2020 total milk output at 223.06 billion pounds
Increased cow numbers and increased output per cow drove December milk production well above December 2019. Preliminary data in USDA’s latest Milk Production report has output at 18.94 billion pounds, up a bearish 3.1% from a year ago. December output in the top 24 states hit 18.1 billion, up 3.2%.
Revisions raised the November 50-state total by 73 million pounds, to 18.1 billion, up 3.4% from November 2019, instead of the originally reported 3.0%.
December cow numbers increased for the sixth consecutive month, totaling 9.44 million head in the 50 states, up 12,000 from November’s count, which was revised up 24,000. The December herd was at a whopping 100,000 head above December 2019 and the largest dairy herd in over 20 years.
December output per cow averaged 2,006 pounds, up 40 pounds or 2.0% from a year ago.
Fourth Quarter milk output in the 50 states totaled 55.6 billion pounds, up 3.0% from a year ago, with cow numbers at 9.43 million head, up 59,000 from Third Quarter and 81,000 more than a year ago.
The preliminary data would peg 2020 total milk output at 223.06 billion pounds, up 2.1% from 2019, with cow numbers at 9.38 million head, up 46,000 or 0.5%.
California’s December milk output was up a tank busting 110 million pounds or 3.2% from a year ago, thanks to a 70 pound gain per cow offsetting 5,000 fewer cows. Wisconsin was up 2.6%, on a 55 pound gain per cow offsetting 2,000 fewer cows milked.
Idaho was up 1.2%, on 11,000 more cows, though output per cow was down 10 pounds. Michigan was up 4.9%, on a 45 pound gain per cow and 12,000 more cows. Minnesota was up 4.7%, on a 45 pound gain per cow and 10,000 more cows, and New Mexico was up 3.7%, on a 30 pound gain per cow and 7,000 more cows milked than a year ago.
New York was up 2.2%, thanks to a 45 pound gain per cow, though cow numbers were unchanged. Oregon was down 0.5% on 2,000 fewer cows but output per cow was up 15 pounds. Pennsylvania was up 1.5%, on a 45 pound gain per cow offsetting a loss of 5,000 cows.
South Dakota continues to show the biggest increases, up 11.9%, on 14,000 more cows and 15 more pounds per cow. Texas was up 7.5%, on 33,000 more cows than a year ago, who produced 35 more pounds per cow than a year ago.
Vermont again was one of only six states showing a decline, down 3.1% on 4,000 fewer cows, though output per cow was up 5 pounds. Washington State was off 0.9% on 3,000 less cows, with milk per cow up 5 pounds.
In the week ending January 16, 2021, 67,400 dairy cows were sent to slaughter, down 100 from the previous week but 200 head or 0.3% above a year ago.
Give no thought of any shortage of milk, butter, or cheese anytime soon in this country. December’s Cold Storage report put that to rest and no doubt sent shivers throughout the dairy industry, as dairy stocks grew markedly due to restaurant and food service shortfalls and slowing government buying opposite rising milk output.
December 31 butter stocks swelled to 273.8 million pounds, up 22 million pounds or 8.7% from November, and a scale breaking 84.1 million pounds or 44.4% above December 2019, 18th consecutive month they topped the year ago level.
American type cheese hit 801.2 million pounds, up 39.2 million pounds or 5.1% from November and 51.3 million pounds or 6.8% above a year ago.
The “other” cheese category climbed to 576.9 million pounds, up 12.2 million pounds or 2.2% from November and 28.8 million or 5.3% above a year ago.
The total cheese inventory amounted to 1.398 billion pounds, up 51.1 million pounds or 3.8% from November, biggest inventory since June 2020, and 75.9 million pounds or 5.7% above that of a year ago.
HighGround Dairy says butter stocks typically build in December as production climbs and holiday buying ends but the build exceeded the five-year average. As to the cheese build, HGD says it is a concern “as strong milk production is expected to result in heavy cheese output in the coming months to drive stocks even higher.” The build was nearly ten times the five-year average.
Speaking in the February 1 Dairy Radio Now broadcast, HGD’s Lucas Fuess said December was the second consecutive month that milk output topped 3% above the previous year, and pointed to the “tremendous growth rate in cow numbers,” as well as growth in milk per cow as well as milk components.
He said there was strong growth in almost all regions of the country and mentioned a new cheese plant in Michigan which is quickly heading toward full capacity. He looks for significant milk volumes continuing into the spring flush.
The Cold Storage data is indicative of slightly lower demand in December, he said, and stocks will only grow as milk output increases in the spring, however the silver lining may be the lower U.S. prices being more competitive globally.
He doesn’t think the cheese price has hit bottom yet but concluded; “It all depends if demand can keep up with the really strong production we’re expecting through spring.”
Cash dairy prices indeed came under pressure the last week of January as traders weighed the Milk Production and Cold Storage data. The Cheddar blocks finished the last Friday of the month at $1.5750 per pound, down 3.50 cents on the week, third week in a row of decline and lowest since May 12, 2020, 4.25 cents below where they were on January 4, and 34.50 cents below a year ago.
The barrels rolled to a $1.39 per pound finish, down a quarter-cent on the week, 9.25 cents below their January 4 perch, 11 cents below a year ago, and 18.50 cents below the blocks.
There was no block sold on the week at the CME, and 62 cars for the month of January, down from 109 in December. 21 cars of barrel exchanged hands in the last week of January, 98 cars for the month, up from 90 in December.
Midwest cheese sales vary by type, according to Dairy Market News. Contacts reported stronger Cheddar sales to retail outlets, while some mozzarella producers reported softer interest. East coast based customers are definitely “hit and miss,” with restricted access to restaurants and other food service entities.
