The Agriculture Department reported preliminary November output at 17.4 billion pounds, up a bullish 0.5% from November 2018.
Output in the top 24 states totaled 16.7 billion pounds, up 0.9%. Revisions reduced the original 50-state October total by 60 million pounds, now put at 18.0 billion, up 1.0% from October 2018, instead of the 1.3% originally reported.
Cow numbers were unchanged in November. The 50-state count stayed 9.331 million head, though the October count was revised upward 4,000 cows, but is 27,000 head below November 2018. Output per cow averaged 1,869 pounds, down 65 pounds from October but 15 pounds above a year ago.
California output was up just 0.7%. Cow numbers were down 6,000 head but output per cow was up 20 pounds. Wisconsin was down 39 million pounds or 1.6% from a year ago, on a 20-pound drop per cow and 7,000 fewer cows milked.
Arizona scored the biggest decline, down 6.3%, on 12,000 fewer cows and a 10-pound drop per cow. Colorado had the biggest increase, up 7.0%, thanks to 12,000 more cows and a 5-pound gain per cow. Texas was up 6.9%, on a 30,000 cow increase and 25 pounds more per cow.
Idaho was up 3.1%, thanks to 19,000 more cows, though output per cow was unchanged. New York was up 2.0%, on 3,000 more cows and a 30-pound gain per cow, and Minnesota was up 1.1% on a 40-pound gain per cow offsetting 5,000 fewer cows.
Michigan was up 1.7% on a 5-pound gain per cow and 6,000 more cows. New Mexico was up 2.2%, on a 15-pound gain per cow and 5,000 more cows. Oregon was up 1.9% on a 10-pound gain per cow and 1,000 more cows. Pennsylvania was down 1.3%, though output per cow was up 55 pounds, hardly enough to offset a drop of 24,000 cows.
Vermont was up 0.5% on a 20-pound gain per cow offsetting 1,000 fewer cows. Florida was up 2.2% on a 35-pound gain per cow. Cow numbers were unchanged.
Washington state inched 0.4% higher, thanks to 1,000 more cows but output per cow was unchanged.
The USDA’s latest Livestock Slaughter report shows an estimated 256,100 head of dairy cows were slaughtered under federal inspection in November, down 30,000 from October and 11,900 head or 4.4% below November 2018.
The 11-month cull count stands at 2.96 million head, up 67,100 or 2.3% from a year ago.
FC Stone, however, points out that there were fewer kill days in November compared to a year ago and, on a per-kill-day basis “it looks like slaughter was up a little. Compared to heifers it would suggest a roughly flat milking herd.”
'Twas the market before Christmas
CME cheese price declines reversed the week before Christmas with the blocks closing the week at $1.86 per pound, up 6.25 cents and 47 cents above a year ago.
The barrels, after diving a record 53.25 cents the previous week, fell to $1.57 last Tuesday, lowest since June 12, but finished Friday at $1.6650, 3 cents below the previous Friday but 37 cents above a year ago.
Twelve cars of block traded hands last week at the CME and 35 of barrel, the highest barrel count since the week of Aug. 26.
The blocks were unchanged Monday but gave up 2.75 cents Tuesday, dropping to $1.8325, as traders absorbed the November Cold Storage data and await the market’s reopening after Christmas.
The barrels jumped 5.75 cents Monday but backed down a penny Tuesday, to $1.7125, 12 cents below the blocks.
Cheese traders will have a new tool to use in 2020. The CME will begin listing block cheese futures and options beginning Jan. 12.
The Daily Dairy Report’s Sarina Sharp put cheese prices in perspective in the Dec. 13 Milk Producer Council newsletter, writing: “For cash strapped dairy producers, sky-high cheese prices were nice while they lasted, and they lasted for a surprisingly long time. But in the long run, it’s healthier to have cheese at prices that pay the bills but don’t kill demand. Steady profits are better for the industry than another boom-and-bust cycle.”
Central region cheese contacts tell Dairy Market News that they were hesitant to lock down milk agreements for the end of the year in November, due to the block/barrel price spread being so “atypical of usual market behavior.” The last few weeks of 2019 are providing evidence of that hesitance,” says DMN, as spot milk loads were reported (as of midweek the week of Dec. 16) at $8 under Class III, though some milk handlers did find cheese producers willing to pay Class prices. Plant managers are keeping overall production in check and Midwestern cheese inventories are “in general balance.”
Western cheese makers say they are trying to figure out which way the cash cheese market will turn next. After witnessing the precipitous drop of barrel and block prices, market participants “are ready for a winter holiday,” says DMN. Contracted cheese sales have been steady but manufacturers say spot sales are quiet.
Retailers have most of their seasonal cheese needs. Processors think buyer interest may return after the holidays if the lower prices stabilize. There is plenty of cheese available, milk is abundant, and handlers are preparing to juggle loads in the next few weeks. Plants are running at or near capacity.
Butter topped $2 per pound again, closing Friday at $2.0050, up 4.5 cents on the week but 20 cents below a year ago, with 7 cars trading hands on the week.
Monday’s butter gained 2.25 cents and it stayed there Christmas Eve at $2.0275, after traders mused on Monday’s Cold Storage data.
Butter plant managers say cream is widely available and will remain so into the first week of 2020, if not longer. They are now churning for spring holiday inventories and some are taking extra cream for future stores and because it is at a discount. Contacts say there are expectations that cream multiples could reach as low as $1.00 over the holiday weeks but butter demand is “steady to improved.”
Most Western retail stores have replenished butter stocks and butter inventories are sufficient, production is ongoing, but expected to increase Christmas week as more cream will be clearing through the churns.
Grade A nonfat dry milk closed Friday at $1.25 per pound, down 1.5 cents on the week but 31 cents above a year ago, with 9 sales reported for the week.
Monday saw the powder lose a half-cent and tick down a quarter-cent Tuesday, to $1.2425 per pound.
CME dry whey finished Friday at 31.5 cents per pound, down 2.25 cents on the week and 17.5 cents below a year ago, on 34 sales for the week.
The whey was down a penny Monday but it gained 1.5 cents Tuesday, climbing back to 32 cents per pound.
Bearish butter, bullish cheese
The Agriculture Department’s latest Cold Storage report fed the bears butter and the bulls cheese.
Nov. 30 butter stocks stood at 180.7 million pounds, down 53.8 million pounds or 22.9% from October but a surprising 26.3 million or 17.1% above November 2018, feeding the bears in the market.
American cheese stocks totaled 739.6 million pounds, down 40.3 million pounds or 0.5% from October and 59.4 million or 7.4% below a year ago.
Stocks in the “other” cheese category fell to 560.1 million pounds, down 11.8 million pounds or 2.1% from October, but were up 36.2 million or 6.9% from a year ago.
The total cheese inventory fell to 1.324 billion pounds, down 17.5 million pounds or 1.3% from October and a bullish 28.5 million pounds or 2.1% below November 2018.
January Class I slips
The Agriculture Department announced the first Federal order Class I base milk price of 2020 at $19.01 per hundredweight, down 32 cents from December, $3.89 above January 2019, and the highest January Class I price since 2014. It equates to $1.63 per gallon, up from $1.30 a year ago.