Preliminary data in the USDA’s October Milk Production report has output at 18.56 billion pounds, up 2.3% from October 2019, with output in the top 24 producing states at 17.7 billion pounds, up 2.5%.
    Revisions lowered the September 50-state and 24-state totals 5 million pounds, putting the 50-states at 18.0 billion pounds, still up 2.3% from September 2019.
    October cow numbers totaled 9.39 million head in the 50 states, up an eye catching 14,000 from September and 43,000 above a year ago. The September total was revised up 10,000 head. October’s output per cow averaged 1,977 pounds, up 37 pounds from a year ago or 1.9%.
    California milk was up 1.2% from a year ago, thanks to a 30 pound gain per cow offsetting 5,000 fewer cows milked. September output was revised down 34 million pounds, up 2.2% from September 2019, instead of the originally reported 3.2% gain. Wisconsin was up 1.7% in October, on a 50 pound gain per cow offsetting 9,000 fewer cows.
    Idaho was up 2.7%, thanks to 14,000 more cows and 10 pounds more per cow. Michigan was up 3%, on a 50 pound gain per cow and 3,000 more cows. Minnesota was up 2.5%, on a 60 pound gain per cow offsetting 3,000 less cows. New Mexico was up 1.9%, on a 25 pound gain per cow and 2,000 more cows.
    New York was up 1.0%, thanks to a 20 pound gain per cow, though cow numbers were unchanged. Oregon was down 2.3%, on 2,000 fewer cows and a 10 pound loss per cow. Pennsylvania was up 2.5%, on a 55 pound gain per cow offsetting a loss of 3,000 cows from a year ago.
    South Dakota again saw the biggest gain, up 12.9%, on 13,000 more cows and 45 more pounds per cow. Texas was up 8.2%, on 28,000 more cows and a 65 pound gain per cow. Vermont was down 5.4%, on a 25 pound loss per cow and 5,000 fewer cows. Washington State was off 0.5%, on 2,000 fewer cows, though output per cow was up 5 pounds.
    Most analysts view the report as bearish to the market though we were warned, according to HighGround Dairy’s Lucas Fuess. Speaking in the November 23 “Dairy Radio Now” broadcast, Fuess pointed to the reduced weekly slaughter rates we’ve been seeing, all indicative of a “sharply higher dairy herd size.”
    He said the report is “concerning” because October and November are characteristically the lowest milk production months of the year. He warned that milk will rise seasonally through the spring flush and we could see an extremely burdensome and bearish amount of milk produced in most regions, resulting in milk dumping and growing inventories of product, which will limit upsides on milk prices in 2021. And, it remains to be seen if exports can absorb that extra milk.
    Dairy cow culling crept higher in October, according to the latest Livestock Slaughter report, but was below a year ago, likely due to the high milk prices. An estimated 258,900 head were sent to slaughter under federal inspection, up 8,500 head or 3.4% from September, but 27,200 or 9.5% below October 2019. A total of 2.56 million head have been culled in the first 10 months of 2020, down 142,100 head or 5.3% from the same period in 2019.
    In the week ending November 11, 57,800 dairy cows were sent to slaughter, same as the week before but 4,900 head or 7.8% below that week a year ago.
    Tuesday’s Global Dairy Trade (GDT) auction, Event number 272, reversed gears and saw its weighted average head up 1.8%, after falling 2.0% on November 3.
    Anhydrous milkfat led the gains, up 4.1%, after dropping 2.6% in the last event. Butter inched 0.4% higher, following a 3.9% jump. Skim milk powder was up 2.5%, following a 4.4% drop, and whole milk power was up 1.8%, after falling 2.0% last time.
    Lactose led the losses, plunging 18.8%, after not trading last time, and GDT Cheddar cheese dropped 3.5%, after slipping 0.8% last time.
    StoneX Group equated the GDT 80% butterfat butter price to $1.6984 per pound U.S., up fractionally from the last event. CME butter closed Friday at $1.3450. GDT Cheddar equated to $1.6514 per pound, down 6.6 cents, and compares to Friday’s CME block Cheddar at $1.6450. GDT skim milk powder averaged $1.2696 per pound, up from $1.2348, and whole milk powder averaged $1.3774, up from $1.3539. CME Grade A nonfat closed Friday at $1.0850 per pound.
