Farm milk tanks are not exactly bulging
The spring flush is upon us, but farm milk tanks are not exactly bulging. The U.S. Department of Agriculture’s preliminary data shows March output at 19.8 billion pounds, up 2.1 billion from February, but only 90 million pounds or 0.5% above March 2022 and less than the 1.1% increase in February.The 24-state March total, at 18.9 billion pounds, was up 1.9 billion pounds from February and up 0.6% from a year ago. The February 50-state total was revised up 51 million pounds, while the 24-state total was revised up 48 million pounds.Milk output in first quarter 2023 totaled 56.8 million pounds, up 1% from 2022, with cow numbers at 9.42 million, up 20,000 from fourth quarter 2022 and 40,000 more than first quarter 2022.Farmers have added cows however, despite the high feed prices and falling milk income. Cow numbers totaled 9.435 million, up 6,000 head from the February count, which was revised up 12,000 head, 28,000 more than in January and up 31,000 from a year ago. This makes for the largest dairy herd since August 2021. The 24-state count was also up 6,000 from February and 44,000 above a year ago, largest since July 2021.Output per cow averaged 2,099 pounds, up 3 pounds or 0.1% from March 2022.California, battered by heavy rains and flooding in February and March, saw March milk drop to 3.6 billion pounds, down 75 million pounds or 2.0% from a year ago. Output per cow fell 45 pounds, far outweighing the 1,000-cow increase. Wisconsin output totaled 2.7 billion pounds, up 11 million pounds or 0.4% from a year ago, thanks to a 15-pound gain per cow offsetting the loss of 4,000 cows.Texas was up 4.7%, thanks to 17,000 more cows and a 45-pound gain per cow. The fire at a dairy near Dimmitt on April 10 claimed some 18,000 cows. The cow loss will register in next month’s report however milk output may or may not, as milk in the state was already being dumped due to the excessive supply.Idaho milk was up 3.1%, on 15,000 more cows and a 15-pound gain per cow. Florida again registered the biggest loss, down 5.5%, on 7,000 fewer cows, thought output per cow was up 30 pounds. Michigan was up 2.9%, thanks to a 25-pound gain per cow and 8,000 more cows.Minnesota was up 1.2% on a 20-pound gain per cow and 1,000 more cows. New Mexico was down 4.4%, on 14,000 fewer cows. Output per cow was up five pounds New York was up 2.1% on 10,000 more cows and 10 pounds more per cow.Oregon was down 2.6%, on a loss of 3,000 cows. Output per cow was unchanged. Pennsylvania was off 0.2% on a loss of 1,000 cows. Output per cow was unchanged. South Dakota was up 7%, thanks to 13,000 more cows offsetting a 10-pound loss per cow. Vermont was down 0.9% on a 10-pound drop per cow. Washington State was down 1.6% on 5,000 fewer cows. Output per cow was up five pounds.StoneX reported that milk components improved in March after being weak in January and February. Combined fat and protein was up 0.7% from last year after being up just 0.3% in February.HighGround Dairy (HGD) observed, "With heavy livestock slaughter through the first three months of 2023, it is surprising that the U.S. milking herd continues to grow.”Dairy culling continues to outpace that of a year ago. The latest Livestock Slaughter report shows an estimated 306,100 head were sent to slaughter under federal inspection in March, up 39,600 from February and 8,900 or 2.3% above March 2022.The week ending April 8 saw 61,700 head go to slaughter, down 5,100 from the previous week, but 800 or 1.3% more than a year ago. Year to date, 933,200 cows have been culled, up 33,400 or 3.7% above a year ago. StoneX points out that, so far this year, only two weeks of slaughter were below year ago levels.