Falling cow numbers, driven by higher feed costs and tightening farm margins, plus intense hot weather impacting output per cow, resulted in a smaller increase in August milk output than many expected and the weakest year over year gain since June 2020.
The Agriculture Department’s preliminary data pegs production at 18.84 billion pounds, down 282 million pounds or 1.5% from July, but 208 million or 1.1% above August 2020. It was the 15th consecutive month to top year ago output. The 24-State total hit 18.0 billion pounds, also up 1.1% from a year ago.
Revisions lowered the July 50-State estimate by 18 million pounds from last month’s report, to 19.1 billion, up 2.0% from 2020.
August cow numbers totaled 9.48 million head, down 19,000 from July (15,000 from New Mexico alone), third month in a row cow numbers fell from the previous month, but still 106,000 above a year ago. July numbers were revised down 1,000 head.
August output per cow averaged 1,987 pounds, down 1 pound from 2020.
California output was up 0.7%, thanks to a 15-pound increase per cow offsetting 1,000 fewer cows. Wisconsin was up 2.6% on a 20-pound gain per cow and 21,000 more cows. Idaho was up 1.1%, on 9,000 more cows offsetting a 5-pound drop per cow.
Michigan was up 3.9%, on 17,000 more cows. Output per cow was unchanged. Minnesota was up 2.3% on 16,000 more cows but output per cow was down 25 pounds. New Mexico was down 9.3%, biggest decline in the country, due to a 100-pound drop per cow and 15,000 fewer cows milked.
New York was up 0.3%, thanks to 2,000 more cows, though output per cow was unchanged.
Oregon was up 0.5%, on 1,000 more cows but output per cow was down 5 pounds. Pennsylvania output was unchanged. Cow numbers were down 7,000 head but output per cow was up 25 pounds.
South Dakota again unquestionably had the biggest gain, up 16.2%, on 22,000 more cows and a 5-pound gain per cow. Texas output was held in check from a 45-pound drop per cow but cow numbers were up 32,000 head.
Washington state had the second biggest decline, down 6.6%, following a 7.2% drop in July. Output per cow was down 65 pounds and cow numbers were down 10,000 head.
GDT up 1.0%
Strength remained in Tuesday’s Global Dairy Trade auction which saw the weighted average up 1.0%, following the 4.0% jump on Sept. 7.
Whole milk powder led the gains in this event, up 2.2%, which followed a 3.3% rise last time. Skim milk powder was up 0.9%, after leading the gains last time, with a 7.3% advance. Lactose was up 1.3%, after jumping 6.4% last time.
Butter and cheese fell, down 1.9% and 1.2% respectively. Butter was up 3.7% in the last event and Cheddar was up 3.6%.
StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.1492 per pound U.S., down 4 cents, after advancing 7.9 cents last time, and compares to CME butter which closed Tuesday at $1.75. GDT Cheddar, at $1.9387, was down 2.4 cents, and compares to Tuesday’s CME block Cheddar also at $1.75.
GDT skim milk powder averaged $1.4979 per pound, up from $1.4850. Whole milk powder averaged $1.7131 per pound, up from $1.6740. CME Grade A nonfat dry milk closed Tuesday at $1.35 per pound.
Dairy prices yawn
Dairy prices didn’t see a lot of change last week as traders anticipated Monday afternoon’s August Milk Production report, Tuesday morning’s GDT, and Wednesday’s August Cold Storage report.
Block Cheddar started last week gaining 2.50 cents but headed south from there to a Friday finish at $1.7925 per pound, a quarter-cent higher on the week but 83.50 cents below a year ago when they pole vaulted 46.25 cents to $2.6275. The surge was 1.25 cents shy of the record week to week gain recorded the week of May 11, 2020, when Uncle Sam was meddling in the market because of COVID.
The barrels closed Friday at $1.51 per pound, up 3.25 cents on the week, 12 cents below a year ago, and 28.25 cents below the blocks; 4 cars of block found new homes on the week at the CME and 19 of barrel.
Traders took the blocks down 6.75 cents Monday, with 5 carloads exchanging hands, then regained 2.50 cents Tuesday, climbing back to $1.75 on 3 sales.
