture sales of 575,407 pounds of Cheddar cheese and 39,683 pounds of butter to customers in Asia, Central America, and the Middle East. The product will be delivered through September and raised CWT’s 2019 exports to 25.42 million pounds of American-type cheeses, 2.8 million pounds of butter (82 percent milkfat) and 22.18 million pounds of whole milk powder to 22 countries in six regions.
    The CWT also announced that it will start accepting bids for consideration for assistance on pasteurized process cheese, cream cheese, and anhydrous milkfat.
    U.S. dairy exports are having to contend with a strong U.S. dollar and continuing retaliatory tariffs from Mexico and China. As I pointed out last week, the U.S. has offset some of the losses via other countries but the bottom line is that exports only accounted for 12.5 percent of U.S. milk solids production in January, according to the U.S. Dairy Export Council, lowest figure in about three years.
    While the Administration has walked back its talk of closing the U. S. border with Mexico, the threat was sending shock waves throughout the U.S. dairy industry because that would close access to its largest dairy export market, according to some U.S. dairy organizations.
    “The dairy industry is suffering through one of its worst economic periods ever,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Low milk prices are already creating hardship for farmers, and further supply disruptions would only prolong producer difficulties.” More than seven dairy farms close each day in the United States, according to data from the USDA.
    “Dairy exporters already are suffering from diminished access to export markets due to high tariffs and lack of progress on U.S. trade agreements,” noted Tom Vilsack, president of the U.S. Dairy Export Council. “Closing the border to Mexico would be a gut punch that could set the industry back by a decade or two.”
    Speaking of closing dairy farms; the March 25 issue of Hoards Dairyman told the sad story. Managing editor Cory Geiger also reported in the April 8 Dairy Radio Now broadcast that 2,731 U.S. dairy farms called in quits in 2018, about 6.8 percent, and the most exits since 2007. Geiger sees a similar percentage closing in 2019 and says the number of dairy farms holding permits has declined by 94,041 since 1992, from 131,509 to 37,468, a 72 percent drop. He also pointed out that while the average herd size has gone from 74 cows in 1992 to 251 in 2018, the total number of milk cows in the milking herd has not changed much.
    California remains the number 1 milk producer and has the most dairy cows, followed by Wisconsin, with New York and Idaho battling for the number 3 spot in milk output. Michigan is number 1 in milk per cow, followed by Colorado and New Mexico, and the state with the most cows per herd is New Mexico.
    Evidence of the growing numbers of operations leaving the business is seen in culling numbers. The Daily Dairy Report’s Sarina Sharp wrote in the March 29 Milk Producers Council newsletter that “Week after week, dairy cow slaughter volumes reach the highest figures since 1986, the year of the cow kill program. For the week ending March 16, dairy cow slaughter was 71,129, up 6 percent from the same week a year ago. So far this year, dairy cow culling is up 4.6 percent from the already booming pace of 2018. At this rate, the industry is cutting deep into the dairy herd, and laying the groundwork for slower growth in milk production for the foreseeable future,” warned Sharp.
    Milk prices are climbing however they have a long ways to profitability. USDA’s Prospective Plantings and quarterly Grain Stocks reports showed corn stocks at 8.6 billion bushels on March 1, down 3 percent from March 1, 2018 but a surprisingly much higher level than traders expected, according to the DDR, and “signals suppressed feed demand in recent months.”
    “If the agency’s assessment is correct, it is possible that corn stocks may increase this season, rather than decline as USDA has consistently projected in its monthly balance sheets. That is decidedly bearish,” says the DDR’s Sharp, who adds that soybean stocks remain well above prior-year levels, but the market was already well aware of the soybean surplus.
    Add to that, the devastating flooding of Midwest of farms already reeling from corn and soybean prices that are 20 percent below their 10 year average.
    In politics; lawmakers called on Agriculture Secretary Sonny Perdue to implement the dairy-related provisions of the 2018 Farm Bill as swiftly as possible. A NMPF press release thanked key House and Senate dairy leaders for “adding bipartisan momentum to implementing new, greatly needed dairy programs, a top priority for the U.S. Department of Agriculture.”
    “House Agriculture Committee Chairman Collin Peterson (D-MN) and senior committee member Representative Glenn ‘GT’ Thompson (R-PA) led the House effort, and Senate Agriculture Committee Ranking Member Debbie Stabenow (D-MI) and Senator Roy Blunt (R-MO) led in the Senate. The new Dairy Margin Coverage program and other improvements in the new farm bill will provide critical help to dairy farmers this year,” says NMPF.
    The International Dairy Foods Association president and CEO Michael Dykes echoed some of that sentiment stating “U.S. dairy processors are very pleased with the dairy provisions in this new farm bill. The Agriculture Improvement Act of 2018 not only represented a historic collaboration between the IDFA and NMPF, but it also provides processors and producers with new and improved risk management tools to better manage the current market instability and uncertainty.”