April milk production in the top 23 states hit 15.98 billion pounds, up 3.3 percent from April 2011, according to preliminary data in the USDA’s latest Milk Production report. Revisions lowered the initial March estimate to 16.4 billion, still 4.3 above a year ago. The 50-state April total was 17.19 billion pounds, up 3.2 percent.

April cow numbers in the 23 states, at 8.53 million head, were up 4,000 from March and 94,000 head more than a year ago. Output per cow averaged 1,875 pounds, up 40 pounds from a year ago.

California was up 3.1 percent from a year ago on 23,000 more cows and a 35-pound per cow gain. Wisconsin was up 3.5 percent on a 55-pound gain per cow, thanks to the weather and 4,000 more cows. New York was up 3.6 percent on a 65 pound gain per cow. Cow numbers were unchanged from a year ago.

Idaho was up 2.9 percent on a 50-pound gain per cow and 1,000 more cows. Pennsylvania was the only state showing a decline, down 1 percent on 5,000 fewer cows. Output per cow was unchanged. Minnesota was up 1.3 percent thanks to a 35-pound gain per cow but cow numbers were down 4,000 head.

Michigan was up 6.2 percent on 14,000 more cows and a 5-pound gain per cow. New Mexico was up 3.6 percent on 11,000 more cows and a 5-pound gain per cow.

Texas was up 3.3 percent on a 14,000 cow increase. Output per cow was unchanged, and Washington State was up 4.1 percent on 7,000 more cows and a 25-pound per cow increase.

Mary Ledman, editor of the new Daily Dairy Report, believes the data will be read with some relief by the cash markets, and it will give them some underlining strength because some expected the gain to be closer to 4 percent. Add to that, the previous month’s gain was more than 4 percent.

More importantly, according to Ledman, is “the tide has turned in the West.” Key states like California, Washington and Idaho, regionally, saw milk output inch 0.6 percent lower than March, “so supply management programs there are taking hold,” and the peak of the milk production season has been reached as it has in the Southwest, Arizona, Texas and New Mexico – down 0.1 percent.

Ledman said milk production in the Northeast and the Midwest likely has another month of incremental gain before heading lower seasonally. However, on a bearish note, she warned that the U.S. dairy herd continues to expand.

The good news is that the gain in April was only half that of the previous month and she says we could see increased slaughter in May and into June and predicts the U.S. dairy herd will be trending lower by midyear. For a weekly recap of the dairy markets and a sneak into the following week’s listen to the new audio file of the Daily Dairy Report at www.dailydairyreport.com

The latest Livestock Slaughter report issued last week shows an estimated 239,800 culled dairy cows were slaughtered under federal inspection in April, down 38,200 from the 278,000 culled in March but 2,000 more than April 2011.

Dairy Profit Weekly (DPW) points out that, based on April’s Milk Production report, the April culling rate represented about 2.6 percent of the nation’s herd. Through the first four months of 2012, cull cow slaughter totaled 1.043 million, up 24,200 from the same period in 2011.

Cash block cheese closed the week of May 21 at $1.57 per pound, up 7 cents on the week (most of it coming on May 25), but still 24 cents below a year ago when the blocks jumped 10.25 cents to $1.81.

Barrel closed at $1.47, up a penny on the week and 34.75 cents below a year ago. Four cars of block traded hands on the week and none of barrel. The AMS-surveyed block price averaged $1.5271, down slightly, while the barrels averaged $1.4887, down a half-cent.

Milk supplies across the U.S. remain above year ago levels and much of that milk is finding its way to cheese plants, according to USDA’s Dairy Market News. Discounts are being offered to plants to encourage higher production but cheese stocks are up, as evidenced in April Cold Storage data. Plants are keeping a close eye on inventories as demand is “moderate,” according to USDA.

Increased features in retail advertising are helping to move additional supplies and exports are being aided by the Cooperatives Working Together (CWT).

CWT accepted 24 requests for export assistance this week to sell a total of 3.578 million pounds of cheese and 1.642 million pounds of butter to customers in Asia, Africa, Central America, and the Middle East. CWT’s 2012 cheese exports now stand at 53.8 million pounds plus 44.4 million of butter and anhydrous milk fat.

April 30 American cheese stocks totaled 628.4 million pounds, up 1 percent from March and 1 percent above April 2011, according to the latest Cold Storage data.

The total cheese inventory, at 1.02 billion pounds, was up 2 percent from March but down 1 percent from a year ago. Butter stocks amounted to 253.9 million, up 22 percent from March and a whopping 79 percent above those a year ago.

Bill Van Dam, of the Alliance of Western Milk Producers, pointed out in his May 18 newsletter that, when considering U.S. prices compared to the rest of the world, “we need to keep in mind the percentage of each product made in this country that is sold into the export trade.” Only 5.8 percent of the cheese made here is exported, he said. The opposite side is that 94.2 percent is sold domestically.

He said Cheddar cheese traded last week on the Global Dairy Trade (gDT) sold for as low as $1.27 per pound. “There are many reasons that our cheese prices may not react quickly (or at all) to the dip in cheese prices at the gDT,” Van Dam wrote, “for example our largest export customer is Mexico.”

FC Stone’s May 22 eDairy Insider Opening Bell reported “New Zealand’s Fonterra believes world dairy prices have likely reached bottom and are expected to begin recovering when Oceania’s new production season starts in August. The co-op plans to pay its suppliers $4.21 (U.S.) per kilogram of milk solids in the year ending May 31, 2013, a 9 percent drop from the current year.”

The May 24 edition also warned that “Mounting concern over a possible exit by Greece from the euro zone has been lifting the U.S. dollar. If Greece does leave the currency zone, the U.S. dollar could strengthen further, which could hurt exports of dairy products and dampen economic growth in the United States.”

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.