This column was written for the marketing week ending April 23.
U.S. milk output grew for the 10th consecutive month and set a bearish new monthly high in March. The U.S. Department of Agriculture’s preliminary data shows output hit 19.75 billion pounds, up 1.8 percent from March 2020. Output in the top 24 states, at 18.84 billion, was up 2 percent. Revisions added 37 million pounds to the original February 50-state estimate, now put at 17.7 billion pounds, up 2.3 percent from a year ago, after adjusting for the Leap Day.
March cow numbers were up for the 14th consecutive month, totaling 9.468 million head in the 50 states. This is up 8,000 from February’s count, which was revised up 2,000 head, and up 77,000 from March 2020.
Output per cow averaged 2,086 pounds, up 20 pounds or 1 percent from a year ago.
California was up 1.5 percent from a year ago, thanks to a 35-pound gain per cow, but with 2,000 fewer cows. Wisconsin jumped a tank-busting 97 million pounds or 3.7 percent from March 2020, thanks to a 65-pound gain per cow and 7,000 more cows
Idaho was up 0.8 percent on 5,000 more cows, but output per cow was unchanged. Michigan was up 3.5 percent on 14,000 more cows and a five pound gain per cow. Minnesota was up 7.6 percent on a 70-pound gain per cow and 17,000 more cows. New Mexico, still recovering from winter storm Uri, was down 1.1 percent, due to a 30-pound drop per cow, though cow numbers were up 1,000 head.
New York inched up 0.5 percent on a 10-pound gain per cow. Cow numbers were unchanged. Oregon was off 0.9 percent on 2,000 fewer cows, but output per cow was up 10 pounds. Pennsylvania was down 1.5 percent on a drop of 10,000 cows, though output per cow was up 10 pounds.
South Dakota took back the title of the biggest gain, up 13.4 percent, thanks to 18,000 more cows outweighing a 10-pound drop per cow. Indiana wasn’t far behind, up 10 percent, thanks to 17,000 more cows milked and a five pound per cow gain.
Texas, which was also hit hard by winter storm Uri, was up 3.9 percent on 27,000 more cows, but output per cow was down 15 pounds. Vermont was down 4.3 percent on 5,000 fewer cows and a five pound drop per cow, and Washington State was down 1.2 percent on 2,000 fewer cows, and a 10 pound drop per cow.
Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter, pointed out in the April 26 “Dairy Radio Now” broadcast the report was far from bullish — though it did point out some regional items of interest.
Milk output growth slowed in the Southwest and actually fell in the Northeast, he said, and both regions were impacted by processor level supply management programs, while other regions saw unhindered growth.
Dairy demand is the crucial factor and Gould pointed out that, prior to the Covid pandemic, we consumed more cheese and butter via restaurants than at home. We’re seeing more people traveling and eating out again, he said, so dairy demand at retail is shifting back to food service. “That begs the question,” he concluded, “Can we grow dairy demand fast enough to keep up with supply. So far the answer is yes, but as we move forward it becomes a bit more murky.”
Dairy cow culling topped the previous month and year. The USDA’s latest Livestock Slaughter report shows an estimated 302,200 head were sent to slaughter under federal inspection in March. This is up 37,000 head from February and 14,200 or 4.9 percent above March 2020. Culling in first quarter 2021 totaled 844,700 head, down 7,800 or 0.9 percent from the same period a year ago.
Meanwhile, the annual Livestock Slaughter Summary reports 3.06 million dairy cows retired from the dairy business in 2020, down 160,700 from 2019 or 5 percent. January saw the largest cull rate, at 298,500 head, with August having the lowest count, at 225,300 head.
In the week ending April 10, 60,500 dairy cows were sent to slaughter, up 500 from the previous week but 4,100 or 6.3 percent less than that week a year ago.
Checking the cooler, March butter stocks didn’t shrink, but they didn’t build either, according to USDA’s latest Cold Storage report — and that’s good news. The March 31 butter inventory totaled 354.6 million pounds, virtually unchanged from the February level which was revised 1.9 million pounds higher, but was 45 million pounds or 14.5 percent above March 2020. March was the 21st consecutive month that butter stocks topped those a year ago.
