January milk production higher

The “Mielke” Market Weekly

The U.S. Department of Agriculture’s latest preliminary data shows January milk production hit 19.1 billion pounds, up 0.1% from January 2024, following a 0.5% decline in December. Output in the top 24 states totaled 18.3 billion, up 0.2%, after slipping 0.4% in December. December output was revised down 3 million pounds in the 50 states and was unchanged in the 24-state data.

January cow numbers, at 9.37 million, were up 10,000 head from December and 41,000 more than a year ago. The December count was revised up 4,000 head. The 24-state count, at 8.9 million, was up 9,000 from December, and 54,000 above a year ago. The December count was revised up 5,000 head.

January output per cow in the 50 states averaged 2,040 pounds, down 7 pounds or 0.3% from a year ago. The December average was revised down 1 pound. The 24-state January average, at 2,054 pounds, was down 8 pounds or 0.4%. The December average was revised down 2 pounds from last month’s report.

Milk output for all of 2024 was reported at 226 billion pounds, down 0.2% from 2023. Revisions to 2023 production decreased the annual total by 53 million pounds. Revised 2024 production was up 14 million pounds from last month’s estimate. Annual milk production has increased 8.3% from 2015, said the USDA.

Cow numbers in 2024 totaled 9.34 million, down 42,000 from 2023. The average number of milk cows was revised up 3,000 head for 2024. The average has increased 0.2% from 2015. Production per cow averaged 24,178 pounds of milk, up 61 from 2023. That average has increased 8.1% from 2015, according to the USDA.

Lots of eyes were on California, which continues the battle with bird flu. Variants in several states are keeping the war going. January output in the nation’s No. 1 milk producer was down a whopping 203 million pounds or 5.7% from a year ago. December output was revised down 43 million pounds, resulting in an 8.0% decline from a year ago, instead of the 6.8% reported.

Wisconsin’s January output was down 17 million pounds or 0.6% from a year ago, on 5,000 fewer cows, and output per cow was down 5 pounds.

Idaho’s output was up a hefty 88 million pounds or 6.4% from a year ago, thanks to 27,000 more cows and a 45-pound gain per cow. Idaho’s December output was revised up 35 million pounds, a 6.1% increase from December 2023, instead of the 3.5% originally reported.

Michigan was up 0.7% on 1,000 more cows and a 10-pound gain per cow.

Minnesota was off 0.2%, on a loss of 9,000 cows, though output per cow was up 35 pounds. New Mexico was down 1.2% on 3,000 fewer cows; output per cow was unchanged. New York was up 2.0% on a 40-pound increase per cow, while cow numbers were unchanged.

Oregon was up 2.0% on 1,000 more cows and a 20-pound gain per cow. Pennsylvania was up 0.8% on a 15-pound gain per cow. Cow numbers were unchanged.

South Dakota was up 6.5% on a 60-pound gain per cow and 7,000 more cows. Texas tied South Dakota for the biggest percentage gain this month, also up 6.5% but due to 40,000 more cows and a 5-pound gain per cow.

Vermont was unchanged though cow numbers were down 3,000 head. Output per cow was up 45 pounds. Washington State was down 2.9% on a 35 pound drop per cow and 3,000 fewer cows.

StoneX said both fat and protein content nationwide were well above a year ago, which puts component adjusted production up 2.2%.

The week ending Feb. 15 saw 53,500 dairy cows sent to slaughter, down 2,500 from the previous week, but 5,800 or 9.8% below a year ago. Year to date, 376,000 have been culled, down 20,700 head or 5.2% from a year ago.

The higher fat and protein content of U.S. milk has resulted in plenty of butter and cheese and more butter in storage. USDA’s latest Cold Storage report shows Jan. 31 butter stocks totaled 270.3 million pounds, up a whopping 56 million or 26.1% from December, and up 22.7 million pounds or 9.2% from January 2024. December stocks were revised down 8.1 million pounds.

The American-type cheese inventory inched up to 777.6 million pounds, up 6.5 million or 0.8% from December’s level, but was down 62.2 million pounds or 7.4% from a year ago. The December total was revised 1.4 million pounds lower.

