Milk production in the USA was below a year ago for the fourth month in a row in February. That was expected but no need to worry about a milk shortage like consumers were over toilet paper not so long ago.
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The Agriculture Department’s preliminary data shows output at 17.5 billion pounds, down 1.0% from Feb. 2021, and follows the 1.7% drop in January. Output in the top 24 producing states totaled 16.7 billion pounds, down 0.7%. Revisions lowered the original 50-State January estimate by 20 million pounds to 19.0 billion, 1.7% below that of a year ago.

February cow numbers totaled 9.37 million, up 3,000 from January, first increase in eight months, but were down 96,000 from a year ago. The January count was revised 1,000 head lower.

Output per cow averaged 1,869 pounds, up 1 pound from 2021. January output per cow was revised down 2 pounds to 2,032 pounds.

California production totaled 3.3 billion pounds, down 6 million pounds or 0.2% from a year ago, thanks to a 5 pound drop per cow. Cow numbers were up 1,000. Wisconsin output totaled 2.4 billion pounds, up 17 million or 0.7%. Cow numbers were up 9,000 and output per cow was unchanged from a year ago.

Idaho was unchanged in cow numbers, output per cow, and total production. Michigan was down 2.9% on 13,000 fewer cows, though output per cow was unchanged. Minnesota was down 3.2% on a 25 pound drop per cow and 8,000 fewer cows. New Mexico produced 86 million pounds or 13.1% less milk in February on a drop of 44,000 cows, although output per cow was unchanged.

New York was off 0.8% on 6,000 fewer cows though output per cow was up 5 pounds. Oregon was down 0.5% on a 5 pound drop per cow. Cow numbers were unchanged. Pennsylvania was down 0.9%, on 7,000 fewer cows, though output per cow was up 10 pounds. South Dakota continues to put lots of milk in the tank, up 18.3%, thanks to 27,000 more cows far offsetting a 10 pound drop per cow. Texas was up 4.3% on 15,000 more cows and a 35 pound gain per cow.

Vermont was off 0.5% on 1,000 fewer cows, though output per cow was unchanged. Washington State was down 4.7% on a loss of 15,000 cows, though output per cow was up 15 pounds.

Hopefully, the milk supply remains in check and supports prices. Rising feed and fuel prices will likely act as a governor to milk output however rising fuel and food prices for families could threaten dairy product demand.

Global milk output is not rising either. StoneX Mar. 21 Early Morning Update pointed out that February New Zealand milk output was down 7.2% from last year. The forecast for the full season is down 4.4%, “but there’s still room for it to come in lower than forecast, according to StoneX.

Meanwhile, China’s latest import data from January and February showed that “Combined volumes were down against the record start to 2021,” says HighGround Dairy, “as weaker demand needs for whey, lower availability of skim milk powder and other finished goods counterbalance the strong import volumes for whole milk powder.”

Whole milk powder imports were up in both January and February, according to HGD’s Lucas Fuess in the March 28 Dairy Radio Now broadcast. They totaled 157.1 million pounds in February, up 40.3% from February 2021, as the country looked anywhere it could around the globe for product, while skim milk powder totaled just 62.4 million pounds, up only 5.2%. Fuess blamed the lack of product availability rather than a downturn in Chinese demand for skim milk powder.

The largest drop was in the whey category, according to HGD, with extensive losses to the U.S. and Europe. February imports were the weakest since June 2019, but Fuess said the recovery in China’s hog herd from African Swine Fever likely led to the decrease in whey needs.

Milk availability is tight in New Zealand, Fuess concluded, a major supplier of dairy to China, which had caused them to look to other sources such as Australia, the EU, and the U.S.

Fat imports were solid with the bulk of the volume from New Zealand, says HGD. “Demand for butter and anhydrous milkfat in recent months has been observed on Global Dairy Trade events as the North Asia region increased fat purchases in 2022. The countries seeing the largest drops were Poland and the U.S.

China, for the past few years, has released its January and February data together in March as retaliation of President Trump’s tariffs.

