May milk production down 0.4%
U.S. milk production is lagging. The Agriculture Department’s latest Milk Production report pegs preliminary May output at a bullish 19.06 billion pounds, down 0.4% from May 2018, the second month in six years output was below a year ago.
Output in the 24 top producing states hit 18.1 billion pounds, down 0.1%. Revisions added 195 million pounds to the original 50-State April total, now put at 18.47 billion pounds, up 0.3% from April 2018. Georgia was added to the list of the top 23 milk producing states with this report.
May cow numbers in the 50 states totaled 9.3 million head, up 5,000 from April but 89,000 head below a year ago. Output per cow averaged 2,042 pounds, up 12 pounds from a year ago.
California production was up 1.3% from a year ago, thanks to a 35-pound gain per cow outweighing 7,000 fewer cows. Wisconsin was up 0.4%, despite 5,000 fewer cows. Output per cow was unchanged.
Idaho was up 1.4% on 9,000 more cows. Output per cow was unchanged. New York was up 1.0%, on a 10-pound gain per cow and 3,000 more cows. Output in Pennsylvania was down for the 15th consecutive month, down 67 million pounds or 7.0% from a year ago, due to 30,000 fewer cows milked and 25 pounds less per cow.
Minnesota was off 0.2%, despite a 20-pound gain per cow. Cow numbers were down 6,000 head.
Michigan was up 0.4% on 2,000 more cows milked but output per cow was unchanged. New Mexico was down 0.8%, on 8,000 fewer cows but output per cow was up 35 pounds. Texas was up 5.4% quite easily on 30,000 more cows milked, though its output per cow was off 5 pounds.
Vermont was unchanged. Cow numbers were down 1,000 but output cow was up 10 pounds. Florida was down 4.9%, on 7,000 fewer cows. Output per cow was up 15 pounds. Washington state was up 0.5%, on 1,000 more cows though output per cow was unchanged from a year ago.
GDT falls 3.8%
Weakness returned to Tuesday’s Global Dairy Trade auction, which made CME prices look thrilling. In its third session of decline, the weighted average of products offered fell 3.8%, following a 3.4% decline June 4 and a 1.2% loss on May 21.
Sellers brought 53.4 million pounds of product to the market, up from 43.8 million in the last event and the highest total since Feb. 19, 2019.
Butter led the losses, down 5.7%, which followed a 10.3% plunge on June 4. Cheddar and whole milk powder were both down 4.3%, following declines of 14.0% and 1.5%, respectively.
Skim milk powder was down 3.5%, following a 4.0% drop, anhydrous milkfat was down 3.3%, after posting a 5.7% decline last time. Lactose was off 2.2%.
Rennet casein alone was in the black, up 2.3%, after a 4.2% gain last time.
FC Stone equates the GDT 80% butterfat butter price to $2.0150 per pound U.S., down 11.1 cents from the June 4 event, after dropping 21.8 cents in the previous session. CME butter closed Tuesday at $2.3625.
GDT Cheddar cheese equated to $1.7150 per pound, down 7.7 cents from the last event, which followed a 40.9-cent plunge, and compares to Tuesday’s CME’s block Cheddar at $1.78.
GDT skim milk powder averaged $1.0696 per pound, and compares to $1.1051 last time. Whole milk powder averaged $1.3637, down from $1.4232 last time. CME Grade A nonfat dry milk closed Tuesday at $1.05 per pound.
Cash dairy prices seemed a bit confused last week as record high heat hit the West Coast and traders anticipated this week’s May Milk Production report and Global Dairy Trade auction.
The Cheddar blocks hit $1.80 per pound last Thursday, the highest CME price since February 2017, but then retraced and closed Friday at $1.7825, still up 3 cents on the week, 18 3/4-cents above a year ago, and likely the highest priced cheese globally. The barrels finished at $1.6050, up 7 cents on the week and 15 1/2-cents above a year ago.
