Longest-ever government shutdown ends

The “Mielke” Market Weekly

Senate lawmakers finally agreed on legislation to reopen the government and the House voted its approval Wednesday night, 222 to 209, with six Democrats joining all but two Republicans to approve the measure. The president signed the legislation hours later. But the aftermath of the longest-ever shutdown is far from over, especially if you were flying this week or last.

The shutdown delayed the latest milk production data by a few weeks, and, unlike affected government workers, U.S. milk cows kept working. There were many more of them in September and output per cow saw healthy gains. The U.S. Department of Agriculture’s preliminary data showed output hit 18.990 billion pounds, up 4.0% from September 2024, following a 3.4% gain in August. The 24-state total, at 18.279 billion, was up 4.2%, after gaining 3.6% in August.

The growth from August to September was counter-seasonal, said HighGround Dairy, and the herd size is the biggest since the second quarter of 1993.

August output in the 50 states was revised to 19.543 billion, up 23 million pounds from last month’s estimate, and 3.4% above a year ago, instead of the 3.2% originally reported. The 24-state total was revised to 18.8 billion, up 44 million pounds or 3.6% above a year ago, instead of the 3.3% reported.

September cow numbers totaled 9.581 million head, up 40,000 head from August, and 228,000 or 2.4% more than a year ago. The August count was revised up 21,000 head. The 24-state head count, at 9.146 million, was up 38,000 from August, and 235,000 or 2.6% above a year ago. The August count was revised, up 33,000 head. The herd has grown 191,000 head since January. 

Output per cow averaged 1,982 pounds, up 30 pounds or 1.5% from a year ago in the 50 states and averaged 1,999 pounds in the top 24, up 30 pounds or 1.5%. Revisions reduced the August national average by 2 pounds and took 3 pounds off in the 24 states.

California cows put just under 3.3 billion pounds in the tank in September, up 78 million or 2.4% from a year ago, thanks to 5,000 more cows and 40 pounds more per cow. Wisconsin output totaled 2.7 billion pounds, up 74 million or 2.8%, on a 35-pound per cow gain and 14,000 more cows in the string.

Idaho output, at 1.5 billion pounds, was up 129 million pounds or 9.1% from a year ago, thanks to 53,000 more cows and a 25-pound gain per cow. Kansas again recorded the biggest percentage increase, up a whopping 21.1%, on 38,000 more cows and a 5-pound gain per cow.

Michigan was up 4.8% on 19,000 more cows and a 10-pound gain per cow. Minnesota was up 4.5%, on 14,000 more cows and a 25-pound gain per cow.

New Mexico, one of only four states showing a decline in milk output, was down 1.3%, on a loss of 3,000 cows. Output per cow was unchanged. New York was up 6.0% on 25,000 more cows and a 40-pound gain per cow. Oregon was up 5.9% on 5,000 more cows and a 30-pound gain per cow.

Pennsylvania inched up 0.4% on a 25-pound gain per cow, outweighing a drop of 5,000 cows. South Dakota was up 9.4%, on 19,000 more cows and a 10-pound gain per cow.

Texas production hit 1.5 billion, up 103 million pounds or 7.4% from a year ago, thanks to 36,000 more cows and a 40-pound gain per cow. Vermont was up 4.5%, on 3,000 more cows and a 35-pound gain per cow. Washington State again posted the biggest drop in the country, down 8.5%, on 23,000 fewer cows milked. Output per cow was up 5 pounds.

StoneX broker Dave Kurzawski called the report “a big, big, bearish number,” and pointed out that fat and protein in the milk was also up, so component-adjusted growth was up a whopping 6.1%.

Kurzawski attributed the milk output increase primarily to cows being added at the fastest pace in some 40 years and reminiscent of the expansion in the mid-1980s when the government paid farmers to stop producing milk for a period of time and when those payments ran out, the herd rebounded very quickly. The past 15 months, cow numbers were up 58,000 head or 2.8%, said Kurzawski.

“The market is trying to figure this all out and weigh it against demand,” he said, “which seems to be spotty and lackluster at best. The bright spot in the U.S. this year has been exports, and now you look at Europe and global prices and they have been coming down on butter and cheese, for example.”

