Search Site   
Current News Stories
Pork producers choose air ventilation expert for high honor
Illinois farm worker freed after 7 hours trapped in grain bin 
Bird flu outbreak continues to garner dairy industry’s attention
USDA lowers soybean export stock forecast
Hamilton Izaak Walton League chapter celebrates 100 years
Miami County family receives Hoosier Homestead Awards 
Book explores the lives of the spouses of military personnel
Staying positive in times of trouble isn’t easy; but it is important
Agritechnica ag show one of largest in Europe
First case of chronic wasting disease in Indiana
IBCA, IBC boards are now set
   
News Articles
Search News  
   
Butter demand up nearly 23 percent in latest USDA Supply and Utilization report
 
Mielke Market Weekly
By Lee Mielke
 
Dairy product consumption continues to please and butter was the big story in the USDA’s latest Supply and Utilization report, according to HighGround Dairy’s Alyssa Badger.
Speaking in the Feb. 19 “Dairy Radio Now” broadcast, Badger reported that butter demand hit 220.9 million pounds, up a whopping 22.5 percent, the largest value ever for the month, and credited strong domestic utilization, which was up 25.3 percent. It gained 4.7 percent from November to December, she said, the first increase in that period ever, versus the five-year average of a decline of 22.6 percent.
Butter exports have been terrible, she said, down 41.3 percent from a year ago. But the disappearance numbers “justify the prices we’ve been seeing and we may even see a revision in the next Cold Storage report.”
Nonfat dry milk utilization, at 199.6 million pounds, was down for the fifth month in a row, and down 12.1 percent from a year ago. Quite the opposite story of butter, according to Badger, as domestic usage was down 34.2 percent while exports were up 0.9 percent. Inventories were down 21 percent from a year ago, she said, an eight-year low, because production continues to be weak.
December cheese utilization totaled 1.2 billion pounds, up 1.9 percent from December 2022, and the third consecutive monthly gain. Total consumption for the year was up 0.3 percent, smallest annual gain since 2020, when disappearance actually fell, according to Badger. Interestingly, the December Dairy Products report showed 2023 cheese production was also only up 0.3 percent from 2022.
Dry whey disappearance, at 72.1 million pounds, was down 8.0 percent from a year ago, the smallest December value since 2012, according to HGD, as exports fell 15.6 percent. Exports were down on an annual basis from April to December 2023, says HGD, but domestic usage was stronger in 10 months of 2023, propping up the annual total, and resulted in an increase of 2.8 percent from 2022.
Meanwhile, the Agriculture Department’s latest Livestock, Dairy, and Poultry Outlook stated that “Domestic demand for dairy products in 2023 was year-over-year higher for most of them. On a milk-fat milk-equivalent basis, 2023 domestic use increased 1.8 percent over the previous year, in contrast to the 1.1 percent decrease in 2022. Domestic use on a skim-solids milk equivalent basis increased by 2.8 percent in 2023, compared to a 0.8 percent decrease in 2022.”
The Outlook reported “There were considerable increases in domestic use of whey protein concentrate, dry whey, butter, lactose, and American type cheese in 2023, relative to 2022. However, domestic use for other-than American type cheese and dry skim milk products decreased.”
The 2024 dairy herd size forecast was revised up 5,000 head, totaling 9.355 million for the year, due to higher expected milk cow numbers in the second half. “This small increase in the number of cows is attributed to higher expected milk prices early in the year, as milk production usually responds to changes in milk and feed prices with a lag of several months,” the Outlook explained.
“Even with the higher forecast for milk cow numbers, they are still expected to be lower than 2023. Recent slaughter trends, together with tight replacement heifer inventories and high reported prices for dairy heifers, suggest a year-over-year decline for the dairy herd in 2024 despite lower expected feed costs, improved milk prices, and robust demand for dairy products. The forecast yield per cow was reduced by 20 pounds to 24,395 pounds based on recent data.”
The week ending Feb. 3 saw 60,000 head go to slaughter, down 100 from the previous week, and 5,700 or 8.7 percent below a year ago. Year to date, 275,700 head have been culled, down 62,900 head or 18.6 percent from a year ago.
The Outlook pointed out that “Dairy cow slaughter for the first 3 weeks of 2024 continued the downward trajectory from the second half of 2023, with the reported weekly slaughter rates among the lowest observed for this period of the year (lower than the 20-year average), but this may reflect slaughter schedule reductions due to winter weather in late January.”
Checking finances, the Feb. 9 “Daily Dairy Report” stated that USDA distributed record-level payments via the Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) programs in 2023.
Smaller dairies have regularly used the DMC program,” the DDR said, “which has provided greater premium subsidies to farms producing 5 million pounds or less of milk, about 200-225 cows. Coverage levels have ranged from $4-$9.50 per cwt. However, any farm could have enrolled in DMC and received catastrophic coverage ($4 per cwt.) for a $100 administrative fee.”
Information on 2024 enrollment from the Farm Service Agency has yet to be released, according to the DDR.
CME block Cheddar cheese, after dropping 8 cents the previous week, crept back to $1.5850 per pound Monday but closed Valentine’s Week at $1.48, losing another 9 cents, lowest since Jan. 19, and 40 cents below that week a year ago.
The Cheddar barrels hit $1.60 Wednesday, then reversed direction but closed Friday at $1.6075, up 3 cents on the week, 6 cents above a year ago, and an inverted 12.75 cents above the blocks. Sales totaled 16 of block and eight of barrel.
HighGround Dairy’s “Monday Morning huddle” warned; “Despite the U.S. price advantage to global markets, industry contacts report that future international sales are slow. Further, market participants continue to talk about the impact of the new capacity coming online later this year, with some concerned about an oversupply situation.”
Dairy Market News reported that cheese demand ranges steady to seasonally quiet. Midwest cheesemakers are focused on building inventory as spring holiday demand draws closer. Some plants say milk availability is not where it would be expected in mid-February and spot prices under-Class had yet to be reported. Some do not expect them to return in the near future, says DMN. Spot prices are holding in a tight range at or just over Class III, while last year during week seven, they were $10 to $2-under Class.
Western retail cheese demand is steady to light. Manufacturers and distributors note food service demand is strengthening and export demand is steady. Milk volumes are tighter but spot loads are available. Plants report steady cheese production and a few say near term inventories are tight, according to DMN.
StoneX Feb. 14 “Early Morning Update” stated; “The July U.S. retail price of Cheddar cheese was higher than expected at $5.72 per pound, up 18 cents from December, but down 22 cents from January last year. We should see some downward pressure on retail prices given the weakness we’ve seen in the spot cheese market. Comparing Cheddar cheese to other food prices, it comes in dead last when looking at the percent change since January 2021. Again, we should see a correction and it is down significantly from the highs in late 2022 but consumers are still likely reconsidering buying the extra bag of cheese given the elevated retail prices from pre-pandemic levels.”
Cash butter closed Friday at $2.75 per pound, up 6 cents on the week and a hefty 37.50 cents above a year ago. 
2/21/2024