The May 17 announcement that the U.S. would lift steel and aluminum tariffs on Canada and Mexico drew praise from dairy producers and processors this week and raised hopes in the dairy industry.
Mexico, in turn, lifted its retaliatory tariffs against U.S. cheese exports. The break in the logjam could improve dairy prices and the chances for passage of the U.S.-Mexico-Canada Free Trade Agreement and perhaps help end the trade dispute with China.
Meanwhile, while U.S. milk production in March fell below that of a year ago for the first time in six years, the USDA’s preliminary 50-state data put April output up 0.1 percent, according to the May 20 Milk Production report. Output was pegged at 18.43 billion pounds, with output in the top 23 producing states at 17.4 billion pounds, up 0.3 percent. Revisions lowered the original 50-state March total by 40 million pounds, to 18.873 billion pounds, down 0.6 percent from March 2018.
April cow numbers in the 50 states totaled 9.328 million, down 1,000 from March, 90,000 below a year ago, and the 10th consecutive month that cow numbers were below a year ago since May 2016. Output per cow averaged 1,976 pounds, up 21 pounds from a year ago and the 42nd consecutive month of gain.
California production was up 2.6 percent from a year ago, thanks to a 60-pound gain per cow outweighing 7,000 fewer cows. Wisconsin was up just 0.4 percent, on a 15-pound gain per cow, but cow numbers were down 4,000 head. Minnesota was off 0.1 percent, despite a 20-pound gain per cow. Cow numbers were down 6,000 head.
The U.S. is decreasing its herd, says FCStone: “There was a material downward revision in cow numbers for March (down 15,000 head from last month’s report), which means the herd fell a total of 25,000 head between February and March. Couple that with a 1,000-head decrease in April.”
Milk output will also likely be impacted down the road considering what weather is currently doing to crop planting. The latest Crop Progress report shows only 49 percent of the corn crop was planted, as of the week ending May 19, up from 30 percent the previous week, but down 29 percent from a year ago and 31 percent behind the five-year average; 19 percent of the corn has emerged, up from 10 percent the previous week but 28 percent behind a year ago and 30 percent behind the five-year average.
The report shows 19 percent of U.S. soybeans are in the ground, up from 9 percent the previous week, 34 percent behind a year ago, and 28 percent below the five-year average.
Cold storage dairy stocks were close to or below year-ago levels according to the Agriculture Department’s latest Cold Storage report. April 30 butter stocks totaled 290.8 million pounds, up 21.1 million pounds or 7.8 percent from March but were 16.5 million pounds or 5.4 percent below those in April 2018.
American-type cheese, which includes Cheddar, was virtually unchanged, totaling 782.6 million pounds, down 2.2 pounds from March but 2.3 million pounds above a year ago.
The Daily Dairy Report says while the American cheese decline was small, “the direction is remarkable,” pointing out that “American cheese stocks have not waned from March to April since 1993” and says it “helps explain why the CME spot Cheddar barrel market climbed to new calendar year highs in April and traded at even greater values earlier this month.”
The Agriculture Department announced the June Federal order Class I base milk price at $17.07 per hundredweight, up 65 cents from May, $1.82 above June 2018, and the highest Class I price since January 2017. It equates to about $1.47 per gallon, up from $1.41 in May and $1.31 a year ago.
The six-month Class I average stands at $15.94, up from $14.47 a year ago and compares to $16.27 in 2017.
Regarding the swine fever in China, FCStone’s Shanghai office reports that “The epidemic is still a complete mess. Another 2 cases were reported in the past week. These cases were in Central China 200-300 kilometers away from prior outbreaks reported six months ago. It’s not easy to contain this virus, and some of our customers in China suggested every hog in the country may be at risk as their entire production model is doomed for a systematic collapse with their poor biosecurity standards. Let’s hope they’re overreacting,” FCStone said.