February cow numbers were up for the eighth consecutive month
The Agriculture Department’s preliminary data reports February milk output hit 17.63 billion pounds, down 1.5% from February 2020, however February 2020 had an extra “Leap Day,” 29 days of production instead of the 28 this year, so adjusting for that, February output was really up 2.0% from 2020. Output in the top 24 states was up 2.3%, when adjusted.
Revisions in January output were a big factor of interest in this report as January’s preliminary estimate was raised by 155 million pounds to 19.3 billion, up 2.4%, instead of the originally reported 1.6% increase.
February cow numbers were up for the eighth consecutive month, totaling 9.46 million head in the 50 states, up 3,000 from January’s count, which was revised up 5,000 head. The February herd was up 81,000 from February 2020.
February output per cow averaged 1,864 pounds, up 22 pounds or 1.2% from a year ago.
California’s February output was up 2.1% from a year ago, when adjusted, thanks to a 43 pound gain per cow, but with 3,000 fewer cows. The Golden State’s January total was revised up 94 million pounds, resulting in a 2.0% increase from January 2020, instead of the originally reported 0.7% decrease.
Wisconsin was up 3.2% in February on a 57 pound gain per cow but 2,000 fewer cows. The Badger State’s January output was revised up 12 million pounds, resulting in a 3.6% gain from January 2020, instead of 3.1%.
Idaho was up 0.4%, despite a 2 pound drop per cow, but cow numbers were up 3,000 head. Revisions added 14 million pounds to Idaho’s January output, up 0.7% from a year ago, instead of the 0.3% drop originally reported.
Michigan was up 3.8%, on a 14 pound gain per cow and 13,000 more cows. Minnesota was up 5.8%, on a 51 pound gain per cow and 12,000 more cows. New Mexico inched 0.9% higher on 3,000 more cows with output per cow unchanged.
New York was up 1.7%, thanks to a 32 pound gain per cow. Cow numbers were unchanged. Oregon was down 1.5% on 2,000 fewer cows but output per cow was up 2 pounds. Pennsylvania was off 0.7%, on a drop of 8,000 cows, though output per cow was up 14 pounds.
Indiana again showed the biggest gain, up 10.4%, thanks to 17,000 more cows milked and a 14 pound per cow gain, but South Dakota was next again, up 9.6%, on 13,000 more cows and 7 more pounds per cow.
Texas was up 5.3%, on 30,000 more cows and 4 more pounds per cow, and that despite the weather challenges it endured.
Vermont was down 3.9% on 4,000 fewer cows and a 6 pound drop per cow. Washington State was down 2.3% on 4,000 less cows, and an 18 pound drop per cow, as weather impacted that state as well.
The data may seem bearish however demand dynamics, including rising food service sales, retail sales, and exports will help swallow some of that extra milk.
Interesting footnote; the Mar. 12 Milk Producers Council newsletter reported that in 1990, Wisconsin produced 24.4 billion pounds of milk, with California at 20.9 billion pounds, but just three years later California production surpassed that of Wisconsin, the nation’s top milk producing state for over a century. Today, 28 years later, California and Wisconsin still rank Number 1 and 2 respectively, with California at 40.5 billion pounds and Wisconsin at 30.6 billion.
There were seven states that produced over 10 billion pounds in 2019: California, Wisconsin, Idaho, New York, Texas, Michigan and Pennsylvania. California accounted for nearly 19% of the milk produced in the U.S. in 2019 with Wisconsin at 14%.
In the week ending Mar. 6, 70,400 dairy cows were sent to slaughter, down 1,200 from the previous week but 5,400 or 8.3% more than that week a year ago. The four week rolling average hit 66,325 head, up 1,200 or 1.8% from a year ago.
The Agriculture Department’s monthly Livestock, Dairy, and Poultry Outlook, issued Mar. 15, mirrored milk price and production projections in the Mar. 9 World Agricultural Supply and Demand Estimates report.
