Winter weather made the headlines this week as it moved across the U.S. HighGround Dairy warned; “After a green and brown December in the northern half of the U.S., meteorologists expect storms to increase in January due to El Niño.” The Pacific Northwest got its turn Friday, where my thermometer read 5 degrees as I wrote this, living 10 miles south of the U.S. Canada border.

You’ll recall that November milk production was down 0.6% from a year ago. The November Dairy Products report shows that milk continued to move away from the churn and dryer to the cheese vat. 

Cheese output totaled 1.164 billion pounds, down 2.6% from October but 0.7% above November 2022, the third consecutive month to be above a year ago and the highest November total ever. Cheese output in the 11 months hit 12.9 billion pounds, up 0.3% from the same period in 2022.

Butter production inched up to 165.2 million pounds, up 2.9 million pounds or 1.8% from October’s level which was revised up 1.7 million pounds. Output was down 6.3 million pounds or 3.7% from a year ago. YTD butter stood at 1.9 billion pounds, up 2.5% from a year ago.

Butter averaged $2.72 per pound in Nov. 2023, down from $2.86 in 2022.

Yogurt production totaled 352.1 million pounds, up 4.5% from a year ago, with YTD at 4.4 billion pounds, up 3.3%.

Hard ice cream, at 52.1 million pounds, was down 3.8% from 2022, with YTD output at 669.9 million pounds, down 0.5% from a year ago.

Dry whey production fell to 67.5 million pounds, down 6.8 million pounds or 9.2% from October and 4.5 million pounds or 6.4% below year ago. YTD whey stood at 856.2 million pounds, up 1.9%. Stocks slipped to 71.0 million pounds, down 4.4 million or 5.8% from October, and down 2 million or 2.7% from a year ago.

The Daily Dairy Report’s Monica Ganley Quarterra wrote in the Jan. 5 Milk Producers Council newsletter; “Whey manufacturers continue to route the whey stream toward high protein products, which is likely helping to put some support under dry whey prices. November output of whey protein isolates and whey protein concentrates (WPC) with more than 50% protein rose by 16.4% and 7.5%, while production of dry whey and lower protein WPCs fell by 10.9% and 16.8%, respectively.”

Nonfat dry milk output dropped to 115.7 million pounds, down 11.7 million or 9.2% from October and down 45.0 million or 28.0% from a year ago. YTD powder was at 1.7 billion pounds, down 3.8% from a year ago. Stocks dipped to 208.9 million pounds, down 7.7 million, or 3.6% from October and down 42.7 million pounds or 16.9% from a year ago.

Skim milk powder production climbed to 57.9 million pounds, up 14.4 million pounds or 33.1% from October, and 8.8 million or 17.8% above a year ago. YTD SMP was at 501.1 million pounds, down 15.6% from a year ago.

“NDM volumes continued to fall on poor milk production in the West,” says HighGround Dairy. “However, SMP output climbed, indicating that export demand may have increased slightly from an abysmal showing throughout 2023.”

Nonfat dry milk exports, at 148.8 million pounds, were down 4.7% from a year ago, the lowest November since 2020, driven by lower volumes to Mexico, Indonesia, Vietnam, and China. Still, the loss was not as bad as the double-digit decreases posted in September and October, according to Berning.

Dry whey exports, at 32.7 million pounds, were down 25.4%, down for the eighth consecutive month and have been down by 10% or greater since May 2023. 

HGD blamed “dismal sales to China as the primary reason, with smaller volumes to Southeast Asia and Canada also playing a role. But, whey protein concentrate 80 shipments picked up year-over-year for the fourth month in a row, according to HGD, with bigger demand from China, Canada, Brazil, and India.

“Late summer’s high butter prices killed international demand,” adds HGD. Just 3.4 million pounds were exported, down 81.9% from a year ago, the lowest mark since November 2020. “Through November, butter exports were less than half of January-November 2022, says HGD. “It seems unlikely, given the high U.S. butter prices compared to Oceania and Europe that exports will recover in 2024.”

Speaking of butter; the U.S. price acted as a magnet, with imports hitting 12.6 million pounds, up 18.8% from a year ago, third highest ever, according to Berning. About 90% of the imports are from Ireland and New Zealand.

Spot milk availability remains at holiday levels, according to Dairy Market News, and prices as low as $7-below Class III. Plant downtime was reported throughout the Midwest. Winter weather was expected to add some hurdles. Cheese loads were reportedly moving well via steady demand. Barrel, Cheddar and Italian style cheesemakers relay similar demand notes. Contacts in the upper Midwest say that inventories are not heavy, nor tight, and they expect the bolstered milk levels to keep market prices in check until demand ebbs.

Spring demand preparations are underway for butter makers in the Central region, says DMN. Butter output is very busy. As winter weather disrupted hauling at plants through the region, plants were doing what they could to run as much as possible. Cream availability, despite multiples/prices holding above the holiday season, is still seasonally ample and contacts say plants were still turning cream away, as they are at capacity. Bulk butter demand is steady when compared to previous years during the first weeks of the year. As the storms close schools and institutions from the Upper Midwest to as far south as Texas, food service demand was expected to take a temporary hit, DMN warned.

Western cream is readily available but volumes have been manageable since the holidays ended. Butter manufacturers note stronger to steady production but they are working to increase their inventories, though current levels are sufficient. Domestic butter demand is steady to lighter as a few manufacturers relay that demand is below expectations. Production costs have reportedly increased, particularly for labor, says DMN. Export demand is “moderate.”

Grade A nonfat dry milk hit $1.2050 per pound Tuesday, highest level since Nov. 14, 2023, but finished Friday at $1.1850, 1.25 cents higher on the week but 7 cents below a year ago, with 11 sales reported on the week.

StoneX reported a Dec. 31 fire in a dairy raw materials storage unit in the Algerian municipality of Bourguiga. “The warehouse contained approximately 10,000–12,000 tons of milk powder, according to several market sources, and they wasted little time in what appeared to be an attempt to rebuild lost inventories as a new Onil tender occurred Monday.” The tender included about 15k MT of whole milk powder and 22k MT of skim milk powder with delivery set March-May, according to StoneX.

The week ending December 30 saw 42,600 dairy cows go to slaughter, down 13,200 from the previous week and 10,900 or 20.4% below a year ago, biggest drop since December 2021. Year to date, 3,047,700 head had been retired from the dairy business, up just 28,200 or 0.9% from a year ago. This was also the lowest market share held by dairy cows since Thanksgiving of 2022 when dairy cows accounted for 7.9% of total beef production that week.

 The latest U.S. milk production estimate for 2023 was lowered from last month, in Friday morning’s World Agricultural Supply and Demand Estimates report, citing lower milk cow inventories and lower expected milk per cow. The 2024 forecast was also lowered due to a reduced average cow inventory for the year and slower growth in output per cow. The report stated; “USDA’s Cattle report, which will be released January 31, will provide an indication of producer intentions for retaining dairy heifers for addition to the breeding herd.”