Greater milk output in nearly every Midwestern state overwhelmed the region

Dairy farm milk tanks are not being refilled very quickly. The U.S. Department of Agriculture’s latest preliminary data shows February output at 17.68 billion pounds, down 1.6 billion pounds from January, but 135 million or 0.8% more than February 2022 and less than the 1.3% increase seen in January.The 24-state total, at 16.9 billion pounds, was up 1.0% from a year ago. Both January totals were revised up five million pounds. February was the eighth month in a row that milk production topped that of a year ago.Farms are adding cows. Cow numbers totaled 9.42 million, up 12,000 head from the January count which had no revision and was up 37,000 head from a year ago, largest dairy herd since August 2021. The 24-state count was up 12,000 from January and 54,000 above a year ago, the largest since July 2021.Output per cow averaged 1,877 pounds, up seven pounds or 0.4% from 2022.California cows put 3.3 billion pounds of milk in the tank in February, down 29 million pounds or 1% from a year ago due to lots of rain, 2,000 fewer cows and a loss of 20 pounds per cow. Output there hasn’t really shown much of an increase since August 2021. Wisconsin output, at 2.4 billion pounds was up 7 million or 0.3% due to a 10-pound gain per cow offsetting a loss of 3,000 cows.Texas was up 5.5%, thanks to 22,000 more cows and a 40-pound gain per cow. Idaho was up 3.4%, on 15,000 more cows and a 20-pound gain per cow.Florida again registered the biggest loss, down 11.4%. Michigan was up 3.1%, thanks to a 30-pound gain per cow and 7,000 more cows. Minnesota was up 1.0% on a 10-pound gain per cow and 2,000 more cows. New Mexico was down 4.2% on 12,000 fewer cows though output per cow was unchanged. New York was up 2.9%, thanks to 10,000 more cows and a 25-pound gain per cow.Oregon was down 2.4%, on a loss of 3,000 cows. Output per cow was unchanged. Pennsylvania was off 0.1% on a loss of 2,000 cows, though output per cow was up five pounds. South Dakota was up 6.2%, thanks to 12,000 more cows offsetting a 10-pound loss per cow. Vermont was down 1.0% on 1,000 fewer cows, though out per cow was up five pounds. Washington State was down 2.2% on 6,000 fewer cows. Output per cow was unchanged.The March 20 Daily Dairy report warned, “Greater milk output in nearly every Midwestern state overwhelmed the region and resulted in steeply discounted spot milk prices and smaller checks for dairy producers. Cooperatives in Texas frequently dumped milk, despite self-imposed caps on members’ output.”Flooding occurred throughout California covering fields and roadways with water, reports HighGround Dairy (HGD) “closing primary and alternative routes throughout the state, delaying transportation and causing plant downtime. The state remained under siege this week and Governor Newsom designated 40 counties as disaster counties including Tulare, Fresno, Kings, Madero, Mariposa and Merced.”Meanwhile, a Nor’easter dropped three feet of snow on parts of New England last week which caused delayed milk pickups, according to Dairy Market News (DMN). However, milk production was steady in other parts of the Eastern seaboard.The Federal Reserve raised interest rates for the ninth time in a row this week by a quarter percent to just under 5% in its ongoing effort to control inflation. The action comes in the face of the collapse of two regional banks.Lots of eyes are on dairy culling as finances tighten on the farm. The USDA’s latest Livestock Slaughter report shows an estimated 266,500 head were sent to slaughter under federal inspection in February, down 31,400 head from January and mirrored numbers in February 2022. Culling in the two month period totaled 564,400, up 37,000 or 7.0% from the same period a year ago.The week ending March 11 saw 67,300 head go to slaughter, up 421 head from the previous week and 2,300 more than a year ago. Year to date, 673,400 cows have been culled, up 24,000 head or 3.7%, from the same period in 2022.We have plenty of butter. The USDA’s latest Cold Storage report shows the Feb. 28 inventory at 295 million pounds, up 30.7 million pounds or 11.6% from the January figure which was revised 1.6 million pounds higher and was 32 million or 12.2% more than February 2022. It was the third month in a row butter stocks topped those of a year ago but the report is viewed as neutral to the market.American cheese stocks fell to 816.9 million pounds, down 6.5 million pounds or 0.8% from the January inventory which was revised up 4.6 million pounds. Stocks were down 14.2 million pounds or 1.7% from a year ago.The “other” cheese category crept up to 605.5 million pounds, up 5.7 million pounds or 0.9% from January and 5.1 million or 0.8% above a year ago.The total cheese inventory came in at 1.446 billion pounds, down 234,000 pounds or 0.02% from January and 20.7 million or 1.4% below a year ago.Woes continue in international dairy trade. The March 21 Global Dairy Trade’s weighted average dropped 2.6%, following the 0.7% slip on March 7, and 1.5% on February 21. Traders brought 59.1 million pounds of product to market, up from 59 million March 7, and the average metric ton price slipped to $3,361 U.S., down from $3,403.00 on March 7.Cheddar led the declines, down 10.2%, after dropping 10.2% on March 7. Anhydrous milkfat was down 3.8%, following a 1.8% decline and butter was down 3.0%, after a 0.3% slip. Skim milk powder was down 3.5%, following a 1.1% descent and whole milk powder was down 1.5%, after inching up 0.2%.StoneX Dairy Group says the GDT 80% butterfat butter price equates to $2.1012 per pound U.S., down 6.7 cents, and compares to CME butter which closed Friday at $2. GDT cheddar, at $1.8381, was down 20.7 cents, after losing 26.2 cents in the previous event and compares to Friday’s CME block cheddar at a very pricy $2.10. GDT skim milk powder averaged $1.2012 per pound, down from $1.2424 and whole milk powder averaged $1.4641 per pound, down from $1.4865. CME Grade A nonfat dry milk closed Friday at $1 per pound.Analyst Dustin Winston says, “North Asian purchases, which includes China, were higher than last year and the last event as the region continues to stay above 50% market share since returning to this trend in February.”China’s dairy imports indeed