The first indication is that U.S. milk production jumped more than expected in August, thanks to increases in output per cow and cow numbers.
The Agriculture Department’s latest data show output at 19.02 billion pounds, up 1.6% from August 2021. The 24-State total came in at 18.2 billion pounds, up 1.7%.
It is only the second monthly increase since October 2021 but is measured against last year’s small 0.6% gain from August 2020. The USDA has lowered its estimates in recent World Agricultural Supply and Demand Estimates reports. However, revisions raised the 50-State July estimate 53 million pounds to 19.2 billion, up 0.5% from a year ago instead of the 0.2% increase originally reported.
August cow numbers totaled 9.427 million, highest since August 2021, up 8,000 head from July numbers, which were revised up 3,000 head. The August herd was only down 11,000 head from July 2021 but is up 60,000 from January.
Output per cow averaged 2,018 pounds, up 34 pounds or 1.7% from August 2021. July output per cow was revised up 5 pounds to 2,038 pounds.
California output was up 2.0% from a year ago. Cow numbers were up 4,000 and output per cow jumped 35 pounds. Wisconsin was up 1.1%. Cow numbers were down 6,000 head but output per cow was up 35 pounds from a year ago.
Idaho was up 2.5% on a 35-pound gain per cow and 6,000 more cows. Michigan was down 1.5% on 15,000 fewer cows though output per cow was up 45 pounds. Minnesota was up 0.6%, thanks to a 45 pound per cow gain offsetting an 8,000 cow drop. New Mexico was down 3.3% on a 24,000-cow drop, but output per cow was up 95 pounds.
New York was up 2.0%, thanks to a 55-pound gain per cow offsetting a loss of 4,000 cows.
Oregon was up 1.4% on 1,000 more cows and a 5-pound gain per cow. Pennsylvania was up 0.5%, on a 35 pound gain per cow but cow numbers were down 7,000 head.
South Dakota was up 14.5%, thanks to 22,000 more cows and a 15-pound gain per cow. Texas was up 8.9% on 30,000 more cows and an 80 pound gain per cow.
Washington state was down 4.2% on 12,000 fewer cows, though output per cow was up 5 pounds.
Cash cheese prices strengthened considerably last week and butter set a new record. The butter soared 7 cents last Tuesday to an all-time high $3.24 per pound, with one sale hitting $3.25. It fell the next day, but Tuesday’s price bested the previous record by 10.50 cents. It closed Friday at $3.1325, down 3.75 cents on the week but $1.3425 above a year ago, with 14 cars sold on the week.
Monday’s butter regained 2 cents, then gave back 0.25 cents Tuesday, slipping to $3.15, as traders weighed the milk production data and the morning’s GDT.
Dairy Market News says, “Cream availability for butter production has yo-yoed quite a bit the past month, but last week was tighter. Very few spot loads were offered at prices enticing enough for butter makers to act on.” Butter inventories are tight and there’s growing concern about end-of-year stocks.
Demand for cream is strong in the West and cream volumes are tight amid high temperatures and declining milk output. Butter output was steady to lower last week.
Cheddar block cheese topped $2 per pound last Wednesday, first time since mid-July and closed Friday at $2.06, highest since July 13, up 14.25 cents on the week, after gaining 15.25 cents the previous week, and 26.75 cents above a year ago.
The barrels finished Friday at $2.09, 15.75 cents higher and 58 cents above a year ago. Sales totaled 3 cars of block and 9 of barrel.
The blocks eased back 0.75 cents Monday and stayed there Tuesday at $2.0525. The barrels were up 1.25 cents Monday and jumped 6.75 cents Tuesday, to $2.17, highest since July 11.
A growing number of cheesemakers tell DMN that inventories are tightening in the Midwest. Barrel producers say retailers are starting to plan end-of-year holiday orders and are concerned regarding their production capacity and whether it will meet those needs. Adding to the concern, milk has been down by a noticeable amount the past few weeks.
