Increased output in milk per cow nudged October production above October 2017 and was the 59th consecutive month that output topped that of the year before. Preliminary data in the top 23 states shows output at a somewhat bullish 16.9 billion pounds, up 1.0 percent from 2017, with the 50-state total, at 17.9 billion pounds, up 0.8 percent. Revisions lowered the initial 50-state September estimate by 2 million pounds to 17.4 billion pounds, up 1.3 percent from 2017.

October cow numbers in the 50 states totaled 9.37 million head, down 2,000 from September and 30,000 less than a year ago, fourth time cow numbers were below a year ago since May 2016. Output per cow averaged 1,912 pounds, up 21 pounds from the year before.

HighGround Dairy points out that milk production growth fell below 1 percent for the fourth report this calendar year, which has not occurred with such frequency since 2013. “The US herd size continues to contract as U.S. farmers tighten their belts, but the strength in the milk per cow figure remains strong enough to counterbalance the smallest milking herd since Feb 2017."

Speaking of herd contraction; dairy cow culling jumped in October as finances tightened on the farm and many shutter their operations. The Agriculture Department’s latest Livestock Slaughter report shows an estimated 288,200 head were slaughtered under federal inspection, up 40,800 from September and 27,200 above a year ago. A total 2.6 million head have been culled in the 10-month period, up 126,300 or 5.1 percent from 2017.

Meanwhile; dairy trade took another blow in Tuesday’s Global Dairy Trade auction (GDT), event number 224. The weighted average of products offered plunged 3.5 percent, largest decline since August 21, 2018, and follows a 2.0 percent drop on Nov. 6, a 0.3 percent slip Oct. 16 and a 1.9 percent decline on Oct. 2. It is the seventh consecutive decline. Sellers brought 94.7 million pounds to market, highest amount so far this year.

 The losses were led by butter, down 9.6 percent, which follows a 1.7 percent loss in the last event. Anhydrous milkfat was right behind, down 9.4 percent, after a 1.3 percent loss last time. Rennet casein was down 4.5 percent, after slipping 2.9 percent. Whole milk powder and skim milk powder were down 1.8 and 1.6 percent respectively. Whole milk powder was down 2.9 percent last time but skim milk powder was up 1.2 percent.

Lactose and Cheddar cheese were the only two in positive territory; lactose up 1.1 percent, and Cheddar up 0.2 percent, after it fell 4.6 percent last time.

FC Stone equates the GDT 80 percent butterfat butter price to $1.6095 per pound U.S., down 18 cents from the last session. CME butter closed Wednesday at $2.28. GDT Cheddar cheese equated to $1.4751 per pound U.S. and compares to Wednesday’s CME block Cheddar at $1.3450. GDT skim milk powder averaged 89.13 cents per pound and whole milk powder averaged $1.1789. CME Grade A nonfat dry milk closed Wednesday and the week at 89 3/4-cents per pound.

October butter stocks saw the biggest drawdown in 25 years but remain well above October 2017 and the 8th consecutive month they topped year ago levels, according to the Agriculture Department’s latest Cold Storage report.

September fluid milk sales totaled 3.79 billion pounds, down 5.6 percent, according to the USDA’s latest tracking data, as plant-based beverages appear to continue to steal market share, which was previously already declining.

Conventional product sales totaled 3.6 billion pounds, down 5.9 percent from a year ago; organic products, at 206 million pounds, were even down, off 1.2 percent and represented about 5.4 percent of total sales for the month.

Checking the markets; cash cheese prices plunged in the Thanksgiving holiday shortened week. The Cheddar blocks fell to $1.34 per pound on Tuesday, lowest CME price since May 2016, but closed Wednesday at $1.3450, down 10 3/4-cents on the week and a heartbreaking 26 1/2-cents below a year ago.

 The barrels rolled to $1.24 per pound Wednesday, approaching lows seen just four weeks ago, down 12 cents on the week, 43 1/2-cents below a year ago, and put the spread at 10 1/2-cents. 15 cars of block traded hands on the week at the CME and 6 of barrel.

Many Midwestern cheese plants allotted more time off this week, according to Dairy Market News. Reported spot milk prices were all discounted, ranging $1 to $3 under Class. Although discounts were reported, spot milk prices from Thanksgiving Week a year ago were as low as $5 under Class.

Inventories vary from plant to plant, while barrel producers have begun to see a necessary downshift in stocks the past two weeks. Some cheese producers relay that markets have slowed sales for most of the fall, while others are not as affected. There are contacts who foresee a bullish 2019 ahead and suggest that cheese inventories will begin to clear up as milk intakes have been tighter than in recent years, creating an improved supply/demand balance.

Western cheese demand has remained steady. Contacts suggest domestic buyers continue to seek cheese for retail and food service accounts and seasonal holiday demand appears to be picking up somewhat. The strong dollar is creating headwinds for export sales. Inventories, especially for barrels, are heavy in the West and milk supplies are ample for most cheese making needs.

Midwestern butter makers report demand is expectedly strong, according to DMN. Cream is more available, but not as much as was expected during the holiday week. Some Central region churns were clearing cream from the West, as locally produced cream continues to make its way into Class II manufacturing within the region. Butter markets are “steadily bullish.”

The October Consumer Price Index (CPI) for the all food category is 254.4, up 1.2 percent from 2017. The dairy products index is currently 216.8, 0.2 percent lower from a year ago. Fresh whole milk was up 0.2 percent; cheese, down 1.0 percent; and butter was up 0.6 percent.

Cooperatives Working Together (CWT) member cooperatives accepted 23 offers of export assistance from CWT to help capture contracts to sell 8.607 million pounds of Cheddar and Monterey Jack cheese, 716,502 pounds of butter, and 1.721 million pounds of whole milk powder.

The product will be delivered through May 2019 and put’s CWT’s year-to-date sales at 1.3 billion pounds of milk equivalent on a milkfat basis. The total consists of 62.4 million pounds of American-type cheeses, 14.6 million pounds of butter (82 percent milkfat) and 54.6 million pounds of whole milk powder.

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.