Preliminary data in the USDA’s October Milk Production report has output at 18.56 billion pounds, up 2.3 percent from October 2019, with output in the top 24 producing states at 17.7 billion pounds, up 2.5 percent.

Revisions lowered the September 50-state and 24-State totals 5 million pounds, putting the 50-States at 18.0 billion pounds, still up 2.3 percent from September 2019.

October cow numbers totaled 9.39 million head in the 50 states, up an eye catching 14,000 from September and 43,000 above a year ago. The September total was revised up 10,000 head. October’s output per cow averaged 1,977 pounds, up 37 pounds from a year ago or 1.9 percent.

Most analysts view the report as bearish to the market though we were warned, according to HighGround Dairy’s Lucas Fuess. Speaking in the November 23 ‘Dairy Radio Now’ broadcast, Fuess pointed to the reduced weekly slaughter rates we’ve been seeing, all indicative of a “sharply higher dairy herd size.”

He said the report is “concerning” because October and November are characteristically the lowest milk production months of the year. He warned that milk will rise seasonally through the spring flush and we could see an extremely burdensome and bearish amount of milk produced in most regions, resulting in milk dumping and growing inventories of product, which will limit upsides on milk prices in 2021. And, it remains to be seen if exports can absorb that extra milk.

Dairy cow culling crept higher in October, according to the latest Livestock Slaughter report, but was below a year ago, likely due to the high milk prices. An estimated 258,900 head were sent to slaughter under federal inspection, up 8,500 head or 3.4 percent from September, but 27,200 or 9.5 percent below October 2019. A total of 2.56 million head have been culled in the first 10 months of 2020, down 142,100 head or 5.3 percent from the same period in 2019.

Tuesday’s Global Dairy Trade (GDT) auction, Event number 272, reversed gears and saw its weighted average head up 1.8 percent, after falling 2.0 percent on November 3.

Anhydrous milkfat led the gains, up 4.1 percent, after dropping 2.6 percent in the last event. Butter inched 0.4 percent higher, following a 3.9 percent jump. Skim milk powder was up 2.5 percent, following a 4.4 percent drop, and whole milk power was up 1.8 percent, after falling 2.0 percent last time. 

Lactose led the losses, plunging 18.8 percent, after not trading last time, and GDT Cheddar cheese dropped 3.5 percent, after slipping 0.8 percent last time.

CME block Cheddar dropped to $1.5975 per pound by Thursday, lowest since August 11, but regained 4.75 cents Friday, first gain since October 31, closing at $1.6450, down 27.25 cents on the week and 19.75 cents below a year ago. 

 Midwest cheese producers continue to report COVID-related staffing concerns, reports Dairy Market News, though production is running steadily. Milk availability is growing and cheesemakers are reporting notably lower spot milk prices. There was some interest on the cheese buyer side this week, as customers are returning in light of the price declines, but most reports continue to point to buyer hesitancy. Curd and barrel sales were notably slower, as customers are concerned about more public restrictions due to the pandemic. Cheese customers do not want extra inventory at the end of the year, says DMN.

Spot butter saw a Friday finish at $1.3450 per pound, down 5.50 cents on the week and 68 cents below a year ago, with 21 cars trading hands on the week.

Central butter producers report mixed tones on cream availability. Some say offers were generally quiet, others are still receiving cream if they choose to take it. Expectations are pointing to more cream becoming available into early 2021. Food service is not expected to be where it has been in previous years. Retail buying increases have helped allay some of the food service loss, but market prices are and have been strained in 2020 compared to previous years. 

Cream supplies have been adequate for steady butter production in the West. A surge is anticipated Thanksgiving Week as some operations take time off. Orders remain strong for most print accounts as prices edge lower. Recent lockdowns, due to advancing pandemic concerns, are stimulating retail sales. Manufacturers continue to pull heavily on stored butter to meet the strong yearend orders.

Grade A nonfat dry milk closed at $1.0850 per pound, down a quarter-cent on the week and 13.50 cents below a year ago, with 29 sales reported for the week.

The dry whey fell to 42 cents per pound Wednesday but closed Friday at 43.75 cents, up 0.75 cents on the week and 9 cents above a year ago on 2 sales.

U.S. dairy product commercial disappearance looked favorable in September. The USDA’s latest data shows total cheese disappearance at 1.14 billion pounds, up 3.0 percent from September 2019, but year to date is down 0.2 percent. American type cheese was up 10.2 percent from a year ago and mirrored year to date numbers.

Dairy farm margins fell slightly over the first half of November as milk futures struggled to hold ground against increasing feed futures, according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC.

“The U.S. dollar recently fell to its lowest level in two months,” says the MW, which “provides a tailwind to U.S. dairy exports. Data released November 4 indicated U.S. dairy export volume in milk solids equivalent rose 5 percent in September from a year ago, marking the 13th straight month of year-over-year increases,” and “The increased exports will help keep prices steady amid demand destruction due to COVID-19,” according to the MW.

Meanwhile this week’s Livestock, Dairy, and Poultry Outlook says feed price forecasts have been raised significantly. The corn price estimate for the 2019/20 marketing year is $3.56 per bushel; the 2020/21 forecast is $4.00 per bushel, 40 cents higher than last month’s forecast. 

Whole milk sales totaled 1.2 billion pounds, up 4.1 percent from a year ago. Sales for the nine month period totaled 11.7 billion pounds, also up 4.1 percent from 2019, and made up 33.3 percent of total milk sales for September and 33.9 percent thus far for the year.

Skim milk sales, at 225 million pounds, were down 15.2 percent from a year ago and were down 14.4 percent year to date.

Total packaged fluid milk sales, January through September, hit 34.4 billion pounds, up 0.4 percent from 2019. Conventional product sales so far totaled 32.3 billion pounds, down 0.3 percent. Organic products, at 2.2 billion pounds, were up 12 percent and represented 6.3 percent of total fluid milk sales so far for the year.

Dairy Market News reports that Class I demand remains mixed in the COVID-19 era for school districts. Orders are mostly steady from week to week.