U.S. milk output is stalling as cow numbers and output per cow continue to fall. Production fell below that of a year ago for the first time since May 2020, the result then of restrictions imposed by several cooperatives.

The USDA’s preliminary data show October output at 18.52 billion pounds, down 0.5% from October 2020. The 24-State total, at 17.7 billion, was down 0.3% from a year ago. Revisions lowered the September 50-State estimate by 37 million pounds to 18.0 billion, virtually unchanged from 2020.

Cow numbers totaled 9.40 million head, down 14,000 from September, the fifth consecutive month they were down from the previous month, and the September count was revised 8,000 head lower. The October herd was 14,000 head below a year ago and down a whopping 103,000 head since June.

StoneX Dairy Group says, “The only time we’ve seen that in the past 23 years was late 2009 when we lost 178,000 head over 5 months with the help of CWT and truly devastating margins.”

October output per cow averaged 1,970 pounds, down 6 pounds or 0.3% from a year ago.

California output was down 43 million pounds or 1.3% from a year ago, on a 25-pound drop per cow. Cow numbers were unchanged.

Wisconsin was up 69 million pounds or 2.7%, on a 20-pound gain per cow and 21,000 more cows.

Idaho was up 0.9%, on 6,000 more cows, while output per cow was unchanged.

Michigan was off 0.4% on a 30-pound drop per cow, though cow numbers were up 4,000. Minnesota was up 2.8% on 9,000 more cows and a 15-pound gain per cow.

New Mexico again had the biggest drop, down 12.2%, after falling 12.5% in September. Depleted finances shuttered several operations in the state. Cow numbers were down 34,000 head and output per cow was down 45 pounds.

New York was up 1.0%, thanks to 2,000 more cows and a 15-pound gain per cow.

Oregon was unchanged across the board. Pennsylvania was down 3.1%, on 7,000 fewer cows and 30 pounds less per cow.

South Dakota was up 15.3%, on 21,000 more cows and a 5-pound gain per cow. Texas was up 3.9%, with 22,000 more cows milked and a 5-pound gain per cow.

The Daily Dairy Report says Texas increase in cow numbers was likely due to producer purchases of cows and production bases from shuttered dairies in New Mexico.

The DDR adds that a similar phenomenon has been happening in Idaho as an exodus of dairies occurs in Washington state, which scored the second biggest decline in October, down 6.9%, following a 6.8% drop in September. Cow numbers were down 15,000 and output per cow was down 30 pounds.

Butter stocks dropping

The October Milk Production report lit a short-lived fire under cheese prices Thursday and Friday but Monday’s October Cold Storage report put the fire out.

American type cheese stocks climbed to 845.6 million pounds, up 1.5 million pounds or 0.2% from September, and 89.4 million pounds or 11.8% above those a year ago.

HighGround Dairy says American stocks were at their highest point in 2021, which has never happened before during October."

The “other” cheese category slipped to 584.2 million pounds, down 7.7 million pounds or 1.3% from September, but 19.1 million or 3.4% above a year ago.

The total cheese inventory stood at 1.45 billion pounds, down 6.6 million pounds or 0.5% from September, but a whopping 109.9 million pounds or 8.2% above Oct. 2020.

Milk output in August was up just 0.6% while cheese output was up 4.4%. September milk output was unchanged while cheese output was up 3.3%.

HGD concludes that “until shipping lanes open up for more expanded access to export and more important, labor challenges improve to allow converting facilities to maximize their output, expect range-bound cheese markets through the end of 2021 and potentially spilling over to the first few months of 2022.”

The story is a little more encouraging on butter as stocks fell for the fourth consecutive month and remained below those a year ago for the second month in a row. Prior to September, that hadn’t happened since June 2019.

The Oct. 31 butter inventory fell to 281.5 million pounds, down 42.9 million pounds or 13.2% from September and is 18.2 million or 6.1% below a year ago. The September count was revised down 5.7 million pounds from last month’s data.

U.S. butter production was down 1.7% in August and down 4.9% in September as milk was diverted from the churn to the vat.

Prices climb

After jumping 16.50 cents the previous week, the Cheddar blocks fell to $1.66 per pound last Tuesday, then regained 6 cents Thursday and 12.75 cents Friday to close at $1.8575, up 10.75 cents on the week, highest since Sept. 30, and 21.25 cents above a year ago when they tumbled 27.25 cents.

The barrels fell to $1.4450 last Wednesday but finished Friday at $1.52, 2.25 cents higher on the week and 9.75 cents above a year ago; 5 cars of block were trade last week and 28 of barrel.

The blocks were unchanged both Monday and Tuesday, with no activity, holding at $1.8575.

The barrels were down a penny Monday on an uncovered offer, but gained 1.50 cents Tuesday, climbing back to $1.5250, 33.25 cents below the blocks.

Spot milk offers remained somewhat quiet last week, according to Dairy Market News, with Central prices around $1 over class at midweek. Cheese production remained similar to recent weeks, with plants running full schedules, if they can, though some are cutting back. Cheese demand is strong in most cases for Midwestern producers. Some reported lighter customer interest last week but many have been in catchup mode for weeks with labor shortages and orders.

Western retail cheese demand is strong as buyers prepare for the holidays. Food service demand is steady and prices are favorable for international buys but loads intended for export face delays due to port congestion. That may be causing buyers to hesitate, not knowing when or if they would get product from the U.S. Delays are also occurring due to a shortage of truck drivers. Cheese stocks are tightening and output is mixed. Milk is available to run at or near capacity, though some say staffing shortages are limiting output. Uncle Sam announced a cheese solicitation for 19.2 million pounds from March to July.

Butter topped $2 per pound last Thursday, first time since June 2020, and closed Friday at $2.0475, up 9.75 cents on the week, highest CME price since Nov. 20, 2019, and 70.25 cents above a year ago, on 12 sales.

A trade took the butter down 5.75 cents on Monday and stayed there Tuesday, at $1.99 per pound.

Cream supplies are tight, says DMN, so microfixing is occurring — taking frozen blocks, thawing them, and cutting them into consumer ready sticks; but the process requires additional hands, which are in short supply. Butter demand is very strong and cream tightness is expected to continue potentially into 2022, says DMN.

Western cream availability is mixed. Some contacts report availability while others say inventories are tight. Demand for cream is strong in retail and food service and international demand remains strong. A shortage of truck drivers is causing delays to cream and butter loads.

Spot nonfat dry milk closed Friday at $1.5550 per pound, up a half-cent on the week and 47 cents above a year ago, with 12 sales reported on the week.

Monday’s powder was up 1.25 cents on an unfilled bid and was unchanged Tuesday, holding at $1.5675.

Whey continued to climb last week, closing at 70 cents per pound, up 3 cents on the week, highest since April 20, and just a quarter-cent shy of the record 70.25 cents per pound on April 20, 2021. It was 26.25 cents above a year ago, with 2 sales reported for the week.

The whey was unchanged both Monday and Tuesday, holding at 70 cents per pound for the fourth session in a row.

Class I up $1.19

The Agriculture Department announced the December Federal order Class I base milk price at $19.17 per hundredweight, up $1.19 from November, 70 cents below December 2020, and the highest Class I since December 2020.

It equates to about $1.65 per gallon, down from $1.71 a year ago. The 2021 Class I average is $16.83, down from $16.91 in 2020, and compares to $16.99 in 2019.

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Columnist Lee Mielke wraps up the week’s dairy industry news.