The barrels jumped 9 cents on 6 sales Monday and stayed there Tuesday at $1.60, with 9 more loads trading places and the spread lowered to 15 cents.
Cheesemakers told Dairy Market News that their operations remain strained by employee and trucker shortages. Workers are getting all the overtime they want and hiring bonuses and incentives were not yet filling the void.
Spot milk was slightly pricier last week, with the holiday weekend in the rearview mirror. Some cheesemakers said there were no spot milk offers last week. Prices were near or at $1.00 over Class III. But milk availability is expected to increase as Class I pipelines near filling, weather cools, and expected hearty amounts of high quality forage support milk output. Curd and barrel producers say demand is fairly strong, particularly due to fairs and outdoor events. Cheese sales are reportedly healthy, says DMN, though market tones are uncertain.
Retail cheese sales are holding steady in the West, while demand for cheese in food service slid lower last week. International demand remains strong but loads are continuing to back up in warehouses, as they face delays due to a shortage of truck drivers and limited available shipping supplies, and port congestion. Spot purchasers found less cheese available last week, according to DMN, and milk production has decreased, seasonally, though cheese inventories remain high.
Spot butter shot up to $1.8275 per pound last Tuesday, highest since May 21, but closed Friday at $1.79, up a half-cent on the week and 19.25 cents above a year ago, with 22 sales reported on the week.
Monday’s butter fell 1.75 cents, with 9 loads sold, and lost another 2.25 cents Tuesday, with 14 more loads being traded, and the price falling to $1.75.
Reports on the impacts of staffing shortages are increasing, according to DMN, and butter producers are providing notable percentage decreases regarding inventories versus being fully staffed. Prices were generally steeper but some mid to later week cream deals were at a bargain. Food service sales remain healthy, while retail demand is beginning to pick up. Fall demand increases are expected to affect retail sales in a more matter-of-fact way this year than last, says DMN. Still, butter market tones are noted as “steady to slightly bullish.”
Cream is tighter in the West and butter production schedules are mixed. Inventories are ample. Food service orders are steady overall, but some contacts note that demand is beginning to falter in areas with COVID-related temporary school closures or where increasing case numbers or stringent public health precautions may be contributing to lower dine-in numbers at restaurants. Retail sales are fairly level but some grocers are placing larger orders in anticipation of strong customer demand for holiday cooking and baking later this year.
Grade A nonfat dry milk ended last week at $1.35 per pound, 0.75 cents lower than the previous Friday but 28 cents above a year ago, on 9 cars sold for the week.
The powder was unchanged Monday and Tuesday, holding at $1.35.
The Daily Dairy Report’s Sarina Sharp wrote in the Sept. 10 Milk Producers Council newsletter that “in the absence of cheap spot milk, cheesemakers are fortifying vats with nonfat dry milk. Despite the snarls in the global supply chain, exporters are moving big volumes of powder to Mexico and Asia. The fundamentals are friendly, but it may take something more to lift powder prices. The last time U.S. prices were this high, powder stocks were much lower than they are today,” says Sharp.
CME dry whey closed at 53.50 cents per pound, up a half-cent on the week and 18 cents above a year ago on 2 sales for the week.
Monday’s whey was also unchanged but gained 1.50 cents Tuesday, hitting 55 cents per pound, highest since June 30, on 3 sales.
Fluid sales plunge 6.3%
U.S. fluid milk sales continue to falter. USDA’s latest data put July sales of packaged fluid milk products at 3.5 billion pounds, down 6.3% from July 2020, after plummeting 6.7% in June.
Conventional product sales totaled 3.3 billion pounds, down 6.2% from a year ago. Organic products, at 221 million pounds, were down 9.0%, and represented 6.4% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, down 4.8% from a year ago, with year to date consumption down 7.5%. Whole milk represented 33.1% of total milk sales for the seven-month period.
July skim milk sales, at 200 million pounds, were down 12.2% from a year ago and down 14.1% year to date.
Total packaged fluid milk sales for the first seven months 2021 amounted to 25.6 billion pounds, down 5.3% from 2020. Conventional product sales totaled 23.95 billion pounds, down 5.5%. Organic products, at 1.7 billion, were down 2.1%, and represented 6.4% of total milk sales for the period.
The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.