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U.S. milk production lagged year ago levels for the fifth consecutive month in March however that trend may be ending. The Agriculture Department’s latest preliminary data shows March output at 19.7 billion pounds, down 0.5% from March 2021, and follows the revised 0.9% drop in February. March output in the top 24 producing states totaled 18.8 billion pounds, down 0.4%. Revisions raised the original 50-State February estimate by 18 million pounds to 17.53 billion, 0.9% below a year ago, instead of the 1.0% originally reported.

First Quarter 2022 output totaled 56.3 billion pounds, down 1.0% from the same period in 2021. Cow numbers totaled 9.38 million head, unchanged from the October to December quarter, but 85,000 below a year ago.

Farmers are adding cows back into the milking string however. March numbers totaled 9.395 million head, up 15,000 from February, but were still down 87,000 from a year ago. The February count was revised up 10,000 head.

March output per cow averaged 2,096 pounds, up 8 pounds or 0.4% from 2021.

California production totaled 3.7 billion pounds, up 19 million pounds or 0.5% from a year ago, thanks to 1,000 additional cows and output per cow up 10 pounds. Wisconsin output totaled 2.7 billion pounds, up 6 million or 0.2%. Cow numbers were up 3,000 and output per cow was unchanged from a year ago.

Idaho was unchanged in cow numbers, output per cow and total production. Michigan was down 2.9% on 15,000 fewer cows, though output per cow was up 10 pounds. Minnesota was down 2.6% on a 15 pound drop per cow and 9,000 fewer cows. New Mexico was down 9.3% on 37,000 fewer cows but output per cow was up 45 pounds.

New York was down 1.0% on 6,000 fewer cows and output per cow unchanged. Oregon was up 1.3% on a 10 pound gain per cow and 1,000 more cows. Pennsylvania was down 2.2%, on 8,000 fewer cows and a 10 pound drop per cow. South Dakota cows put 20% more milk in the tank, thanks to 30,000 more of them and offset a 10 pound drop per cow. 

Texas, still a long way from number two Wisconsin, was the third largest milk producer in March even beating Idaho, up 6.7%, on 22,000 more cows and a 65 pound gain per cow. Vermont was off 0.9% on a 15 pound drop per cow but cow numbers were unchanged. Washington State was down 4.0% on a loss of 14,000 cows, though output per cow was up 25 pounds.

U.S. dairy cow culling jumped in March but fell short of a year ago, according to the USDA’s latest Livestock Slaughter report. An estimated 297,200 head were sent to slaughter under federal inspection, up 30,700 or 11.5% from February, but 5,000 head or 1.7% below March 2021. Culling in the first quarter totaled 824,600 head, down 20,100 or 2.4% from the same period a year ago.

In the week ending April 9, 60,900 dairy cows were sent to slaughter, down 100 head from the previous week, but 400 or 0.7% above a year ago.

USDA’s 2021 Livestock Slaughter Summary shows an estimated 3.06 million head were sent to slaughter in the year, down 42,900 head or 1.4% from 2020. The biggest culling month was March, with 302,200 head heading to McDonalds, and the smallest month was May at 223,400.

The Agriculture Department’s monthly Livestock, Dairy, and Poultry Outlook, issued April 14, mirrored milk price and production projections in the April 11 World Agricultural Supply and Demand Estimates report. 

The Outlook stated; “It’s not clear if dairy herd expansion will continue throughout the year. Recent input prices for feed, fuel, and fertilizer have been high. The corn price forecast has been raised as has the soybean meal price forecast.” 

“While milk cows are forecast to average 9.37 million for the first half of the year, they are projected to decline to 9.365 million in the second half. The annual average forecast rounds to 9.37 million head, 15,000 higher than last month’s forecast. The forecast for 2022 average milk per cow was unchanged from last month’s forecast of 24,160 pounds per head.”

U.S. dairy product commercial disappearance showed some weakness in February. The good news was cheese, with American type up 7.2% from Feb. 2021, and the other cheese category up 6.4%. Total cheese disappearance hit 1.1 billion pounds, up 6.8%. Exports were up 9.2% from a year ago.