He said it’s mainly the cheese market that’s reeling from the lack of exports. “While butter prices are also coming down, so have U.S. prices, almost an equal distant dynamic, so we’re still in a very good spot to export butter and we’ll know more when the government reopens and those reports are made available.”

As to the impact of the shutdown on the dairy industry, besides missing some USDA reports, Kurzawski speculated that consumers pulled back a little on spending, understandable if you haven’t been paid the past month, but “the reopening might produce a sales burst as we go into the holidays.”

Meanwhile, the Nov. 13 Daily Dairy Report said growth in Europe shifted into high gear in September as well. “Milk collections in the European Union  reached 26.2 billion pounds, up an astounding 5.7% from September 2024,” the DDR said. “That was Europe’s strongest year-over-year increase since 2017.”

All of Europe’s major milk sheds reported strong increases,” the DDR said. “Europe’s dairy industry has fully recovered from bluetongue virus and it’s possible that infections in late 2024 and early 2025 contributed to today’s atypical growth.”

The USDA’s World Agriculture Supply and Demand Estimates report issued Friday raised the 2025 milk production forecast from last month’s report. The higher milk cow inventories and robust milk per cow through third quarter 2025 reported in the September milk production report was cited as the reason. The 2026 forecast was also raised, as the higher inventories and increased productivity rates are expected to carry into next year. 

After dropping 10.75 cents the previous week, the Chicago Mercantile Exchange block Cheddar closed the second Friday of November at $1.54 per pound, down another 12 cents on the week, the lowest since April 12, 2024, and 15.25 cents below a year ago. The barrels fell to $1.6425 per pound Thursday, lowest since Sept. 26, 2025, and were unchanged Friday, 5.75 cents lower on the week, 4.25 cents below a year ago, but 10.25 cents above the blocks. Sales amounted to 18 loads of block.

Central region cheesemakers are running busy schedules, according to Dairy Market news, though some are operating below capacity due to scheduled downtime. Milk production is steady in the region and some plants continue to send milk to bottlers, reducing Class III sales. Spot Class III demand remains light as some cheesemakers say they have volumes available and were not purchasing additional loads. Class III prices at mid-week ranged from flat to $1.50 over class. Retail cheese demand is strengthening, while food service sales remain somewhat light. Lower prices for cheese in Europe are having a negative impact on export demand.

Cheese manufacturers in the West are receiving sufficient milk and spot load demand varies from steady to stronger, said DMN. In a few cases, milk production is below anticipated volumes and cheese producers are securing milk. Cheese output is steady. Domestic demand varies from moderate to steady. Export demand is steady to strong. Demand among buyers for securing first and second quarter 2026 loads is active, according to DMN.

CME butter started the week jumping 3.50 cents, then gave up a penny Tuesday, added 5.25 cents Thursday, and gained 2.25 cents Friday to close at $1.5750, up a dime on the week, but $1.0550 below a year ago. There were 36 CME sales.

Milk output is steady in the Central region, but component levels are up from a year ago. Cream production is steady, but contacts say inventories are tightening somewhat. Some butter makers were increasing their internal usage of cream and reducing what they sell. Demand for cream is steady from butter makers, but Class II sales are picking up. Butter production is strong. Retail butter demand is strengthening as the Thanksgiving holiday approaches.

Food service sales remain light. Export demand is strong as domestic 82% butterfat butter is offered at competitive prices compared to that produced in Europe, said DMN.

A few Western butter manufacturers reported that milk intakes were below anticipated volumes; however, there’s plenty of spot cream available to make up any shortages from lower milk intakes. Spot cream demand is stronger for butter producers and butter output is strong. Retail and bulk butter production is heavily active. Some butter producers reported that their bulk production lines were primarily focused on loads for international customers. This is tightening the availability of bulk butter for domestic buyers and is expected to continue into next year. Salted 80% butterfat butter is readily available, while unsalted 80% is somewhat tight. Domestic butter demand is mixed, while export demand is steady to stronger, according to DMN.