Faced with balancing what would be considered profitable milk prices against profit robbing feed and fuel prices, U.S. dairy farmers keep weeding out less profitable cows. Culling was up slightly from January and a tad above a year ago.

USDA’s latest Livestock Slaughter report shows an estimated 266,500 head were sent to slaughter under federal inspection in February, up 5,700 from January, but 1,300 head or 0.5% below Feb. 2021.

Culling in the first two months of 2022 totaled 527,400 head, down 15,100 or 2.8% from the same period a year ago.

In the week ending March 12, 65,000 dairy cows were sent to slaughter, down 2,500 from the previous week, and 3,800 head or 5.5% below a year ago.

Checking the cupboards; U.S. butter stocks continued to build in February but remained well below a year ago. The Agriculture Department’s latest Cold Storage report shows the February 28 inventory at 263.0 million pounds, up a hefty 43.6 million pounds or 19.9% from the January level which was revised down 1.9 million pounds. Stocks were a whopping 91.6 million pounds or 25.8% below a year ago however, the fifth consecutive month to fall short of the previous year.

American type cheese totaled 833.5 million pounds, down 4.1 million pounds or 0.5% from the January level, which was revised down 1.2 million pounds, but topped those of a year ago by 16.3 million pounds or 2%.

The “other” cheese category climbed to 610.7 million pounds, up 26.7 million or 4.6% from January, and 13.3 million pounds or 2.2% above a year ago.

The total cheese inventory stood at 1.469 billion pounds, up 24.2 million or 1.7% from January, setting another all-time high for total stocks, and were 33.1 million pounds or 2.3% above a year ago. The report is viewed as slightly bearish.

The Agriculture Department announced the April Federal order Class I base milk price at $24.38 per hundredweight, up $1.50 from March and $8.87 above April 2021. It is the highest Class I price ever, topping the previous high of $24.47 in May 2014, and equates to $2.10 per gallon, up from $1.33 a year ago. The four month average stands at $22.15, up from $15.35 in 2021, and $17.67 in 2020.

After falling 6 cents the previous week, Cheddar block cheese shot up to $2.2750 per pound Friday, up 14.50 cents on the week, highest since Nov. 10, 2020, and 55.50 cents above a year ago. The barrels closed at $2.25, up 22 cents, highest since Nov. 6, 2020, and 78.75 cents above a year ago. There were 8 sales of block on the week at the CME and 27 of barrel.

StoneX warns that worries about high labor, feed, and energy costs posed more of an impact on market participants than the stall in milk production decline or the stall in international demand for products that have been driving export volume.

The March 23 Early Morning Update says “The grain complex continues to rip higher as the war continues to rage unchecked in Ukraine. Private analysts UKRAgroConsult just released new estimates and expect Ukrainian corn plantings to drop 29% year over year. They also expect all of their other crops to drop significantly as well. Informa released U.S. estimates Tuesday and dropped corn plantings to 91.4 millimeter acres, down from 93.4 last year.”

Cheddar interests are reportedly very strong right now, according to Dairy Market News. Contacts say buyers were hesitant about market price increases as they hovered around $2, but “that hesitancy may have morphed into urgency as customers’ pipelines ran short and market prices continued northbound.” Spot milk is available for most needs with some reports of an early flush.

Looking westward; cheese export demand remains strong with continuing notable demand from Asian buyers. Domestic demand remains steady to higher as warmer weather and loosening COVID restrictions result in higher food service purchasing. Cheese inventories are tightening. Deliveries continue to face delays due to port congestion and a shortage of truck drivers. Western cheesemakers are busy working through available milk supplies but labor shortages and delayed deliveries of supplies continue to prevent full capacity.

The butter marched to $2.8025 per pound Wednesday, highest since Feb. 15, but was offered lower Friday, slipping to $2.7950, 7 cents higher on the week and $1.02 above a year ago. There were 7 carloads that exchanged hands.

Butter producers able to source cream from the West are still finding relative pricing deals, says DMN, while more who take on locally sourced cream are seeing upticks on multiples. Churning is somewhat busy as spring holidays approach, though some producers say demand is a little lighter than expected this close to the onset of spring and the upcoming holidays. Bullish market prices based on limited supplies, both now and down the line, have created hesitancy among retail buyers. Food service demand, though, is mostly steady, says DMN.

