You’ll recall May milk production was up 0.6 percent from 2022 and the May Dairy Products report shows that most of the extra milk went to the churn and dryer.

Cheese production totaled 1.203 billion pounds, up 2.8 percent from April but 0.2 percent below May 2022, the third month in 2023 with a year over year drop. Output for the five months hit 5.9 billion pounds, up 0.5 percent from the same period a year ago.

Italian cheese output totaled 485.9 million pounds, up 1.4 percent from April but 2.2 percent below a year ago. YTD output, at 2.4 billion pounds, was down 0.6 percent from 2022.

American output climbed to 508.9 million pounds, up 4.7 percent from April and up 4.2 percent from a year ago. YTD American stands at 2.4 billion pounds, up 2.8 percent.

Mozzarella totaled 381.5 million pounds, up 1.0 percent from a year ago, with YTD at 1.9 billion pounds, up 0.7 percent.

Cheddar, the cheese traded daily at the CME, saw output jump to 354.9 million pounds, up 9.2 million or 2.7 percent from April, and up 15.2 million pounds, or 4.5 percent, from a year ago. YTD Cheddar was at 1.7 billion pounds, up 4.1 percent from 2022.

Butter output slipped to 194.4 million pounds, down 2.5 million pounds or 1.2 percent from April but up 14.6 million pounds or 8.1 percent from a year ago. YTD butter output stood at 984.9 million pounds, up 4.5 percent from a year ago.

Yogurt production totaled 398.8 million pounds, down 0.1 percent from a year ago, with YTD at 2.0 billion pounds, up 3.2 percent.

Dry whey totaled 81.8 million pounds, up 2.2 million pounds or 2.7 percent from April and up 2.6 million pounds or 3.2 percent from year ago. YTD whey stands at 382.4 million pounds, up 1.3 percent. Stocks slipped to 78.1 million pounds, down 1 million pounds or 1.2 percent from April but up 4.9 million or 6.7 percent from a year ago.

Nonfat dry milk output grew to 206.2 million pounds, up 7.6 million pounds or 3.8 percent from April and up 13.5 million or 7.0 percent above a year ago. Stocks fell to 300.1 million pounds, down 6.8 million pounds, or 2.2 percent from April, and were down 17.2 million pounds or 5.4 percent from a year ago.

Skim milk powder production totaled 35.4 million pounds, up 600,000 pounds or 1.6 percent from April, but 15.4 million pounds or 30.3 percent below a year ago.

Income over feed costs were below the $8 per cwt. level needed for steady to increasing milk production for the fourth month in a row, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.

“Input prices were lower, but all three commodities were in the top five for May all time. Feed costs were the second highest ever for the month of May and the ninth highest all time. The All-Milk price continued to move away from all-time record levels and was the seventy-fifth highest recorded.”

Milk income over feed costs for 2023, using June 30 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay, are expected to be $7.38 per cwt., a loss of 22 cents per cwt. versus last month’s estimate. 2023 income over feed would be below the level needed to maintain or grow milk production, and down $4.61 per cwt. from 2022’s level, Brooks said.

Looking at 2024, milk income over feed costs are expected to be $9.89 per cwt., a gain of 46 cents per cwt. versus the 2023 estimate. Income over feed in 2024 would be above the level needed to maintain or grow milk production.

Meanwhile, the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. reports; “Apart from the spot third quarter period, dairy margins strengthened over the second half of June as a sharp drop in projected feed costs more than offset lower milk prices.”

The MW detailed May Milk Production data, stating; “The larger milk inventories are increasing both cheese and butter output and inventories,” and detailed the latest Cold Storage report, both of which I have previously reported.

Price recovery hopes, based on the international market, were dashed Tuesday. The Global Dairy Trade’s weighted average fell a more than expected 3.3 percent after being unchanged on June 20. Traders brought 54.8 million pounds of product to market, up from 44.9 million on June 6, and the most since March 21. The average metric ton price fell to $3,334 U.S., down from $3,479 on June 20.

Buttermilk powder led the declines, down 11.4 percent, followed by butter, down 10.3 percent, after posting a 5.5 percent gain on June 20. Anhydrous milkfat was down 3.4 percent, after inching 0.5 percent higher.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.1427 per pound U.S., down 23.75 cents from the June 20 GDT and after gaining 12.9 cents in that event. It compares to CME butter which closed Friday at a pricy $2.48. GDT Cheddar, at $1.9893, was down 6.7 cents after losing 6.1 cents last time, and compares to Friday’s CME block Cheddar at a bargain $1.3925.

Analyst Dustin Winston says “The quantity offered in this event increased by just over 7,000 metric tons. Volume purchased increased by roughly 4,500. With volume purchased increasing by less than the additional offer volume while prices were declining, reflects the weak demand in the market. Purchase volume was up compared to last year.”

Speaking in the July 10 ‘Dairy Radio Now’ broadcast, HighGround Dairy economist, Betty Berning, said nobody anticipated prices getting this low and it doesn’t matter where you farm or what size you are, “Producers are burning through cash and equity.”

She said it’s not a case of too much milk but she does expect a contraction in the herd. The U.S. is relying on the export market, which is great for producers, but right now that demand is not strong and China is a big part of the reason. She cited whey as an example. The U.S. sells a lot of it to China’s hog producers but their margins are not good so we’re exporting less. China also has weather issues, a stumbling population growth, and they’re still trying to overcome what happened during COVID.