U.S. milk production jumped again in September, thanks to increases in cow numbers and output per cow but there’s more to the report than meets the eye.

The USDA’s latest data shows output at 18.28 billion pounds, up 1.5 percent from September 2021. The 24-state total, at 17.5 billion pounds, was up 1.6 percent. It is the third monthly increase in 2022 and revisions raised the 50-state August total by 15 million pounds to 19.03 billion, up 1.7 percent from a year ago, instead of the 1.6 percent increase originally reported.

Cow numbers were expected to rise but the September herd totaled 9.41 million, down 2,000 head from August numbers, which were revised 14,000 head lower. The September herd was up 6,000 from a year ago, first time since September 2021 the herd size was above a year ago, but was 8,000 fewer than the peak in May.

StoneX Dairy Group called the report “neutral to slightly bullish,” and “with only 52,000 cows added to the herd over four months, 2022 has presented the weakest herd expansion seen in the U.S. over the last 15 years.”

Output per cow averaged 1,943 pounds, up 27 pounds or 1.4 percent from September 2021. August output was revised up 4 pounds, to 2,022 pounds.

Third Quarter milk output was up 1.2 percent from 2021, with cow numbers unchanged from second quarter but 29,000 less than third quarter 2021.

Michigan was down 0.7 percent on a loss of 11,000 cows. Output per cow was up 40 pounds. The USDA’s October Livestock Dairy and Poultry Outlook stated: “Based on recent milk production information, the forecast for the average number of milk cows in 2022 has been increased 5,000 head, to 9.41 million as a more rapid pace of expansion is expected in late 2022. The projected average yield per cow was adjusted higher for the remainder of 2022, at 24,110 pounds.

More dairy cows are expected in the first half of 2023 and productivity is expected to be higher. Cow numbers were increased 10,000 head to 9,425 million. Milk per cow was raised 20 pounds, to 24,320 pounds, says the USDA.

Dairy cow culling fell in September. An estimated 260,500 head were sent to slaughter under federal inspection, according to the latest Livestock Slaughter report, down 5,600 head from August and 4,100 or 1.5 percent below September 2021. Culling in the nine months totaled 2.28 million, down 59,800 or 2.6 percent from 2021.

Culling in the week ending October 8, totaled 60,000 dairy cows, down 1,100 from the previous week but 600 head or 1.0 percent above a year ago.

Dairy cow slaughter has exceeded 2021 levels for three consecutive weeks, according to StoneX, however: “The market share of dairy cows being processed as part of the beef market has fallen from year-ago levels. Total cattle slaughter is also up and has exceeded year-ago levels for the last 7 weeks.” Feed costs and availability are blamed. “That coupled with the strong cash price for cattle is lending plenty of fuel to the fire to incentivize farmers to sell their cows.”

International dairy markets remain bearish. The Oct. 18 Global Dairy Trade’s weighted average dropped 4.6 percent, following the 3.5 percent decline on Oct. 4. Traders brought 64.8 million pounds of product to market, down from 68 million on Oct. 4. The average metric ton price fell to $3,723.00 U.S., down from $3,911.00.

Declines were led by skim milk powder, down 6.9 percent, following a 1.6 percent slip on Oct. 4. Whole milk powder was down 4.4 percent, after slipping 4.0 percent. Cheese was down 3.9 percent, following a 3.8 percent decline. Anhydrous milkfat and butter were down 2.7 percent and 2.6 percent respectively, after AMF fell 1.7 percent on Oct. 4 and butter was down 7.0 percent.

StoneX says the GDT 80 percent butterfat butter price equates to $2.1468 per pound U.S., down 5.8 cents after dropping 16.50 cents in the last event, and compares to CME butter which closed Friday at a world high $3.20. Cheddar, at $2.1632, was down 9 cents after losing 8.2 cents, and compares to Friday’s CME block Cheddar at $2.0575. GDT skim milk powder averaged $1.4744 per pound, down from $1.5864 (11 cents). Whole milk powder averaged $1.5519 per pound, down from $1.6208 (7 cents). CME nonfat closed Friday at $1.42 per pound.

StoneX says Southeast Asia purchases declined substantially from the last event along with Europe and Africa, while North Asia purchases increased.

HighGround Dairy adds: “So far, buyers are not concerned about the slow start to the New Zealand milk production season.”

The GDT is waiting on China. President Xi Jinping kicked off his Communist Party Congress Oct. 16. His zero-COVID policies remained in place, locking down major cities, which has greatly weakened China’s economy and its purchases.

Cooperatives Working Together sales this week totaled 1.1 million pounds of American-type cheese and 77,000 pounds of cream cheese. The product is going to customers in Asia and Middle East-North Africa through February.

CME Cheddar blocks closed Oct. 21 at $2.0575 per pound, up 0.75 cents on the week and 24.75 cents above a year ago. The barrels climbed to $2.2050 on Wednesday, but closed Friday at $2.09, down 3.50 cents on the week, after losing a dime the week before, but were 22.75 cents above a year ago and just 3.25 cents atop the blocks.

Midwest cheesemakers view the barrel-block price inversion as an inhibitor, says Dairy Market News. Barrel averages have topped the blocks since April as barrel inventories remain snug. Cheese demand, for all varieties is strong and Midwest vats are running as actively as cheesemakers are either keeping up or running behind orders.

Looking westward, export cheese demand remains strong, especially from Asian buyers. Cooler weather is contributing to cow comfort and thus milk output.