“Beef supplies in the U.S. are tight,” says HighGround Dairy, “and after spring flush, when production drops, farmers may be even more motivated to send lower producing cows to processing plants to manage expenses against lower milk prices and higher feed costs.”The U.S. Department of Agriculture’s monthly Livestock, Dairy and Poultry Outlook projects U.S. milk cows will average 9.400 million head, 10,000 higher than last month’s forecast. The annual milk per cow projection was lowered 10 pounds from last month to an average 24,335 pounds per head.The International dairy market looked a little more promising Tuesday as the Global Dairy Trade auction weighted average surprised the trade and reversed four successive declines, jumping 3.2% and the first GDT gain since February 7.Traders brought 50.1 million pounds of product to market, down from 52.5 million on April 4 and the average metric ton price advanced to $3,362 U.S., up from $3,227.00 on April 4.All products offered moved higher led by skim milk powder, up 7.0%, after falling 2.5% on April 4. Whole milk powder was up 1%, following a 5.2% downfall. GDT cheddar was up 5.7%, after jumping 3.8%. Butter was up 4.9%, after falling 3.3% and anhydrous milkfat was up 4.7%, following a 7.2% plunge on April 4.StoneX says the GDT 80% butterfat butter price equates to $2.1332 per pound U.S., up 10 cents after losing 6.8 cents on April 4 and compares to CME butter which closed Friday at a pricy $2.40. GDT cheddar, at $2.0006 was up 11 cents and compares to Friday’s CME block cheddar at a bargain $1.75. GDT skim milk powder averaged $1.2590 per pound, up from $1.1699 and whole milk powder averaged $1.4012 per pound, up from $1.3846. CME grade A nonfat dry milk closed Friday at $1.1650 per pound.Analyst Dustin Winston reports that “North Asian purchases, which includes China, Middle East, European and North American purchases exceeded year ago levels. The Middle East was the only region to increase purchase volume from both the last event and last year. Southeast Asia purchases faded in this event,” he said, “falling from both last year and last event levels.”HighGround Dairy cautioned that “The auction was not direction setting, with likely short-term demand arriving from Middle Eastern buyers driving this upside surprise. This result will also add more confusion to the already volatile skim milk powder market, which HGD expects to correct at the following auction."Speaking in the April 24 Dairy Radio Now broadcast, Rabo Bank Senior Dairy Analyst, Lucas Fuess said milk output in the Southern Hemisphere is winding down seasonally as New Zealand fared a little better than anticipated but Australia’s output is down. He added that the European Union is in its spring flush, like the U.S., but EU output was up 0.5% in February. He says the gains will continue but we might see some declines in the back half of the year. He also questioned the climb in U.S. milk cow numbers as tight margins take their toll on U.S. farms.Cooperatives Working Together (CWT) cooperatives accepted four offers of export assistance this week that helped capture sales of 229,000 pounds of cream cheese. The product is going to customers in Asia through June.CME block cheddar fell to $1.7450 per pound Thursday, lowest since September 1, 2022, but closed Friday at $1.75, 2.50 cents lower on the week, fourth week of decline and 64.25 cents below a year ago when it peaked at $2.3925.The barrels reversed three weeks of loss and finished at $1.5525, up four cents on the week, 81.75 cents below a year ago and 19.75 cents below the blocks.Sales totaled 29 cars of block, highest weekly sum since the week of May 31, 2021, plus a whopping 85 loads of barrel, highest since December 16, 2017. There were 26 traded Wednesday alone, highest one day total since June 21, 2018. The previous week saw 47 sales and Friday was the fifth time this year that over 20 loads were traded in a single session.The cheese market was encouraged this week by an announcement that McDonalds will enhance its burger lineup by adding more cheese. The trial will begin on the West Coast, meanwhile Midwest cheesemakers continue to report widely available milk, according to Dairy Market News (DMN). Mid-week spot milk prices remained from $11 to $4 under class. Cheese demand is “steady to strong,” says DMN, but there is some near-term concern regarding inventory levels.Varietal cheeses have strong to steady demand from western retail and food service purchasers. Inventories through April remain sold out for some. Asian demand is reported as strong by some while others say Asian purchasers are buying from other sources. Milk volumes are plentiful, enabling maximum to strong production schedules.Cash butter climbed to $2.4025 per pound Wednesday, the highest in four weeks, but closed Friday at $2.40, up 7.25 cents on the week