The Outlook’s forecast for the size of the 2021 dairy herd was raised to 9.445 million head, 10,000 higher than last month’s forecast, based on the reported average number of milk cows in January and recent slaughter rates close to those of last year. Based on yield per cow in January and lower expected cull rates, the forecast yield per cow was lowered to 24,065 pounds per head, down 35 pounds from last month’s estimate.
The Outlook also reported data from the Department of Labor’s Bureau of Labor Statistics, which collects retail price data and calculates consumer price indices, or CPIs to measure inflation in general and groups of consumer purchases.
The BLS shows that dairy had the two lowest price increases, 2.3% for ice cream and 3.6% for Cheddar cheese, and the highest price increase, 9.3% for a gallon of whole milk. Whole-chicken prices increased 4.5% and pork by 4.8%. Eggs and beef saw price increases of 7.9 and 8.1% respectively, according to the USDA.
This week’s Global Dairy Trade auction reversed gears as Event 280’s weighted average fell 3.8%, following the Mar. 2 leap of 15%. The dip ended eight consecutive sessions of gain and was the first slippage since Nov. 3, 2020.
Traders brought 59.2 million pounds of product to market, up from 56.3 million in the last event, as some added volume of powder pulled on the market. The average winning price was $4,089, down from $4,231 on Mar. 2.
The dive was led by whole milk powder, down 6.2%, after it led the gains last time with a 21% jump. Butter was down 2.8%, after posting a 13.7% rise, but anhydrous milkfat was up 3.7%, following a 7.4% advance last time.
Gains were led by lactose, up 8.6%, which followed a 4.9% rise. Skim milk powder was up 0.7%, after a 3.5% gain. There was no volume traded on cheese.
StoneX Group says the GDT 80% butterfat butter price equates to $2.5043 per pound U.S., down 7.4 cents from the last event, after jumping 30.8 cents last time, and compares to CME butter which closed Friday at a bargain $1.6650. GDT skim milk powder averaged $1.5197 per pound, up from $1.4976, and whole milk powder averaged $1.8521 per pound, down from $1.9795. CME Grade A nonfat dry milk closed Friday at $1.1525 per pound.
Speaking of global trade; Western United Dairies’ (WUD) weekly newsletter reports that export containers remain in extreme short supply at California’s ports, according to a report from Noble Wolf, Blimling and Associates.
“Although many products are being directly impacted with a tight domestic export market, major challenges have affected dairy products and their downstream supply chains. There aren’t enough containers in the right place at the right time. Today, too many containers are sitting on idled ships just waiting to be unloaded at U.S. ports. And, once docked, the unloading process is taking longer than usual because of reduced workforces due to COVID flare ups at the ports.”
HighGround Dairy’s Lucas Fuess talked about it in the Mar. 22 “Dairy Radio Now” broadcast, saying that, while whole milk powder prices tumbled at the GDT, they’re still at a sky high levels due to very strong Chinese demand. Skim milk powder prices, or nonfat dry milk as we call it in the U.S., are much higher in Europe and New Zealand because they are able to get product to China, he said. He speculated that U.S. nonfat dry milk would be more aligned with prices in Europe and New Zealand “if we could find shipping containers to ship it.”
Fuess also addressed rising U.S. milk output, warning of “burdensome volumes, especially across the Upper Midwest.” That will push more milk into cheese, powder, and butter, he said, however the Stimulus bill should boost the economy and perhaps dairy demand so back half of the year milk prices may be brighter.
CME dairy prices were weaker with the exception of dry whey which set a new record high. The Cheddar blocks closed Friday at $1.79 per pound, unchanged on the week but 4.75 cents below a year ago. They have advanced 25.25 cents in four weeks.
The barrels rolled downhill to a close of $1.4525, down a dime on the week, still 2.25 cents above a year ago, but a whopping 33.75 cents below the blocks. There were 6 sales of block and 13 of barrel on the week at the CME.