Demand for cream continues to pick up in the West as ice cream makers increase output. Cream is available but tightening as some butter makers use their cream internally rather than sell on the spot market. Butter makers are running busy schedules, though labor shortages continue to prevent full capacity. Food service butter demand is steady to higher and retail is strengthening as customers prepare for the spring holidays. Export demand for butter is steady. Butter makers are working to build inventories in the region, limiting availability.

Grade A nonfat dry milk climbed to $1.88 Thursday, highest since Feb. 16, but closed Friday at $1.8525, down 0.75 cents on the week, though 68.25 cents above a year ago. There were 24 sales reported on the week.

Dry whey finished at 72 cents per pound, down 4 cents on the week and the lowest since Dec. 16, 2021, but 9.25 cents above a year ago. 3 cars were sold.

Checking the demand side of things; the March 18 ‘Dairy and Food Market Analyst’ reports “Total sales at foodservice and drinking places were up 24% year over year in January and up an estimated 33% in February. Compared to before the pandemic (2020), sales grew by 7.0% in February. Limited-service sales (cheese-friendly) continue to out-perform relative to before the pandemic and were up 15% versus the 2020 level, according to Census Bureau data.”

By the way; the DFMA also pointed out that the numbers of ships waiting to be unloaded at West Coast ports is near the lowest level in several months. The average wait time for ships to berth has shrunk to just 11 days after peaking at more than two weeks during December.

That port congestion prompted action by lawmakers and one such move was passage by the Senate Commerce Committee of the Ocean Shipping Reform Act (OSRA). The legislation garnered praise from the National Milk Producers Federation and the U.S. Dairy Export Council, stating in a joint press release that “The approval establishes Senate committee support for action to address shipping supply chain challenges as Congress prepares to commence conference procedures on the Senate-passed U.S. Innovation & Competition Act and the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act. The House COMPETES Act includes the House-passed version of OSRA.”

“Today’s action by the Senate Commerce Committee brings the Ocean Shipping Reform Act one step closer to passage,” said NMPF’s Jim Mulhern. “Export supply chain issues continue to pose immense challenges to dairy exporters, which is why this legislation remains so critical as part of a broad-based approach to tackling those problems.” The measure also got a thumbs up from the International Dairy Foods Association. Next step is a vote by the full Senate.

The IDFA gave a thumbs down however to the Food and Drug Administration’s response to its objections and request for a hearing on the final rule to amend and modernize the standard of identity for yogurt released in June 2021.

IDFA President Michael Dykes stated; “Yogurt makers have been waiting 40 years for the FDA to update and modernize the yogurt standard of identity. Today, the FDA issued a notice telling us to keep waiting and threw in a whole lot of uncertainty, to boot.”

“Last July, IDFA forcefully objected to the FDA’s final rule to amend and modernize the standard of identity for yogurt released in June. In December. IDFA sent a letter to Dr. Woodcock, Acting Commissioner for FDA, reiterating our request for a hearing with FDA to resolve the industry’s objections, along with providing manufacturers sufficient time for compliance. Today, after eight months of waiting, FDA issued a notice staying certain provisions of the yogurt standard of identity final rule. IDFA was able to leverage unique formal rulemaking procedures available to the dairy industry to object and, ultimately, prompt a stay of certain provisions that are detrimental to our industry. Without this lever, an impractical final rule would have gone into effect, damaging yogurt makers, throwing retail establishments into confusion, and limiting choice for consumers. While a stay is helpful at this stage, IDFA’s efforts to reform the yogurt SOI will continue into an inexplicable fifth decade.”

Lee Mielke is a graduate of Brown Institute in Minneapolis, MN. 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.

A2 Milk Company Ltd (ATM.NZ) said on Wednesday the U.S. Food and Drug Administration (FDA) deferred its request to sell infant milk formula products in the United States, sending its shares down more than 12%.

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