looked a little more favorable, according to the latest data. HGD points out that China did not release January data during the usual time in February but waited to release January and February data at the same time in March, an occurrence that began during the pandemic.February imports of skim milk powder totaled 108.2 million pounds, down 31.1% from February 2022, however skim milk powder imports totaled 89.2 million pounds, up 42.9%.Market share of skim milk powder is steadily changing, says HGD, with New Zealand’s share falling in January to 53%, from 64% the year prior. U.S. skim milk powder market share increased the most, shifting from 5.5% in January 2022 to 11.5% this year.Whey imports totaled 113.7 million pounds, up 52.6% from a year ago and have grown in annual comparisons, says HGD, but are still lagging the market highs in 2021. The US is China’s number one whey supplier, taking a 42% market share.Butter totaled 13.8 million pounds, down 15.1%, while anhydrous milkfat, at 4.6 million, was down 41%.Cheese imports amounted to 27.6 million pounds, up 0.1%, while infant formula, at 53.6 million pounds, was up 37.4% from a year ago.Lucas Fuess, Rabo Bank senior dairy analyst, shared some insights from Robo’s Global Dairy Quarterly report in the Mar. 27 “Dairy Radio Now” broadcast. He warned of an abundant spring flush in the U.S. with steep discounts on milk but said he doesn’t see a lot more near-term weakness, “as demand holds up.”Europe is seeing more milk, he said, and the weak March 21 GDT came even as Chinese demand was “fairly decent.” “Other buyers did not step up enough to lift those global product prices.”He expects some price recovery in the second half of 2023 for the U.S. though he admits it will be a challenge to keep pace with 2022 export records in 2023.Back home, fluid milk sales looked a little better in January, in that they didn’t fall as much as has been the case. The USDA’s latest data shows packaged fluid product sales totaled 3.8 billion pounds, down just 0.6% from January 2022.Conventional product sales totaled 3.5 billion pounds, down 1.0% from a year ago. Organic products, at 258 million pounds, were up 4.8% and represented 6.8% of total sales for the month.Whole milk sales totaled 1.3 billion pounds, up 1.2% from a year ago and represented 34.2% of total milk sales for the month. Skim milk sales, at 193 million pounds, were down 6.2% 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.One more positive note, the March 16 Daily Dairy report says “Sales of lactose-free and low-lactose milks are growing even more rapidly than plant-based alternatives. These milks include longstanding brands like Lactaid, as well as the newer ultra-filtered, nutrient dense, high protein milks such as Fairlife and to a lesser degree the much newer A2 milks. While technically not low-lactose, A2 milk, which contains only the A2 protein, have been shown to prevent some symptoms for those who suffer from lactose malabsorption,” the Daily Dairy report stated.Speaking of fluid milk, the U.S. Department of Agriculture announced the April class I base price at $18.85 per hundredweight, down 14 cents from March, $5.53 below a year ago and the lowest class I since November 2021. It equates to $1.62 per gallon, down from $2.10 a year ago. The four month class I average stands at $20.26, down from $22.15 a year ago and compares to $15.35 in 2021.Dairy prices were mixed as spring was sprung this week. The cheddar blocks, after pole vaulting almost 22 cents the previous week, made it to $2 per pound Wednesday and closed Friday at $2.10, highest since January 11, up 10.25 cents on the week, but 17.50 cents below a year ago.The barrels went the other direction, after gaining 42 cents the previous three weeks, falling to $1.94 Wednesday. They rallied to close Friday at $1.9625, up 0.25 cents on the week, 28.75 cents below a year ago and raised the spread to 13.75 cents. Sales totaled 14 cars of block on the week and 19 of barrel.Midwestern cheesemakers are still finding spot milk as low as $11 under class III, according to Dairy Market News. There is no shortage of milk in the Midwest, though cheesemakers who had been reporting heavily discounted milk in recent weeks weren’t getting those offers this week. Cheese inventories are balanced too tight. Some cheesemakers are running behind as demand has returned. Barrel cheese producers suggest similar sentiment.Varietal cheese demand from retail and food service purchasers is steady in the West. Close to sold out inventories for contract sales continue. Export demand remains strong to steady from Asian markets and more consistent prices holding. Export demand to other areas is reportedly steady to light but less competitive to European and Global Dairy Trading pricing. Ample milk volumes are available for cheesemakers to keep regional cheese production strong, says Dairy Market News.Cash butter saw its Friday finish at $2.3450 per pound, down 5.50 cents on the week and 45 cents below a year ago with 11 loads sold on the week.Butter demand ranges from on par to busy, with some plants saying spring holiday demand has backed off. Certain retailers are still ordering somewhat actively. Butter churning is very active. Cream is available locally but offers are quieter and some plants were obtaining cream from the West. Organic cream is reportedly widely available, in comparison to conventional cream, says Dairy Market News.Cream volumes are plentiful in the west and demand is steady to light. Some cream was being brought in to keep production at max capacity while others remain at decreased capacity due to equipment repairs. Retail demand is steady with spring holiday season orders picking up. Export demand is steady for Asian markets while lighter for European markets due to less competitive U.S. prices.CME nonfat dry milk fell to the lowest level it has seen since March 22, 2021, closing at $1.15 per pound, 3.75 cents lower on the week and 70.25 cents below a year ago, with three sales put on the board.The whey closed Friday at 44.50 cents per pound, down 2.25 cents on the week and 27.50 cents below a year ago, with five sales on the week at the CME.Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. 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.