Cheese demand reports are mixed, according to Dairy Market News, but Midwestern cheesemakers are reporting busier tones, with some having trouble keeping up with demand. Cheese inventories vary but some are balanced to tight. Export interests, renewed school lunch programs, and spring holidays have all helped to keep market tones somewhat bullish, says DMN.
Retail cheese demand in the West has been slowing slightly, while demand for cheese at food service has been picking up. Buyers are finding that there is plenty of cheese available. Mozzarella is moving well, says DMN, and with the upcoming March Madness and other televised spring sports tournaments, some contacts expect demand to pick up as viewers purchase both restaurant carry out and grocery pizzas. Cheese is being produced in high volumes in the west, with plenty of milk available. International interest has lessened meanwhile as prices increase. Port issues have improved but still not back to normal, says DMN.
Cash butter saw its Friday finish at $1.6650 per pound, down a nickel on the week and 9 cents below a year ago, with only 5 sales reported for the week.
Central cream is tightening, according to butter producers, but churning is ongoing. Cream is nearing the peak of affordability for churners, says DMN, but butter availability remains bountiful with some bulk loads nearing one year in age. Butter market tones have retained solidity, thanks to consecutive weeks of positive food service demand which is described as “reminiscent of pre-COVID buying,” according to DMN, plus interest continues from export customers.
Spring flush is early in the west, says DMN, and cream is plentiful. Ice cream makers are pulling more heavily on cream but butter makers have ample cream supplies. And, there is a lot of butter in the cooler. Export interest is strong, food service demand is showing growth as restrictions relax, and retail accounts are building inventory to prepare for the upcoming spring holiday advertised sales.
Grade A nonfat dry milk closed Friday at $1.1525 per pound, down 1.75 cents on the week but 16.50 cents above a year ago when the powder fell 6.50 cents. There were 11 sales for the week.
Spot dry whey continued its record-breaking trek in small daily gains and reached its Friday summit at 61.25 cents per pound, up 2 cents on the week and 28.25 cents above a year ago, with just 2 sales reported at the CME.
Dairy margins continued to improve in the first half of March as milk prices continued higher while feed costs held generally steady, according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC.
The MW reported that “Strong export demand is providing support to the market along with ongoing domestic demand from the Farmers to Families Food Box Program. Export shipments have been particularly strong to the Philippines, Vietnam, and China since the beginning of the year.”
Speaking of feed costs, StoneX Dairy warned in its Mar. 15 ‘Early Morning Update’ that “Dairy farmers can no longer expect to have $3.50 corn and $3 bean meal. This increase in feed price has brought dairy margins below the 25% historical price index, presenting a challenge for dairy farmers if there were to be any further shocks to the market.”
The April Federal order Class I base milk price was announced by the USDA at $15.51 per hundredweight, up 31 cents from March, $1.13 below April 2020, and equates to about $1.33 per gallon, down from $1.43 a year ago.
Unfortunately, U.S. fluid sales have returned to “normal,” meaning they fell again. The latest data shows 3.9 billion pounds of packaged fluid products were sold in January, down 4.9% from Jan. 2020, and follows a 1.5% gain in December.
Conventional product sales totaled 3.6 billion pounds, down 5.7% from a year ago. Organic products, at 255 million pounds, were up 8.1%, and represented 6.6% of total sales for the month.
Whole milk sales totaled 1.3 billion pounds, down 2.7% from a year ago, and made up 33% of total fluid sales in January, while skim milk sales, at 225 million pounds, were down 15.3% from a year ago. The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.
The Mar. 15 Daily Dairy Report states however that “Demand from bottlers is steady to strong in most parts of the country. Stay at home orders have driven strong fluid milk consumption over the past year but as students return to classrooms to varying degrees, fluid milk demand from educational institutions is likely to grow. Class I utilization among the federal milk marketing orders in January was 33.9%, the highest it has been for that month since 2012.”
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.