HighGround Dairy (HGD) points out that February was the fifth month in a row that total cheese disappearance topped that of the previous year and was the steepest year over year gain since April 2021.

Unfortunately, butter took a hit, coming in at 145.5 million pounds, down 13.0% from a year ago, steepest year over year decline since August 2016, according to HGD. Butter exports were up 46.3% but only amounted to 11.2 million pounds.

Nonfat-skim milk powder totaled 172.3 million pounds, down 2.2%, falling short of the previous year for the fourth consecutive month. HGD points out that, while domestic disappearance was up from a year ago, exports were down 11.5%, driving the overall decline. Port congestion issues likely played a role there. 

Dry whey disappearance totaled 68.6 million pounds, down 5.8%, but was an improvement over 2020’s weak performance, according to HGD. Dry whey exports were down 20.1% from a year ago in February.

Powder, cheese, and butter, in that order, pulled the April 19 Global Dairy Trade auction lower, the third consecutive decline. The weighted average dropped 3.6%, following the 1.0% slip on April 5, and 0.9% on March 15. 

All products offered lost ground. Whole milk powder led the declines, down 4.4%, after it fell 1.5% on April 5. Skim milk powder followed, down 4.2%, after inching up 1.0% last time. GDT Cheddar was down 3.9%, following a 2.7% jump, and butter was down 3.7%, after it slipped 0.6%. Anhydrous milkfat was off 1.3%, following a 2.5% drop, and lactose rounded out the losses, down 2.4%.

StoneX Dairy says the GDT 80% butterfat butter price equates to $2.9383 per pound U.S., down 11.1 cents, and compares to CME butter which closed Friday at $2.6675.  GDT Cheddar, at $2.8053, was down 13 cents, and compares to Friday’s CME block Cheddar at $2.3925. GDT skim milk powder averaged $1.9995 per pound, down from $2.0859. Whole milk powder averaged $1.9083, down from $2.0558. CME Grade A nonfat dry milk closed Friday at $1.7550.

Recent declines in demand, the Russia-Ukraine conflict, Chinese lockdowns, and Fonterra adding volume of product on offer brought the downward pressure. Purchases by other regions was up but couldn’t offset China’s weaker buying.

China’s March import data showed whole milk powder imports totaled 128.1 million pounds, down 29.8% from March 2021. Skim milk powder, at 50.7 million pounds, was down 27.3%, and whey imports, at 83.2 million, were down 50.1%.

Butter bucked the trend, up 7.9%, but only totaled 27.5 million pounds, and cheese imports amounted to 35.1 million pounds, down 21.6%

HighGround Dairy’s Lucas Fuess added the caveat in the April 25 Dairy Radio Now broadcast that China’s 2021 purchases were at record levels for a lot of these products, and “It was a record first quarter.”

The Cheddar blocks gained 2.50 cents Monday, hitting $2.3975 per pound, highest since Nov. 5, 2020, but in a likely reaction to the GDT, reversed direction Tuesday, fell to $2.3350 Wednesday, then rallied Thursday, and closed Friday at $2.3925, up 2 cents on the week, fifth consecutive week of gain, and 60 cents above a year ago. 

The barrels, after closing the previous week at $2.44 per pound, also the highest price since Nov. 5, 2020, fell to $2.3425 Wednesday, reversed Thursday, and closed Friday at $2.37, down 7 cents, ending seven week of gains, 56.50 cents above a year ago, and a more typical 2.25 cents below the blocks. There were 12 cars of block and 23 of barrel that exchanged hands on the week at the CME.

The April 15 Dairy and Food Market Analyst credited exports for the high CME cheese prices, which were still a bargain compared to global levels. Slowdowns in China were blamed for the slowdown in powder and high prices have affected butter sales, at least in the U.S., the Analyst stated. “Generally speaking, dairy markets continue to be supported, not by tremendous dairy demand, but by a shortfall in supplies globally.” 

Midwestern cheesemakers continue to report strong demand, according to Dairy Market News, with some having to slim orders down to complete others. Milk is available but remained at a discount. Staffing shortages continue to plague plants but most are still running active schedules. DMN says “Cheese market bulls met some resistance throughout the week, but as demand continues to overshadow inventories, contacts are not overly concerned about price dips.”

