U.S. milk output is simmering, not cooling yet, and certainly not boiling over, but was nudged higher by stronger output per cow, especially in the Midwest. The Agriculture Department’s latest preliminary data has May production at 19.875 billion pounds, up 120 million pounds or 0.6 percent above May 2022. The 24-state total, at 19.0 billion pounds, was up 146 million or 0.8 percent above a year ago.

The April 50-state and top 24-state totals were revised up 22 and 23 million pounds respectively, up 0.4 percent, instead of the 0.3 percent originally reported for the 50 states, and up 0.6 percent in the top 24 states, instead of the originally reported 0.5 percent.

May cow numbers totaled 9.43 million head unchanged from the April count which was not revised. The herd was up 23,000 head from January and up 13,000 from a year ago. The 24-state count was also unchanged from April and was 24,000 head above a year ago.

Output per cow averaged 2,108 pounds, up 10 pounds or 0.5 percent from May 2022 in the 50 states and up 11 pounds to 2,126 pounds or 0.5 percent, in the top 24 states.

HighGround Dairy says, “The slowing of the milking herd foreshadows what is likely to come in the second half of the year: declining cow numbers on a monthly basis and potentially versus prior year, causing output to come close to parity.”

Robo Bank senior dairy analyst Lucas Fuess said in the June 26 ‘Dairy Radio Now’ broadcast that farm margins are a real concern, considering the June Class III futures is just below $15 per hundredweight while cost of production nears $20. He expects that will pull milk output lower, possibly below year ago levels.

“Hopefully, some pullbacks in U.S. milk production by the end of the year will cause a little price recovery,” he concluded, however with drought threatening the corn crop, relief from high feed prices may be in question.

Stressed finances are keeping dairy culling rates high. The latest Livestock Slaughter report shows an estimated 249,100 head sent to slaughter under federal inspection in May, up 5,500 head from April, and 23,900 or 10.6 percent above May 2022. Culling in the five-month period totaled 1.363 million head, up 75,600 or 5.9 percent from the same period a year ago.

The week ending June 10 saw 57,300 dairy cows go to slaughter, up 5,500 head from the previous week and 6,900 head or 13.7 percent more than a year ago. Year to date, 1.447 million have been culled, up 72,000 head or 5.2 percent from a year ago. StoneX says “Total cattle slaughter continues to be weak so dairy cows are holding a larger share of the beef market than it did a week ago.”

Tuesday’s Global Dairy Trade weighted average was unchanged, after slipping 0.9 percent on June 6 and May 16. The event saw 44.9 million pounds of product sell, down from 50.97 million on June 6. The average metric ton price crept to $3,479 U.S., up $80 from June 6.

Butter saw the biggest change, up 5.5 percent, after inching 0.5 percent higher on June 6. Anhydrous milkfat was up 0.5 percent, following a 1.8 percent advance. Cheddar was down 3.3 percent, after jumping 7.4 percent on June 6. Skim milk powder was up 2.3 percent, after holding steady. Whole milk powder was unchanged, following a 3.0 percent decline.

StoneX says the GDT 80 percent butterfat butter price equates to $2.3802 per pound U.S., up 12.9 cents, and compares to CME butter which closed Friday at $2.42. GDT Cheddar, at $2.0563, was down 6.1 cents, and compares to Friday’s CME block Cheddar at $1.4050. GDT skim milk powder averaged $1.2098 per pound, down from $1.2498, and whole milk powder averaged $1.4387 per pound, down from $1.4390. CME Grade A nonfat dry milk closed Friday at $1.1325 per pound.

Analyst Dustin Winston says North Asian purchases, which include China, fell with volume down significantly from the last event and about half of the volume purchased a year ago. SE Asia volume was slightly lower from the last event, but up from last year by 43 percent.

Meanwhile China’s latest dairy import numbers had key commodity imports “bouncing all over the map,” according to HighGround Dairy. The largest jump over prior year by volume was in whey, at 125.7 million pounds, up 27.9 percent from May 2022. The U.S. remained the primary supplier, according to HGD.

Whole milk powder and skim milk powder imports, at 115.8 million and 70.7 million pounds respectively, were up 9.0 percent and 24.6 percent respectively. HGD says “While not quite as strong as the impressive volumes shown in 2021, SMP imports did remain positive against prior year, with New Zealand accounting for 36 percent market share versus just 19 percent last year. U.S. share was down 33 percent.

Butter imports were down 3.1 percent and cheese was down 4.6 percent. HGD reported that “Lactose imports remain elevated due to infant formula usage domestically,” and “was anticipated as it was recently approved for use and the price is right.”

Cooperatives Working Together members accepted 33 offers of export assistance this week to capture sales of 3.8 million pounds of American-type cheese, 22,000 pounds of anhydrous milkfat, and 6.6 million pounds of whole milk powder. The product is going to customers in Asia, Middle East-North Africa, Oceania, and South America and raised 2023 exports to 23.6 million pounds of cheese, 594,000 pounds of butter, 24,000 pounds of anhydrous milkfat, 31.2 million pounds of whole milk powder, and 4.1 million pounds of cream cheese.

CME dairy prices remained under pressure in the Juneteenth holiday-shortened week as traders awaited Friday afternoon’s May Cold Storage report, which I will detail next week.

The Cheddar blocks saw some recovery, marching to $1.41 per pound Thursday, but closed Friday at $1.4050, up 3 cents on the week.