    Cooperatives Working Together (CWT) members accepted 16 offers of export assistance this week from CWT to help capture sales of 1.7 million pounds of Cheddar and Gouda cheese, 1.0 million pounds of butter, 39,683 pounds of anhydrous milkfat, and 37,479 pounds of cream cheese. The product is going to customers in Asia, the Middle East, North Africa, Oceania, and Central America through April 2021 and raised CWT’s 2020 exports to 29.7 million pounds of American-type cheeses, 11.9 million pounds of butter (82% milkfat), 2.0 million pounds of anhydrous milkfat, 6.58 million pounds of cream cheese, and 48.16 million pounds of whole milk powder. The products will go to 29 countries and are the equivalent of 1.0 billion pounds of milk on a milkfat basis.
    CME block Cheddar dropped to $1.5975 per pound by Thursday, lowest since August 11, but regained 4.75 cents Friday, first gain since October 31, closing at $1.6450, down 27.25 cents on the week and 19.75 cents below a year ago.
    The barrels plunged 21 cents Monday to $1.40, lowest since August 24, but pushed higher Friday to $1.4225, 18.75 cents lower on the week, 76.25 cents below a year ago, and 22.25 cents below the blocks. 7 cars of block sold and 13 of barrel.
    Midwest cheese producers continue to report COVID-related staffing concerns, reports Dairy Market News, though production is running steadily. Milk availability is growing and cheesemakers are reporting notably lower spot milk prices. There was some interest on the cheese buyer side this week, as customers are returning in light of the price declines, but most reports continue to point to buyer hesitancy. Curd and barrel sales were notably slower, as customers are concerned about more public restrictions due to the pandemic. Cheese customers do not want extra inventory at the end of the year, says DMN.
    Western cheese buyers are seeing more offers for cheese as prices sink. Contacts think markets shifted from active demand to oversupply in a relatively short amount of time and manufacturers and brokers are trying to clear stocks so they don’t lose value. Buyers are not interested unless prices are at lower levels. The challenge for both buyers and sellers is that demand for cheese is lagging. Retail demand is ahead of last year but food service sales are weak, government purchases are less than previous rounds, and higher prices have stagnated export opportunities. But, cheese production is steady in the west.
    Spot butter saw a Friday finish at $1.3450 per pound, down 5.50 cents on the week and 68 cents below a year ago, with 21 cars trading hands on the week.
    Central butter producers report mixed tones on cream availability. Some say offers were generally quiet, others are still receiving cream if they choose to take it. Expectations are pointing to more cream becoming available into early 2021. Food service is not expected to be where it has been in previous years. Retail buying increases have helped allay some of the food service loss, but market prices are and have been strained in 2020 compared to previous years.
    Cream supplies have been adequate for steady butter production in the West. A surge is anticipated Thanksgiving Week as some operations take time off. Orders remain strong for most print accounts as prices edge lower. Recent lockdowns, due to advancing pandemic concerns, are stimulating retail sales. Manufacturers continue to pull heavily on stored butter to meet the strong yearend orders.
    Grade A nonfat dry milk closed at $1.0850 per pound, down a quarter-cent on the week and 13.50 cents below a year ago, with 29 sales reported for the week.
    The dry whey fell to 42 cents per pound Wednesday but closed Friday at 43.75   cents, up 0.75 cents on the week and 9 cents above a year ago on 2 sales.
    U.S. dairy product commercial disappearance looked favorable in September. The USDA’s latest data shows total cheese disappearance at 1.14 billion pounds, up 3.0% from September 2019, but year to date is down 0.2%. American type cheese was up 10.2% from a year ago and mirrored year to date numbers.
    Butter, at 188.8 million pounds, was up 12.2%, following two consecutive months of declines, according to HighGround Dairy, and is up 2.9% year to date. Nonfat and skim milk powder totaled 235.8 million pounds, up 20.3% from 2019 and up 1.2% year to date, supported by good domestic demand according to HGD.
