February milk production 'leaps'

February milk output shot higher, thanks to an increased herd size and favorable weather. The Agriculture Department’s preliminary data in its Milk Production report shows output at 17.87 billion pounds, up 5.3% from February 2019.

However, the data is skewed in that February had an extra “leap day” of production than 2019. Adjusting for the extra day, output was up 1.7%.

February output in the top 24 states totaled 17.0 billion pounds, up 5.6%, but after adjusting, it was up 2.0%. Revisions added 40 million pounds to the original 50-state January total, now put at 18.8 billion, up 1.1% from January 2019.

Cow numbers in the 50 states in February totaled 9.37 million head, up 9,000 from January and 18,000 above a year ago. The 24-state count totaled 8.84 million head, up 8,000 from January and 39,000 more than February 2019. Revisions added 13,000 cows to the January count, now put at 9.36 million, 7,000 above a year ago.

Output per cow in the 50 states averaged 1,841 pounds, after adjusting, up 27 pounds from a year ago or 1.5%.

Adjusting for the Leap Day, California was up 84 million pounds or 2.6% from a year ago. Cow numbers were down 3,000 but output per cow was up 52 pounds.

Wisconsin was down 0.8% on 10,000 fewer cows and 1 pound less per cow.

Texas was up 74 million pounds or 7.0%, thanks to 32,000 more cows and a 21-pound gain per cow.

Idaho was up 5.5%, on 27,000 more cows and a 22-pound gain per cow.

New York was up 1.9%, thanks to a 38-pound gain per cow. Cow numbers were down 1,000.

Michigan was up 1.1% on 3,000 more cows and a 6-pound gain per cow.

New Mexico was up 2.7%, on 11,000 more cows offsetting a 15-pound drop per cow.

Oregon was up 2.0%, thanks to 3,000 more cows. Output per cow was down 7 pounds.

Pennsylvania inched up 0.1% on a 61-pound gain per cow, but cow numbers were down 17,000.

Washington state was up 4.0%, on 4,000 more cows and a 48-pound per cow increase.

Most analysts view the report as bearish. FC Stone points out, “We are now 7 months into the herd expansion and we’re up 55,000 head.” “It appears that farmers are responding to margins just like they used to.”

HighGround Dairy warned that “spring flush volumes will be massive and burdensome on an industry that has seen intense volatility in recent days due to COVID-19.”

Culling drops

Dairy cow culling dropped in February. The latest Livestock Slaughter report shows an estimated 266,100 head went to slaughter under federal inspection, down 32,400 head or 10.8% from January and 12,800 or 4.6% below February 2019.

The two-month total shows 564,600 head were retired so far in 2020, down 12,700 or 2.2% from 2019.

More butter

U.S. butter supplies keep climbing as more is being produced and less is being consumed.

The Agriculture Department’s latest Cold Storage report shows Feb. 29 stocks at 302.3 million pounds, up 55 million pounds or 22.2% from January and 58.8 million or 24.1% above February 2019. It's the eighth consecutive month stocks topped the year-before level.

Revisions added 4.7 million pounds to the original January total.

American cheese totaled 778.8 million pounds, down 8.5 million pounds or 0.1% from January and 43.9 million pounds or 0.6% below a year ago.

Stocks in the “other” cheese category were at 556.5 million pounds, up 5.5 million pounds or 0.9% from January and 3.8 million or 0.7% above a year ago.

The total cheese inventory stood at 1.36 billion pounds, up 6 million pounds or 0.4% from January, but 73.4 million pounds or 0.5% below February 2019, and the sixth consecutive month total cheese stocks were below a year ago.

Prices struggle

Cash Cheddar block cheese closed Friday at $1.8375, down 3.5 cents on the week but still 26.75 cents above a year ago.

The barrels fell to $1.3875 last Thursday, lowest CME price since March 11, 2019, setting a record spread of 47.5 cents, but they closed Friday at $1.43, 7 cents lower on the week and 13.5 cents below a year ago.

Cheese was unchanged Monday, as traders anticipated the afternoon’s February Cold Storage report. The blocks backed down 2.25 cents Tuesday to $1.8150, while the barrels gained 2 cents, hitting $1.45, 36.5 cents below the blocks.

Midwestern cheesemakers saw a variety of demand responses early last week, according to Dairy Market News. If they were primarily a retail based operation, orders were very active. If their focus is on foodservice and government related buying, they were slow.

Milk was at $2 to $6 under Class mid-week but some bottlers were beginning to pull from milk supplies, diverting milk into bottling due to what they call the "toilet paper effect," wherein alongside toiletry items, grocery store shelves are being cleared of dietary staples such as milk, eggs and bread.

It remains to be seen whether the increased fluid milk sales will offset the drops in foodservice dairy demand.

Food chain cheese orders in the West are trending down but retailers' intakes have increased due to many end-users stocking up for later usage. Cheese processing continues on an active tone as milk is abundant.

Butter sank to $1.67 per pound last Wednesday but rallied Thursday and Friday to close at $1.7550, still 5.75 cents lower on the week and 51 cents below a year ago.

Monday’s butter was down 1.5 cents and shed another 3 cents Tuesday, falling to $1.71, lowest CME price in five years, almost to the day.

Butter makers are seeing positives in retail demand, says DMN, but it’s too early to tell whether the upticks are early spring holiday demand. DMN says schools and universities have no need to order, with state mandated closures through early April in many states.

Cream is plentiful and, as more milk flows from processing to bottling, more cream is being churned, adding to an already heavy supply. Contacts are hopeful that bakery and ice cream needs lend some help, otherwise dumping is expected.

Western butter makers say near-term retail butter demand is strong and certain retail orders are several times higher than typical. Consumers are stocking up but, while the swell of retail business has kept butter output active, foodservice accounts are diminishing and butter inventories are steady to growing.

Spot nonfat dry milk was pummeled, falling below $1 per pound last Wednesday, first time since April 17, 2019, and closed Friday at 98.75 cents, down 6.5 cents on the week and 3 cents below a year ago. Fifty cars traded hands on the week.

The powder gained 1.75 cents Monday, inching back above $1, but lost a half-cent Tuesday, slipping to $1.00 per pound.

Dry whey saw a Friday close at 33 cents per pound, down 1.75 cents on the week and dead even with a year ago.

The whey was steady Monday and Tuesday.

Class I down

The Agriculture Department announced the April Federal order Class I base milk price at $16.64 per hundredweight, down 82 cents from March but 88 cents above April 2019 and the highest April Class I since 2014. That put the four month Class I average at $17.67, up from $15.54 at this time a year ago and compares to $14.29 in 2018.