The blocks dropped 3 1/4-cents Monday but regained 3 cents Tuesday, ascending to $1.78, as traders weighed the morning’s drop at GDT. CME trading appears to be ignoring the weakness of the previous sessions.
The barrels were unchanged Monday but jumped 4 cents Tuesday, hitting $1.6450, the highest since May 10, but a still too high 13 1/2-cents below the blocks.
FC Stone’s Dave Kurzawski says, “We’ve come to expect a wider (block-barrel price) spread this time of year as excess loads of milk, normally discounted milk, gets made into barrel cheese. To be sure, that same story has played out this year. But the story differs in that the U.S., and to some degree the world, is just not awash in milk as we’ve seen the past few years.
"We’ve seen a burst of barrel production over the past month or so courtesy of some otherwise concerning demand issues, weaker demand on Mozzarella in particular, not burdensome excesses of fresh milk. Because of this, we see the barrel market as nearing the tail end of this fire sale.”
He adds that “spring milk production is tighter than expected this time of year not because of weather, but because of economics. This dynamic, we believe, could become exacerbated with summer heat and higher feed costs.”
Dairy Market News reports that cheese demand is moving in a positive direction, according to Midwestern cheese producers. Some production schedules are at full-bore, however, “As a bevy of dairy farmers have shuttered in the Midwest and elsewhere in the nation, cheesemakers say they notice those losses,” says DMN. “Health of the cheese markets is a concern to contacts” plus “contacts are leery of a price gap larger than a dime.”
Meanwhile, stability is the order of the day in the western cheese market. “On one hand, downward price pressures on barrels were noticeable in the past week as customer preferences are moving from processed to natural cheese. On the other hand, block prices are increasing, causing a limitation in demand when prices are higher than $1.70.”
Butter marched to $2.4050 per pound last Tuesday but saw a Friday closing at $2.3650, down 3 1/4-cents on the week and 1 1/4-cents above a year ago, with a hefty 47 cars sold.
Monday’s butter crept up 1 1/4-cents, then gave back 1 1/2-cents Tuesday, sliding to $2.3625.
Midwestern butter supplies are a bit tight while demand is steadfast, according to DMN. Buyers are finding deals on bulk butter out West and suggest that availability there may “keep butter markets from a full-on bullish push.”
Western butter demand remains ahead of expectations. Contacts are seeing some seasonal slowdown but not to the extent they might see normally.
Grade A nonfat dry milk held at $1.0550 per pound for six consecutive sessions only to close Friday at $1.0525, a quarter-cent lower on the week but 26 1/2-cents above a year ago.
The powder was unchanged Monday but inched a quarter-cent lower Tuesday, to $1.05.
Spot dry whey finished a quarter-cent lower last week, closing at 36 1/4-cents per pound, 4 3/4-cents below a year ago.
Monday’s whey took a three-quarter-cent dip and lost 1 1/4-cents Tuesday, slipping to 34 1/4-cents per pound.
Fluid sales down
U.S. fluid milk sales are far from any recovery. The latest data shows 3.7 billion pounds of packaged fluid sales in April, down 3.1% from April 2018.
Conventional product sales totaled 3.6 billion pounds, down 2.4% from a year ago. Organic products, at 176 million pounds, were down an eye-popping 16.5% and represented about 4.7% of total sales for the month.
Whole milk sales totaled 1.2 billion pounds, up 0.7% from a year ago and made up 32.1% of total fluid sales in the month. Sales for the four-month period totaled just under 5 billion pounds, up 0.2% from a year ago.
Skim milk sales, at 275 million pounds, were down 11.7% and made up just 7.4% of total milk sales for the month.
Total packaged fluid milk sales, January through April totaled 15.5 billion pounds, down 2.5% from a year ago.
Conventional products year-to-date totaled 14.7 billion pounds, down 2.3%. Organic products, at 807 million pounds, were down 7.4% and represented about 5.2% of total fluid milk sales for the period.