Grade A nonfat dry milk closed Friday at $1.1825 per pound, up 3.75 cents on the week, but 21.75 cents below a year ago, with 17 sales for the week.

Dry whey jumped 2 cents Monday, added 2 cents Tuesday and tacked on 3 more cents Friday to close at 78 cents per pound, the highest CME price since Dec. 13, 2024, and 12.50 cents above a year ago. There were three sales on the week.

The U.S. Dairy Export Council and National Milk Producers Federation praised the announcement this week of new trade frameworks with Argentina, Ecuador, El Salvador and Guatemala, which “collectively position U.S. dairy exporters for further gains in the western hemisphere.”

“U.S. dairy exports to U.S.-Central America-Dominican Republic Free Trade Agreement partners have almost doubled over the past five years. The frameworks the administration has negotiated with Guatemala and El Salvador position our exporters to really capitalize on that landscape during the first duty-free year of dairy trade under the CAFTA-DR trade agreement by ensuring that nontariff trade barriers don’t slow our progress,” said Gregg Doud, president and CEO of NMPF. “Non-tariff barriers tend to sprout up like weeds when tariffs disappear, which is why these commitments are so important in this region. The nontariff commitments announced with Argentina and Ecuador also may help resolve multiple long-standing issues in those markets.”

The agriculture department announced this week the opening of a sterile fly dispersal facility in Tampico, Mexico, in its fight against New World screwworm. “The facility will allow USDA to disperse sterile flies aerially across northeastern Mexico, including in Nuevo Leon, and ensure flexibility and responsiveness in northern Mexico, giving us a greater ability to drop sterile flies and continue to push the pest south,” said Agriculture Secretary Brooke Rollins.

Stopping the spread of screwworm is a top priority for the Trump administration, Rollins said, after meeting last week with the Mexican president, Claudia Sheinbaum, and Secretary Julio Berdegue on the joint response to screwworm. “We are boosting our efforts and completing a joint review of our screwworm operations in Mexico to ensure our protocols are being followed.”

Rollins also led the largest USDA agribusiness trade mission in history last week, according to a USDA press release. Some 41 U.S. businesses, 33 cooperators and agriculture advocacy groups, six state departments of agriculture, and 150 participants conducted more than 500 business-to-business meetings over three days. Rollins said, “This was a critical opportunity for American business to further trade ties and for USDA to continue its aggressive response to NWS in Mexico.”

U.S. dairy farmers and related industry people gathered this week in Arlington, Texas, for the joint annual meeting of the NMPF, the United Dairy Board and the United Dairy Industry Association.

NMPF President and CEO Gregg Doud said, “U.S. dairy is well-positioned for growth. I love where we are in this industry right now, today, folks,” noting $11 billion in new dairy-plant investment currently underway nationwide. “Yes, there’s going to be uncertainty. My goodness, there’s uncertainty. But we’re in expansion mode. And I love it.”

“Dairy producers in the past year have grappled with workforce instability and a shifting trade environment even as consumer demand has remained strong and the benefits of dairy are increasingly recognized in the nutrition and policy communities. But the firm foundation built for dairy over the past several years bodes well for the industry’s future,” said outgoing NMPF Chairman Randy Mooney, who also reflected on his 17 years leading NMPF’s board of directors.

Agriculture Secretary Brooke Rollins touted the administration’s milk action plan to support dairy farmers,  “I want to be very clear. We will never stop fighting for those of you in the dairy industry and across rural America; we have reached that golden age for our producers.” “Dairy farmers have delivered for America for 250 years, and now it’s time for us to deliver for you,” she said.

Rollins outlined USDA’s dairy priorities, outlining the administration’s 4-point approach to support the industry: incentivizing dairy consumption through changes to the Dietary Guidelines for Americans, expected in December or early January; working to drive down input costs; facilitating investments in American milk processing; and expanding markets to help milk producers prosper. She also noted the importance of farm-labor issues, pledging to seek federal changes to rules and regulations in coordination with the departments of labor and homeland security, while noting that broader changes will require congressional action. “We are acutely aware of the unique labor needs of the dairy industry,” she said.