StoneX Dairy’s Dustin Winston says, “The report will heighten interest in the Dairy Products report as we look to see if strong demand or a lack of butter production triggered the unchanged stocks.”
Butter stocks almost always increase between February and March, says StoneX, and 2010 was the last time that didn’t happen. The group of analysts believe “More milk was pushed to the Class III side of the market from Class IV, with the new St. Johns, Mich. cheese plant helping push that along.”
American-type cheese stocks climbed to 831.8 million pounds, up 14.6 million pounds or 1.8 percent from February, which was revised up 1.2 million pounds, and is a whopping 55.4 million pounds or 7.1 percent above a year ago.
The “other” cheese category hit 611.8 million pounds, up 14.4 million or 2.4 percent from February and 36.9 million or 6.4 percent above a year ago.
The total cheese inventory stood at 1.47 billion pounds, up 30 million pounds or 2.1 percent from February and a hefty 91.8 million or 6.7 percent above a year ago. March was the fifth month in a row that total cheese stocks grew.
The April 22 Daily Dairy Report says, “The increases in stocks of American and other cheese (mostly Italian varieties) was virtually equal, suggesting that cheese demand has been lackluster across both retail and foodservice channels.”
The Daily Dairy Report added, “Lighter than anticipated government purchases may also have contributed to the accumulation of American cheese stocks, as some of this product could have been produced with the Food Box program in mind.”
Looking globally, the April 20 Global Dairy Trade auction weighted average slipped 0.1 percent following a 0.3 percent uptick on April 6. Lactose led the losses, down 3.4 percent after plunging 6.5 percent in the last event. Anhydrous milkfat was down 3.3 percent after inching 0.8 percent higher. Butter was off 0.6 percent, following a 2 percent advance.
GDT Cheddar was up 1.2 percent after posting a 2.2 percent gain last time, and whole milk powder inched 0.4 percent higher.
StoneX says the GDT 80 percent butterfat butter price equates to $2.5382 per pound U.S., down 1.8 cents, and compares to Chicago Mercantile Exchange butter which closed April 23 at $1.77.
GDT cheddar, at $2.0120 per pound, compares to April 23’s CME block cheddar at $1.7925. GDT skim milk powder averaged $1.5265 per pound, down from $1.5272, and whole milk powder averaged $1.8583 per pound, up from $1.8531. CME Grade A nonfat dry milk closed April 23 at $1.2525 per pound.
The proverbial elephant was in the dairy aisle in March. China’s Customs Statistics show record highs for the month with notable gains from New Zealand, Germany, the United States, Australia and Poland, according to HighGround Dairy.
Whole milk powder imports totaled 182.6 million pounds, up 76.6 percent from March 2020, almost 93 percent of them from New Zealand. Skim milk powder totaled 69.6 million pounds, up 27.2 percent.
Whey imports hit a record 267 million pounds, up 76.7 percent. Volumes from the United States were higher, but U.S. market share fell slightly from 2020. Countries seeing a rise in market share were Poland, Belarus, and Turkey, according to HighGround Dairy.
China imported 25.5 million pounds of butter, up 41.5 percent from a year ago, and cheese imports totaled 44.8 million pounds, up 74.1 percent.
Fluid milk and cream demand remained strong with imports from New Zealand expanding, as well as from the EU. The largest supplier within the EU was Germany, followed by Poland and France, says HighGround Dairy.
Back home, CME cash block cheddar hit $1.80 per pound on April 19, but finished April 23 at $1.7925. This is up 1.25 cents on the week and 72.25 cents above a year ago.
The barrels closed at $1.805, up 11.5 cents, the highest since Nov. 12, 75.5 cents above a year ago, and an inverted 1.25 cents above the blocks (the first time since July 30). Twenty-two cars of block and 26 of barrel sold on the week.
Midwest cheese plant managers tell Dairy Market News spot milk remains available, with prices at or around $5 under Class III. Some plants resell milk on some days while other days they are trying to stay ahead of the robust supply. Schedules are full and record-setting in some cases while others have only recently upped their output to fulfill demand.
Cheese demand is mostly positive, but market tones are uncertain, says Dairy Market News, with barrel prices overtaking blocks, “which creates questions about near term trends.”