Cheese production remains busy and a few plants reported that demand is hearty enough to outdo production capacity, while concerns elsewhere are for growing inventories which are expected to grow even more, “while customers wait out some sentiment of market stability.” There is plenty of milk in the Midwest and spot milk prices remain discounted to previous weeks, says DMN, but cheesemakers did receive fewer offers of milk week to week.
Western cheese manufacturers are working hard to process the ample supply of milk and to find markets in which to move the cheese. Cheese inventories are also heavy. Market price volatility is “creating significant challenges to forecasting cheese needs,” says DMN, “and market participants do not want to get on the wrong end of a swing.”
Contacts suggest that demand is “all over the place.” Retail demand is holding but losing a little steam from the pre-winter holiday season. Mozzarella demand is starting to slow as the football playoffs draw to a close. Cheese demand from some fast-food chains is strong but food service sales are still way down. Cheese sellers are holding out hope that shuttered restaurants in parts of the U.S. may be able to re-open, or open more fully soon, says DMN.
Cash butter, after jumping 11.25 cents the previous week, fell to its lowest level since May 5, 2020 on Friday, $1.2450 per pound, 15.75 cents lower on the week, 65.50 cents below a year ago, and 15 cents below its January 1 position. 18 cars sold on the week and 63 on the month, down from 129 in December.
Cream remains plentiful in the Midwest, says DMN, with cream offers aplenty from both local and Western sources though some “trucking hiccups” had occurred in getting cream from the West. Retail butter sales are strong, better than expected, according to some this week, but “the elephant in the room remains to be food service sales, or a lack thereof,” says DMN.
Western butter output is at seasonal levels but milk supplies remain heavy so the resulting cream is keeping plants running at full capacity. Retail butter sales are flat, following a brisk two day order cycle, after the recent Food Box announcement. Butter manufacturers anticipate that once the new crop deadline passes, the market should see some renewed interest, though the Cold Storage data won’t likely help matters any.
The January 27 Daily Dairy Report warned; “If owners of this old crop product, produced before December 1, hope to sell it at the CME, they will have to trade it before March 1. After that date, all butter sold at the CME must have been manufactured after December 1, 2020. This timing constraint suggests that offers are likely to be heavy in Chicago in coming weeks, potentially pushing prices down further.”
Grade A nonfat dry milk saw some ups and downs but closed Friday at $1.1725 per pound, unchanged on the week, 2.50 cents above where it was on January 4, but 6.75 cents below a year ago. There were 37 cars sold on the week and 140 on the month, up from 57 in December.
Spot dry whey saw its first slippage since December 31 on Tuesday, dropping 4.25 cents, then rallied and closed the week and the month at 53.50 cents per pound, down a half-cent on the week, 7 cents above its January 4 posting, and 17 cents above a year ago. There were 7 sales on the week and 15 for the month, up from 11 in December.
Cooperatives Working Together (CWT) members accepted 11 offers of export assistance this week to help capture sales of 354,944 pounds of Cheddar cheese, 352,740 pounds of butter, 114,940 pounds of anhydrous milkfat (AMF), 1.102 million pounds of whole milk powder, and 77,162 pounds of cream cheese.
The product is going to customers in Asia and Oceania through May and put CWT’s 2021 sales at 1.825 million pounds of American-type cheeses, 3.131 million pounds of butter (82% milkfat), 114,640 pounds of AMF, 1.226 million pounds of whole milk powder, and 1.01 million pounds of cream cheese.
In other global news, New Zealand whole milk powder exports totaled 405.1 million pounds in December, down 11.1% from December 2019 and the lowest volume for the month since 2016, according to HGD analysis.
“The decline came after November’s 17% year over year increase,” says HGD, “as China was an early buyer of WMP the month prior due to shipping concerns and the desire to ensure that supplies landed by January.” “The lower exports are not reflective of weakened demand as season-to-date shipments are strong,” says HGD, “and GDT results maintained a bullish trend into 2021.”
The trend was similar in skim milk powder exports which totaled 87.1 million pounds, lowest for the month since 2010, according to HGD, though volume to China was up 10%. China was primarily responsible for lower exports of butter and anhydrous milkfat, says HGD, with butter exports to China down 27% and down 9% overall.
New Zealand cheese exports, at 83.2 million pounds, were off 13% overall.
One other bit of global dairy trade news this week was imports into Japan. December cheese imports totaled 53.4 million pounds, up 3.7%, though they were down 4% for the year.
HGD points out that Japan’s cheese imports marked the strongest December volume since 2017, with the EU and U.S. capturing market share in the month at the expense of Oceania.
Skim milk powder imports totaled 7.4 million pounds, down 10.1% in December and down 17.9% year to date. Butter imports only totaled 3.2 million pounds, down 31.3% from a year ago and down 26.8% year to date.
In politics, the Madison-based American Dairy Coalition (ADC) reports that Democrats in the House and Senate have introduced the Wage Act, which would increase the minimum wage to $15 an hour by 2025. The President has previously signaled support for it as well.
If passed, the wage would be raised from $7.25 to $9.50 an hour. It would increase again to $12.50 in 2023, to $14 in 2024 and $15 the following year.
To date, eight states plus Washington, D.C., have approved such increases, according to the ADC, and while the bill is backed by ranking Democrats including House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Vermont’s Bernie Sanders, it will need the support of 10 Republicans to pass in the Senate. There is not a lot of support from Republicans, says the ADC, who “believe Congress should not set this standard because the cost of living is so variable throughout the U.S. and it will hurt businesses.”
Lee Mielke is a graduate of Brown Institute in Minneapolis, MN. He’s formerly the voice of the radio show “DairyLine,” and his column appears in agricultural papers across the U.S. Contact him at firstname.lastname@example.org.