February milk production in the top 23 states totaled 15.2 billion pounds, up 8.3 percent from February 2011, according to preliminary USDA data in its latest Milk Production report, however adjusting for the additional day due to leap year; output was up 4.6 percent on a per day basis. Revisions added 24 million pounds to the initial January estimate, now put at 15.8 billion, up 3.9 percent from a year ago. February output in the 50 states totaled 16.28 billion pounds, up 8 percent, including the extra day and up 4.3 percent, adjusting for the extra day.

February cow numbers in the 23 states totaled 8.51 million head, up 8,000 from January and 102,000 more than a year ago. The mild winter was good on output per cow, which averaged 1,782 pounds, up 117 pounds from a year ago but again the data is skewed by the extra day.

California production was up 10.9 percent, including the extra leap year day (up 7.1 percent minus the extra day) on 28,000 more cows than a year ago and a 165 pound gain per cow. Wisconsin was up 8.2 percent on a 130 pound gain per cow though cow numbers were unchanged (up 4.4 percent minus the extra day). 

New York was up 6.8 percent, including the extra day, on a 110 pound gain per cow. Cow numbers were unchanged. Idaho recorded a 7.9 percent increase on 7,000 more cows and a 110 pound gain per cow.

Pennsylvania was up 3.5 percent despite a 2,000 cow loss but output per cow was up 60 pounds. Minnesota was up 5.6 percent despite a loss of 5,000 cows but output per cow was up 100 pounds. There was only one state showing a drop in production from a year ago when deleting the extra day of production and that was Vermont.

The latest Livestock Slaughter report shows 261,100 culled dairy cows were slaughtered under federal inspection in February, down just 2,700 from January (despite 2 fewer days), but 12,300 more than February 2011 (1 additional day in 2012). Through the first two months of 2012, cull cow slaughter totaled 525,000, up 12,300 from the same period in 2011 (1 more day in 2012 compared to 2011).

The cash dairy market showed little reaction to what really was a bearish milk production report until Friday’s “surprise” and the floor gave in. The block cheese price, after climbing 5.25 cents earlier in the week, plunged 14 cents on an offer, closing the fourth Friday in March at $1.4950 per pound, down 8.75 cents on the week (and reversed three weeks of gain), and 13.25 cents below a year ago. Barrel closed at $1.46, down 12.25 cents on the week and 18 cents below a year ago.

Twelve cars of barrel traded hands on the week and none of block. The NASS-surveyed U.S. average block price inched 0.3 cent higher, to $1.4955. The barrels averaged $1.5056, down 0.9 cent.   

Cheese production across the U.S. continues to surpass year ago levels, according to USDA. Increased milk production is pushing surplus milk to the cheese vat. Spot loads of milk are being discounted to clear to some facilities. Export sales are helping to move some of the excess production.

FC Stone dairy broker Dave Kurzawski, in a March 20 DairyLine interview recorded prior to release of the February Milk Production report, admitted that the gains in the cheese market are a surprise considering how much milk is available, but credited domestic cheese demand. He reported there are good retail promotions occurring plus the Easter/Passover holiday is a factor as are export prospects and said “That put the milk production picture on the back burner,” but the following day warned that reducing milk production is not like “turning around a Porsche, it like turning around an aircraft carrier.”

Speaking of exports; Cooperatives Working Together accepted 15 requests for export assistance this week to sell a total of 3.77 million pounds of cheese and 1.495 million pounds of butter to customers in Asia, the Middle East and Africa. 

Cash butter closed Friday at $1.5225, up three quarters of a cent from the previous week but 55.25 cents below a year ago. Only four cars were sold. NASS butter averaged $1.4425, up 2.8 cents. NASS powder averaged $1.3261, down 1.5 cents, and dry whey averaged 60.44 cents, also down 1.5 cents.

Butter production remains heavy as processors handle seasonally building milk and cream supplies. Buyers are seeing increased retail interest, USDA reports. Feature activity has been active and prices are lower than a year ago. Demand has also been good for bulk butter as buyers seek a physical hedge. 

Checking the cupboard, the latest Cold Storage report shows February butter stocks totaled 205.3 million pounds, up 21 percent from January and a whopping 48 percent above February 2011.

American type cheese, at 606.3 million pounds, was down 1 percent from January and 2 percent below a year ago. The Daily Dairy Report says this suggests strong demand and great exports for the month and the second year that stocks uncharacteristically declined in the first quarter.

Total cheese stocks, at 987.4 million pounds, were up 1 percent from January, but 5 percent below 2011.

Milk production is very strong for this time of year almost everywhere, helped by mild weather, according to USDA. Central region supplies have surged. California remains well above a year ago. Arizona output is heavy and is taxing plant capacity. Pacific Northwest milk remains above the seasonal trend and output in Utah and Idaho is near to slightly ahead of expected seasonal trends. 

Florida’s production is near the seasonal peak and at flush levels in the Southeast. Northeast and Mid-Atlantic production continues to increase and the volume is challenging plant capacity in a number of areas, according to USDA. 

Milk production in New Zealand and Australia also continues to run above a year ago as weather in both countries has been favorable for the most part.

Prices fell in this week’s New Zealand-based Global Dairy auction, according to the March 20 CME Daily Dairy Report. Declines occurred in every category from the previous auction. The average price for Cheddar cheese for May through August was $1.4125 per pound, significantly lower than current U.S. Cheddar. 

Back on the home front; USDA estimates January fluid milk sales at 4.6 billion pounds, down 2.7 percent from January 2011. When adjusted for calendar composition, sales were estimated at 4.7 billion, also down 2.7 percent. January sales totaled 4.45 billion pounds, down 5.5 percent from January 2011. Sales of organic milk products, at 193 million pounds, were up 18.3 percent but organic sales only represented about 4.2 percent of total fluid sales, according to USDA.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.