Demand for cheese is strengthening in retail and food service in the West, thanks to football’s return. Export demand was also trending higher, as U.S. prices have been competitive.
Grade A nonfat dry milk climbed to $1.5875 per pound last Monday, highest since Aug. 3, but finished Friday at $1.57, down 0.50 cents on the week and 22 cents above a year ago, with 25 sales reported on the week.
Monday’s powder slipped a penny and stayed put Tuesday at $1.56.
Whey climbed to 49.75 cents per pound last Tuesday, highest since July 5, but fell to a 46 cent close, up 0.25 cent on the week but 0.75 cent below a year ago on 3 sales.
The whey inched back a half-cent Monday and held Tuesday at 45.50 cents per pound.
Dairy prices need to strengthen to shore up milk prices. The Sept. 9 Dairy and Food Market Analyst reports that dairy farms are calling it quits, particularly in the West where farm-level margins are translating into more sales at the auction block.
“A&M Livestock lists three dairy dispersals in California in the next three weeks,” says the Analyst, “and we are told auction houses are booked out. Farm exits are happening faster than expected. But also, August was the first month that many California milk producers experienced below cost of production milk prices.”
Break-evens in the Golden State are now about $24.00 per cwt, according to the Analyst, nearly $4.00 more than the announced August Class III milk price.
GDT up 2.0%
Recovery continued in Tuesday’s Global Dairy Trade auction, which saw the weighted average rise 2.0%, following the Sept. 6 4.9% jump, reversing five consecutive declines.
Anhydrous milkfat led the way, up 4.0%, after leading the gains last time with a 13.9% rise. Butter inched 0.2% lower, after a 3.3% rise. Whole milk powder was up 3.7%, following a 5.1% gain, and GDT Cheddar was up 2.1% after rising 1.0%. Skim milk powder was down 0.7%, following a 1.5% gain in the last event.
U.S. dairy product demand was “mostly positive” in July, according to HighGround Dairy’s Lucas Fuess in the Sept. 19 "Dairy Radio Now" broadcast. He said there were “red flags” this summer as to how consumers would react to inflation and affect dairy purchases, and that remains to be seen.
The USDA’s latest data shows cheese utilization totaled 1.165 billion pounds, down 5.1% from June but 0.5% above July 2021, with year to date up 1.9%. Domestic utilization was up 0.4% from a year ago and exports were up 1.6%, with YTD exports up 14.6%.
Butter utilization totaled 180.6 million pounds, up 10.3% from June and 4.2% above a year ago, with domestic use up 0.8% from a year ago. Exports were up 78.7%, he said, however, year-to-date utilization remained below the first seven months of 2021, hurt especially by weakness in February and March. Exports are close to record highs, according to HGD, but represent a small share of total utilization.
Nonfat dry milk utilization, at 197.3 million pounds, was down 17.4% from a year ago, down for the second consecutive month and the sixth time this year, as exports “struggle,” Fuess said. Domestic usage was also down, and “that’s been the trend for the past several years. It’s likely that export demand will continue to underperform last year’s impressive sum in the coming months, with weaker shipments negatively impacting utilization into third and fourth quarter.”
Dry whey totaled 86 million pounds, up 13.9% from 2021, as commercial utilization posted its third consecutive monthly gain, climbing to the highest volume of any month since October 2020, says HGD.
Fluid sales down 1.7%
Demand continues to falter in fluid milk. U.S. packaged fluid products totaled 3.3 billion pounds in July, down 5.0% from July 2021.
Conventional product sales totaled 3.1 billion pounds, down 5.4% from a year ago. Organic products, at 228 million pounds, were off 0.3%.
Total packaged fluid sales for the seven-month period amounted to 24.9 billion pounds, down 2.6% from 2021. Conventional product sales totaled 23.3 billion pounds, down 2.7%. Organic products, at 1.7 billion, were down 2.0%, and represented 6.7% of total milk sales for the period.