    Dairy farm margins fell slightly over the first half of November as milk futures struggled to hold ground against increasing feed futures, according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC.
    The report cited USDA’s November Dairy Products report showing cheese output rising 1.1% from a year ago, with Cheddar up 7.7%. It pointed to CME block and barrel values plummeting after reaching all-time highs in October, stating that “While the Food Box program was a boon to Cheddar demand since the beginning of the pandemic, expectations are for the volume of cheese going into food boxes throughout the end of the year to wane.”Butter production also posted a new monthly record, says the MW, and “Stocks of butter have grown as robust retail demand has not completely offset lost foodservice sales.”
    “The U.S. dollar recently fell to its lowest level in two months,” says the MW, which “provides a tailwind to U.S. dairy exports. Data released November 4 indicated U.S. dairy export volume in milk solids equivalent rose 5% in September from a year ago, marking the 13th straight month of year-over-year increases,” and “The increased exports will help keep prices steady amid demand destruction due to COVID-19,” according to the MW.
    “Corn and soybean meal futures were both higher after a bullish crop report,” the MW stated. “USDA lowered corn yield, raised its forecast for U.S. corn exports to a record 2.65 billion bushels, and lowered ending corn ending stocks from the previous month. The soybean complex similarly experienced a reduction in yield and a lowering of ending stocks. As weather cools and regions of the country re-implement restrictions on commerce and movement to reduce the spread of COVID-19, foodservice demand and its disproportionate impact on various products within the dairy complex will take center stage,” the MW concludes.
    Meanwhile this week’s Livestock, Dairy, and Poultry Outlook says feed price forecasts have been raised significantly. The corn price estimate for the 2019/20 marketing year is $3.56 per bushel; the 2020/21 forecast is $4.00 per bushel, 40 cents higher than last month’s forecast.
    The soybean meal price estimate is $299.50 per short ton, with the 2020/21 forecast at $355 per short ton, $20 higher than the last forecast.
    The alfalfa hay price in September was $171 per short ton, $1 lower than August this year and $8 lower than September 2019.
    The Agriculture Department announced the December Federal order Class I base milk price at $19.87 per hundredweight, up $1.83 from November, the highest Class I price since December 2014, and 54 cents above December 2019. That put the 2020 Class I average at $16.91, down from $16.99 in 2019 and compares to $14.84 in 2018.
    Speaking of Class I, the USDA’s latest data shows U.S. fluid milk sales amounted to 3.7 billion pounds in September, down 1% from September 2019.
    Conventional product sales totaled 3.5 billion pounds, down 1.6% from a year ago. Organic products, at 237 million pounds, were up an impressive 7.7% and represented 6.4% of total sales for the month.
    Whole milk sales totaled 1.2 billion pounds, up 4.1% from a year ago. Sales for the nine month period totaled 11.7 billion pounds, also up 4.1% from 2019, and made up 33.3% of total milk sales for September and 33.9% thus far for the year.
    Skim milk sales, at 225 million pounds, were down 15.2% from a year ago and were down 14.4% year to date.
    Total packaged fluid milk sales, January through September, hit 34.4 billion pounds, up 0.4% from 2019. Conventional product sales so far totaled 32.3 billion pounds, down 0.3%. Organic products, at 2.2 billion pounds, were up 12% and represented 6.3% of total fluid milk sales so far for the year.
    Dairy Market News reports that Class I demand remains mixed in the COVID-19 era for school districts. Orders are mostly steady from week to week, although suppliers continue to report each state and region are very distinctive this year.
    The U.S. crop harvest is winding down. USDA’s latest Crop Progress report puts the corn at 95% harvested, as of the week ending November 15, up from 73% at this time a year ago and 8% ahead of the five year average.  
    Soybeans were at 96% harvested, up from 89% a year ago and 3% ahead of the five year average.
    The cotton harvest is 69% completed, up 3% from a year ago and 5% ahead of the five year average.