The “other” cheese category climbed to 573.0 million pounds, up 13.6 million pounds or 2.4% from the December level, but was down 21.9 million or 3.7% from a year ago. December’s level was revised up by 435,000 pounds.

The total cheese inventory hit 1.37 billion pounds, up 19.9 million pounds or 1.5% from December, but down 82.4 million pounds or 5.7% from a year ago as competitive U.S. prices attracted plenty of global buyers for our cheese.

StoneX said the report suggests that butter demand was better than thought for December and probably January as well. It adds; “This was the biggest cheese decline we’ve seen in January in at least two decades and would argue for Chicago Mercantile Exchange block close to $2.00 per pound, even though they averaged $1.88 for the month.”

New data from USDA’s Agricultural Marketing Service suggests the growing number of beef-on-dairy animals is contributing to higher cattle prices for producers and added value to feedlots and processors, according to CoBank livestock analyst Abbi Prins.

Speaking on the March 3 Dairy Radio Now broadcast, Prins said auction prices show that dairy beef crossbred cattle are more expensive, especially on the slaughter side, compared to native beef and traditional dairy cattle. She attributes that to a number of things, such as weight; she said, “Traditionally, dairy cattle are heavier than native beef cattle in a feedlot and dairy beef settle in between.”

Second are the attributes. “Because they have a dairy background, those animals can have a higher meat grade when they enter the processing plants, and they show a little more feed efficiency compared to traditional dairy cattle,” Prins said. It’s also meant extra income for farm bottom lines as crossbred calves range $600-$800 per head at just a week of age, she said.

Prins says the trend for beef on dairy animals will continue because of the value it provides dairy producers but also for what it’s meant for feedlots and packers. She doesn’t see the beef herd getting rebuilt until 2027 or later because that’s dependent on weather and “We have really high calf prices right now, so once those things come into balance, we should see the herd starting to rebuild.”

“The U.S. beef cow herd is at historically low levels due to prolonged drought and poor grazing conditions,” CoBank said. “Tight supplies amid robust consumer demand for beef have pushed cattle prices to record highs.”

Checking Chicago, cash block Cheddar closed Friday and the month of February at $1.7750 per pound, down 12.50 cents on the week, lowest CME price in five weeks, down 8.75 cents on the month, but still 22.50 cents above a year ago.

The barrels closed at $1.78, lowest in three weeks, 2 cents lower on the week, a penny lower on the month and 13 cents above a year ago. Block sales totaled 13 for the week and 41 for the month of February, down from 67 in January. Barrel sales totaled eight for the week and 28 for the month, down from 36 in January.

Midwest cheesemakers reported mixed results on demand, according to Dairy Market News. Most said weekly sales are steady to busy. Some retail and cut-and-wrap cheesemakers say orders are somewhat quiet. Per the norm, milk availability varies, although there were some extra loads on the market this week. Prices at mid-week were $2.50-under to Class III. Some contacts said milk availability seems to be closer to flush territory while others said milk offers have not increased.

Cheese markets are not bullish or bearish, said Dairy Market News, and near-term tones are questionable despite CME prices maintaining relative steadiness.

Demand for Class III milk from western cheese manufacturers is reportedly stronger as new processing capacities steadily become more heavily utilized. Milk volumes are sufficient and steady for supporting somewhat stronger output. Retail cheese demand is somewhat lighter to steady while moderate to steady from food service. Manufacturers and distributors indicate that demand from international buyers is mixed, according to DMN.

CME butter, after regaining almost 4 cents the previous week, dropped to $2.3350 per pound Wednesday, lowest since April 14, 2023. It regained a penny Thursday and stayed put Friday at $2.3450, down 7 cents on the week, 8.50 cents lower on the month and 41.25 cents below a year ago. There were 33 sales on the week and 136 for the month of February, up from 97 in January.