Western cheesemakers also report strong demand from both domestic and international purchasers. Retail sales remain steady and food service increasing. Restaurateurs say warmer weather and lightened COVID restrictions are helping. International demand remains strong and Asian purchasing has increased to ship at the end of 2022 and into 2023 but port congestion remains a hindrance. 

While the congestion has improved, the world’s largest shipping port located in Shanghai China, a city of 26 million, is in lockdown. Hellenic Shipping News reports that in the world stage, “One in five container vessels is waiting outside a congested port.” That has likely leap frogged congestion around the world.

The U.S. Dairy Export Council and the National Milk Producers Federation recommended specific steps to the Biden Administration this week to “provide relief and support to dairy farmers and exporters facing supply chain constraints.” 

A letter to Agriculture Secretary Tom Vilsack and Transportation Secretary Pete Buttigieg called for “interagency collaboration to enhance capacity at ports, incentivize carriers to load export cargo, and improve transparency throughout the supply chain. The lead recommendation called for USDA’s Agriculture Marketing Service to restart its Ocean Shipping Container Availability Report.” 

Spot butter closed Friday at $2.6675, down 8.75 cents on the week, lowest since February 28, but 89.75 cents above a year ago, with twenty two sales reported on the week.

Central butter makers are busy despite continuing staffing shortages. Cream was more widely available, as was expected during and following the holiday weekend. Demand was also reported as active in food service, retail, and export. 

Cream inventories are available in the West, says DMN. Contacts report that demand slipped following the holiday weekend and interest from purchasers in other regions was waning. Regional ice cream makers are pulling on cream supplies. Food service butter demand is steady while retail is declining. 

Spot Grade A nonfat dry milk closed at $1.7550 per pound, down 6.75 cents on the week, lowest since January 1, but 50.25 cents above a year ago, with eighteen sales.

Dry whey bobbled a bit but closed at 63.50 cents per pound, unchanged on the week but 1.50 cents above a year ago, on seven sales for the week at the CME.

The Agriculture Department announced the May Federal order Class I base milk price at a new record high, $25.45 per hundredweight, up $1.07 from April and $8.35 above May 2021. It equates to $2.19 per gallon, up from $$1.47 a year ago. The five month Class I average stands at $22.81, up from $15.70 a year ago, and $16.72 in 2020.

Dairy margins remained relatively stable the first half of April as strength in milk prices largely offset the impact from higher projected feed costs according to the Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

The MW cited the latest World Agricultural Supply and Demand Estimates, which forecast a small rise in 2022 U.S. milk output and higher exports on a skim-solids basis for whey and skim milk powder, despite weak Chinese demand in recent months. It also reported on the fall in February export volume, third consecutive month, though butterfat, cheese, and lactose posted large gains. 

“U.S. cheese exports set a record for the month of February at nearly 33 MMT,” the MW stated, and “This marked the 8th consecutive month of year-over-year growth. Cheese exports to Japan were particularly strong, posting a 59% increase from last year. Global cheese demand remains robust. U.S. cheese shipments were up 13% through the first two months of the year. Dairy exports to Mexico fell 10% on a milk solids basis, reflecting both a strong U.S. dollar and relatively high prices keeping buyers on the sidelines.” 

The MW stated that “Corn and meal continued to trade higher in response to the ongoing war in Ukraine and uncertainty surrounding global feed grain supplies. The ongoing conflict complicates the region’s ability to be a reliable supplier of goods on the global stage for the foreseeable future. The U.S. will remain the dominant supplier of corn to the world until South American product hits the market in mid/late summer. Attention will be paid to next month’s WASDE, which will provide the first look at USDA’s new crop balance sheets,” the MW stated.

The Agriculture Department’s latest Crop Progress report shows 4% of the U.S. corn crop has been planted, as of the week ending April 17, up from 2% the previous week but 3% behind a year ago and 2% behind the five year average. 

The report shows 1% of the soybeans are in the ground, 2% behind a year ago and 1% behind the five year average. Weather is posing some challenges to fieldwork in some parts of the country.

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 lkmielke@juno.com.