By Lee Mielke

U.S. milk production grew for the 11th consecutive month in April and saw the biggest spike since November, thanks to increased cow numbers and increased milk per cow. The Agriculture Department’s preliminary data shows output at a bearish 19.3 billion pounds, up 3.3% from April 2020. Output in the top 24 states, at 18.4 billion, was up 3.5%. 

Revisions added 30 million pounds to the March 50-State estimate, now put at 19.78 billion pounds, up 1.9% from a year ago. Keep in mind, a year ago some regions had coop mandated supply management programs in place.

April cow numbers were up for the 15th consecutive month, totaling 9.49 million head in the 50 states, up 16,000 head from the March count, which was revised up 6,000 head, and is up a whopping 113,000 head from April 2020. 

April output per cow averaged 2,033 pounds, up 40 or 2% from a year ago.

Michigan was up 4.5%, on 15,000 more cows and a 20 pound gain per cow. Indiana was up 11.4%, thanks to 19,000 more cows milked and a 10 pound per cow gain.

 Rising milk prices spurred April milk output but also resulted in a drop in dairy cow culling from the previous month and year. The USDA’s latest Livestock Slaughter report shows an estimated 257,500 head were sent to slaughter under federal inspection, down 44,700 head from March and 21,900 or 7.8% below April 2020. Culling in the first four months of 2021 totaled 1.1 million head, down 29,700 or 2.6% from the same period a year ago.

he May 18 Livestock, Dairy, and Poultry Outlook mirrored milk price and production projections in the May 12 World Agricultural Supply and Demand Estimates report but it projected the U.S. milking herd will average 9.47 million head in 2021, 10,000 head higher than last month’s forecast. “The number of milk cows is expected to trend upward through third quarter and then decline in fourth quarter due to relatively high feed prices,” the Outlook stated, and the milk per cow forecast was 24,070 pounds, unchanged from last month’s estimate.

The 2022 herd is projected to average 9.465 million head, 5,000 less than the 2021 projection, as “Some contraction is expected due to relatively high feed prices and weaker milk prices,” explained the USDA. Milk per cow was projected to average 24,335 per head, a year-over-year increase of 1.1%.

Cheese prices are under close scrutiny. Uncle Sam’s Food Box program ends May 31 and cheese production is increasing from spring flush abundant milk supplies and increased cheese processing capacities. Food service cheese demand from restaurants is very strong but offsetting drops in retail sales.

USDA released its first post-Food Box program solicitation, which totaled just 1.7 million pounds of cheese for delivery July thru September. For perspective: at its peak, the government was buying more than 30 million pounds of cheese per month thru the Food Box program. Instead, USDA is moving to favor butter and released a solicitation to buy 13 million pounds for delivery July thru September,” the DFMA stated.

Thankfully, third quarter U.S. dairy demand was solid, based on USDA’s latest data. Cheese disappearance topped that of a year ago for the third consecutive month and set a new first quarter record high, according to HighGround Dairy, “as demand remained firm to kick off the year opposite record production.”

Butter disappearance bested that of a year ago for the fifth consecutive month and marked the strongest March disappearance on record, according to HGD.

Total nonfat dry milk disappearance “surged into March and marked a new record high for the month,” says HGD, and “In a similar trend seen in other dairy products, both domestic and export disappearance were up versus prior year.”

Down on the farm; “Dairy margins strengthened over the first half of May as there was a sharp selloff in the feed markets that more than offset slightly weaker milk prices,” according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC. The MW says “The milk market remains supported by very strong dairy product exports that are boosting their prices.”

 “Feed expenses however remain a headwind to dairy operations,” the MW warned, “particularly those who are more exposed to variable cost increases in the spot market as well as those who are more exposed to Class IV pricing and negative PPD’s in their milk checks. This may begin to slow down or even reverse the ongoing growth in the dairy herd as high prices are expected to increase through the upcoming marketing year according to USDA.” 

The MW reported that corn prices have moderated significantly, down over $1.00 per bushel in nearby futures while soybean meal prices likewise declined about $40 per ton recently.”

Dairy Market News says milk remains available for Central cheese production but some contacts expect potential tightness as spring flush milk yields recede. Cheese producers are taking advantage of discounts, though they are smaller than a few weeks ago. Cheese demand varies, depending on the variety but pizza cheesemakers continue to report steady sales.

Retail cheese demand held steady in the West this week but food service demand slowed slightly. Cheese producers continue to run full schedules, with the available milk in the region. CME prices have weakened however some contacts are optimistic that recent changes to CDC recommendations regarding COVID-19 and vaccinated individuals may contribute to higher food service sales in the coming weeks as people resume pre-pandemic activities, says DMN.

Grade A nonfat dry milk marched to $1.3125 per pound Tuesday but closed Friday at $1.2975, a quarter-cent lower on the week but 28.50 cents above a year ago when the powder jumped 7.75 cents. 13 cars were sold on the week.

CME dry whey finished Friday at 64.50 cents per pound, up 0.50 cents on the week and 28.25 cents above a year ago, with 5 sales reported on the week.

Dairy fat, particularly butter, again weighed down this week’s Global Dairy Trade. The weighted average was down for the third session in a row, slipping 0.2%, following a 0.7% decline on May 4 and 0.1% on April 20. 

Buying by China is supporting prices on powder especially, according to HighGround Dairy, and the latest import data shows that. April whole milk powder imports totaled 144.8 million pounds, up 3.2% from April 2020, highest for the month since 2014, says HGD, with 89% coming from New Zealand.

Skim milk powder imports totaled 78.8 million pounds, up 43.1%, a record high for the month, says HGD, and market share shifted as China sought new suppliers after excess Fonterra product was limited. New Zealand remained the top supplier but the EU, Australia, U.S. and Belarus helped fill the gap.

Whey imports remain strong as China maintains its rebuilt hog herd. Imports totaled 146.5 million pounds, up 69.7% from a year ago and the highest April volume on record. The U.S. was their top supplier, followed by the EU, Belarus, Turkey, and Argentina.