but 26.75 cents below a year ago, with 16 sales reported for the week.Central butter demand has softened seasonally the past few weeks, says DMN. Churning is still very busy though cream was less available this week. Multiples ticked up and some expect further cream price increases near term, says DMN.Cream is plentiful in the West, with strong to steady cream demand continuing as cream multiples moved higher this week. Strong to steady butter production continues. Butter is moving well, with a steady pull on inventories. Export demand is steady to lighter due competitive prices from European and Asian markets, however, Canadian purchases increased this week.After falling to $1.1225 per pound Monday, CME grade A nonfat dry milk found itself at its lowest price since February 24, 2021. Tuesday’s GDT reversed that and the powder closed Friday at $1.1650, up 3.50 cents on the week but 59 cents below a year ago, with seven sales put on the board for the week.Dry whey slipped to 35 cents per pound Monday, lowest since January 31, 2023, then headed back up to 38.25 cents Wednesday, but closed Friday at 36.25 cents, unchanged on the week but 27.25 cents below a year ago. There were 35 sales on the week, down from 47 the week before.The May Federal order class I base milk price was announced at $19.57 per hundredweight, up 72 cents from April but $5.88 below May 2022. It equates to $1.68 per gallon, down from $2.19 a year ago. The five-month class I average stands at $20.12, down from $22.81 a year ago and compares to $15.70 in 2021.Fluid milk sales were back to their old ways in February. The U.S. Department of Agriculture’s latest data shows packaged sales totaled 3.4 billion pounds, down 3.2% from February 2022, following a 0.6% slippage in January. A general rule of thumb says a 4% decline in fluid milk sales means about 1% of milk nationally will end up in manufacturing instead of in the jug.Conventional product sales totaled 3.1 billion pounds, down 3.1% from a year ago. Organic products, at 218 million pounds, were down 3.2%.Whole milk sales totaled 1.2 billion pounds, up 0.1% from a year ago, up 0.7% year to date and represented 34.3% of total milk sales for the two months. Skim milk sales, at 173 million pounds, were down 8.0% from a year ago and 7.0% below a year ago.Total packaged fluid sales for the two months amounted to 7.2 billion pounds, down 1.8% from 2022. Conventional product sales totaled 6.7 billion, down 2.0%. Organic products, at 476 million pounds, were up 1.0% and represented 6.7% of total milk sales for the period.One more positive note, the March 16 Daily Dairy report (DDR) 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 DDR stated.Dairy margins were mixed over the first half of April, weakening in nearby periods while holding steady further out on the curve, according to the latest Margin Watch (MW) from Chicago based Commodity and Ingredient Hedging LLC.“Continued pressure on class III futures due to weakness in product prices was the culprit behind declining spot margins,” the MW stated, “with spot cheddar blocks and whey powder prices dropping to one and two-month lows. While class IV prices have held up comparatively better with butter prices in a well-established trading range, spot non-fat dry milk is holding steady at a two-year low.”The MW detailed February export data, the uptick in Tuesday’s GDT, and referenced the minimal changes for corn and soybean domestic balance sheets in the latest World Agricultural Supply and Demand Estimates. “Traders await the May report next month which will feature the first new crop balance sheets for the upcoming 2023 to 2024 crop year. Planting progress has begun across the U.S. Midwest with favorable weather over the first half of April,” the MW concluded.The USDA’s latest Crop Progress report shows 8% of U.S. corn has been planted, as of the week ending April 16, up from 3% the previous week, 4% ahead of a year ago and 3% ahead of the five-year average.The report shows 4% of the soybeans are in the ground, 3% ahead of a year ago and 3% ahead of the five-year average. Late snow last week in the Midwest was delaying planting in a winter that doesn’t seem to want to end.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 firstname.lastname@example.org.