Food service cheese demand has increased in the West as more areas loosen Covid restrictions. Some contacts report a shift in production focus from retail orders, which are and have remained steady, to growing restaurant/food service. Changes in government programs regarding the purchase of cheese and dairy products in general have caused some market instability. The block-barrel inversion also left contacts with uncertainty. Production schedules are full as there continues to be plenty of milk available, according to Dairy Market News.
Butter got back to $1.87 per pound on April 19, fell to $1.74 April 22, and closed the next day at $1.77. This is 8 cents lower on the week, but 62.5 cents above a year ago. Forty-four cars were sold, highest since December 2020. Outside of a few temporary blips, you’d have to go back to November 2019 to find butter consistently above $2 a pound.
Dairy Market News says, “Since roughly the Ides of March, central food service butter sales have incrementally shifted higher week after week.” However, contacts this week reported sales were somewhat subdued though churning was busy.
Western cream is abundant with “a few pockets of seemingly tightening output,” says Dairy Market News; but even in these areas, cream supply is meeting demand. Limited tanker availability continues to stymie greater movement of cream within and out of the region. Butter makers are maintaining seasonally active schedules and inventories are stable. Food service demand is “booming;” some cafeterias, restaurants, and other food service outlets are nearing pre-pandemic levels of operation and retail sales are steady. Some contacts report that export demand is beginning to decline as U.S. prices are becoming less competitive.
Grade A nonfat dry milk climbed to an April 23 close at $1.2525 per pound. This is up 3.75 cents on the week, highest since Jan. 30, 2020, and 44.25 cents above a year ago. There were eight sales reported on the week.
CME dry whey set a new CME record at 70.25 cents per pound on April 20, but backed down to an April 23 close of 62 cents, down 5.5 cents on the week and 23.5 cents above a year ago. There were four sales on the week at the CME.
The May Federal order Class I base milk price was announced at $17.10 per hundredweight, up $1.59 from April, $4.15 above May 2020, and the highest Class I price since December 2020. It equates to $1.47 per gallon, up from $1.33 in April and compares to $1.11 per gallon a year ago. The five-month average is at $15.70, down from $16.72 a year ago and compares to $15.72 in 2019.
The latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. Says, “Dairy margins were mixed over the first half of April, strengthening in nearby slots but weakening in deferred marketing periods further out on the curve.”
The Margin Watch blamed the announcement that the Biden administration will end the Food Box Program after extending it through the month of May.
“The USDA spent $3.8 billion last year as well as another $1.5 billion through the first four months of this year distributing a variety of fruit, meat and dairy products to needy Americans struggling with the pandemic,” the Margin Watch stated. “While the program was lauded even by Democrats (including Senator Dick Durbin of Illinois), the high administrative costs and logistical challenges of the effort were cited as factors in the decision to shut it down and shift aid by expanding food stamp benefits and increasing purchases through other food distribution programs. Despite what will likely be reduced government buying going forward, dairy demand in general remains quite strong.”
“U.S. dairy products are competitively priced on the world market and moving at an accelerated pace despite numerous challenges in the global supply chain. Unfortunately, renewed concerns over forward feed costs with a cold snap in the Midwest possibly delaying germination this spring after a surprisingly bullish Planting Intentions report has tempered enthusiasm,” the Margin Watch concludes.
The latest Crop Progress report shows 8 percent of U.S. corn has been planted as of the week ending April 18. That’s 2 percent ahead of a year ago and mirrors the latest five-year average. The report shows 2 percent is emerged, up from 1 percent a year ago. The data shows 3 percent of the soybeans are in the ground, up 1 percent from a year ago as well as the latest five year average, and 11 percent of the cotton crop has been planted
Cooperatives Working Together members accepted 17 offers of export assistance this week to help capture sales of 1.32 million pounds of cheese, 272,822 pounds of butter, 2.205 million pounds of whole milk powder, 2.205 million pounds of anhydrous milkfat, and 304,238 pounds of cream cheese. The product is going to customers in Asia, Central and South America, North Africa and Oceania thru August.
Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at firstname.lastname@example.org.