StoneX said export activity has increased as international buyers step in to a wildly discounted U.S. fat market. Central region butter makers reported some upticks in demand this week. As market prices continue to fall, retail customers are showing less reluctance to add to their orders. Delay times outside butter plants for cream trucks has declined, but the onslaught of cream has been heavy the past few weeks. Plant downtime due to weather or other situations subsided this week. Cream multiple lows have not been reported at the same levels this week, despite being well below 1.00 for most churn usage. The CME new crop rule may stanch some of the recent price declines, as butter produced before Dec. 1, 2024, will no longer be available to offer on the cash call, says DMN.

Cream also remains heavy in the West, and butter manufacturers say offers are at multiples comfortably lower than what has been customarily expected for the last week of February. Plants are busy working that affordable cream through the churns and building stock for later demand. Domestic demand is moderate to steady. International buying is steady to strong thanks to competitive U.S. prices.

Grade A nonfat dry milk closed Friday at $1.20 per pound, down 4 cents on the week, lowest CME price since Aug. 9, 2024, 14 cents lower than its Feb. 3 print and a quarter-cent above a year ago. Sales amounted to 19 loads for the week and 50 for the month, down from 60 in January.

StoneX said “Bearish news abounds.” Demand remains lackluster, and now discussions seem hopeless, especially that exports to Mexico will ever return to normal.

Dry whey closed the week and month at 51 cents per pound, down 3.50 cents on the week, lowest since July 17, 2024, but still 8.50 cents above a year ago. There were four sales for the week and 10 for the month, down from 16 in January.

Trump’s threatened tariffs look like they will indeed be implemented March 4, and the dairy industry is watching things closely because they will impact U.S. dairy exports.

HighGround Dairy’s Monday Morning Huddle said that the tariff exemption China has maintained on whey for the past four years on U.S. products expires Feb. 28, “which means U.S. whey imports into China will no longer be duty-free. The U.S. primarily ships feed-grade whey, which the Chinese use for pork production. This expiration and heightened trade tensions with the country have already significantly impacted the U.S. whey market.”

In other global news, Tuesday’s Global Dairy Trade Pulse saw 4.33 million pounds of product sold, up slightly from the Feb. 11 Pulse and 96.9% of the total on offer. Prices on both skim and whole milk powder were down from the last Pulse.

On a brighter note, the Feb. 24 Daily Dairy Report said, “The yogurt market could be poised for a demand resurgence. Not only are sales increasing due to the growing use of GLP-1 weight loss drugs, but a new study shows that eating yogurt twice a week could reduce the risk of colon cancer. With colorectal cancer the third leading cause of cancer death in the U.S. in men and the fourth leading cause in women, that that can only bode well for yogurt consumption. Yogurt consumption in the U.S. reached an all-time high in 2024 at over 4.9 billion pounds, up 3.7% from 2023. According to Circana data, year-over-year unit sales of yogurt grew 2.8% last year, while unit sales of drinkable yogurt climbed 9.8%.”

In politics, the International Dairy Foods Association and the National Milk Producers Federation gave a thumbs up to the Trump administration’s updated response plan for highly pathogenic avian influenza.

IDFA President and CEO Michael Dykes, D.V.M., said, “The International Dairy Foods Association is grateful to Agriculture Secretary Rollins for investing up to $100 million in new and ongoing research into animal vaccinations and therapeutic tools to manage highly pathogenic avian influenza in our nation’s dairy herds and commercial poultry flocks. We continue to urge USDA and its federal partners to act quickly to develop and approve the use of safe, effective bovine vaccines to guard against current and future strains of avian influenza affecting U.S. dairy. It is essential that the federal government work with our industry to ensure a vaccination strategy is feasible and cost-effective for farmers while working with international trading partners to assure the use of vaccines does not limit or disrupt U.S. agricultural exports.”

NMPF President and CEO Gregg Doud said, “Dairy farmers and cooperatives appreciate USDA’s leadership in supporting American agriculture and safeguarding animal health as it deals with what soon will be a second year of H5N1 bird flu disruptions in dairy cattle. Dairy farmers and all of agriculture take biosecurity seriously, and we thank USDA and the Trump administration for actions that will further those efforts.”