U.S. milk output is struggling as cow numbers decline and output per cow stagnates. The Agriculture Department’s latest preliminary data shows June production at 18.916 billion pounds, down 4 million pounds or 0.2% from June 2022. The top 24-State total, at 18.1 billion, was up 0.2% from a year ago. 

The May 50-State and 24-State totals were revised up 9 and 16 million pounds respectively, up 0.7%, instead of the 0.6% originally reported. The 24 State total was up 0.9% instead of the originally reported 0.8%.

June cow numbers totaled 9.41 million, down 16,000 head from the May count which was revised down 6,000 head. The herd is the same size as it was in January, 5,000 below a year ago, and the smallest since December 2022. The 24-State count was down 20,000 from May but 14,000 head above a year ago.

Output per cow averaged 2,011 pounds, up 1 pound or 0.05% from June 2022 in the 50 states and up 1 pound, to 2,028 pounds or 0.05%, in the top 24 states. 

Stressed finances are keeping culling rates high. The latest Livestock Slaughter report shows an estimated 255,700 head sent to slaughter under federal inspection in June, up 6,600 from May, and 22,700 or 9.7% above June 2022. 

The week ending July 8 saw 50,600 dairy cows go to slaughter, down 8,700 head from the previous week, but 700 or 1.4% more than a year ago. Year to date 1,671,300 cows have been culled, up 89,400 head or 5.7% from a year ago.

CME cheese shot higher this week. The Cheddar blocks closed the third Friday of July at $1.7825 per pound, up 30.25 cents, highest since April 13, but still 12.75 cents below a year ago. 

 The barrels finished at $1.6550, 26.24 cents higher, highest since April 6, 26.50 cents below a year ago, and 12.75 cents below the blocks. Sales totaled 18 cars of block and 12 of barrel on the week.

Midwestern cheesemakers tell Dairy Market News that milk remains available but not to the point it has been. Spot milk prices have moved higher though they remain below Class III, ranging $7 to $3 under. Cheese supplies vary but a number of plants note that extra loads are spoken for before coming off the line. Demand has been strong but milk availability is seasonally starting to shift lower. 

Temperatures are also reducing milk output in the West and manufacturers note strong cheese demand. Plenty of milk is available and is keeping vats running strong but prices are expected to increase in the coming weeks. 

Butter closed Friday at $2.5825 per pound, up 3.25 cents on the week, highest since Dec. 20, 2022, but 32.50 cents below a year ago. 57 cars sold on the week

Midwest butter production has shifted into lower gear though some is related to scheduled maintenance. Cream availability has become scarce as ice cream output has ramped up. Warm weather has blanketed the region and the cream has dwindled. Butter buyers say the market is tight and expected to tighten.

Grade A nonfat dry milk closed Friday at $1.12 per pound, up 1.50 cents on the week, highest since June 26, but 56.50 cents below a year ago on 4 sales.

Dry whey saw its Friday finish at 25.25 cents per pound, up a half-cent on the week but 20.25 cents below a year ago on 43 sales.

 The Agriculture Department’s latest Supply and Utilization report shows butter consumption, which totaled 170.1 million pounds, continued to slip in May, down 11.3% from April, but was up 1.9% from May 2022. Domestic use was up 3.7% from a year ago however exports were down 29.2%.

Cheese utilization, at 1.21 billion pounds, edged 0.7% ahead of a year ago, with domestic utilization up 2.3%, due to “impressive domestic American-style cheese consumption,” says HighGround Dairy, “However, this was partially offset by further declines in exports of both American and Other cheese, marking the lowest monthly total cheese export volume since January 2022.”

Nonfat dry milk and skim milk powder demand saw the largest May volume since 2020, according to HGD, totaling 248.9 million pounds. “While domestic utilization trended down from April,” HGD says “It hovered above the previous year due to a weak comparable. In contrast, exports grew from April to May but were slightly below the strong volume observed in 2022.”

Dry whey utilization totaled 83.4 million pounds, up 6.2% from a year ago, with domestic use up 13.7%, though exports were down 2.5%.

The July 17 Daily Dairy Report says “Inflation is not running as hot in the U.S. as it is in other parts of the world, granting the Federal Reserve permission to raise interest rates at a slower pace than many of its peers and putting pressure on the dollar. The dollar index stands at a 15-month low against a basket of other currencies,” according to the DDR, but “The weaker dollar is making U.S. dairy products more competitive in the global marketplace, and that could help arrest the decline in U.S. dairy export volumes.” 

Meanwhile, the Agricultural Marketing Service announced a public hearing that will be held August 23 to consider and gather evidence on proposed amendments to the pricing formulas in the 11 Federal Milk Marketing Orders.

The Wisconsin-based American Dairy Coalition charged in a press release that “Dairy farmers continue to lose money as a result of the 2018 farm bill change to how farmers are paid for Class I fluid milk. The change was made without a hearing, without a comment period and without a producer referendum, the ADC says. “Today, we see the net loss that has accumulated for dairy farmers since the ‘average of’ method was implemented will exceed $1 billion next month,” said Laurie Fischer, ADC’s CEO. “The ‘average of’ formula has effectively taken 55 cents per hundredweight away from farmers on all Class I milk over the past 52 months. When you net that out to a blended price based on a 28% Class I use nationwide, it’s a 16-cent loss on every hundredweight of milk shipped. That’s like paying an additional checkoff for 52 months,” says Fischer.

Recovery is still in the distance in international dairy trade. Tuesday’s Global Dairy Trade auction saw the weighted average fall 1.0%, following the 3.3% dive on July 4. Traders brought 57.2 million pounds of product to the market, up from 54.8 million on July 4, and the most since March 21. The average metric ton price fell to $3,289 U.S., down from $3,334 on July 4.

 Analyst Dustin Winston wrote “The market share of SE Asia continues to lead the GDT, reaching the longest amount of time (4 events) that market share has consecutively out-weighed that of North Asia. North Asia market share, which includes China, is still nearly a third of the GDT volume purchased, but this is nothing compared to the roughly 50% normal market share of the region. Only North Asia and South/Central America purchased less volume in this event compared to last year.”

China’s dairy demand remains “underwhelming,” according to Kurzawski. Its citizens have been “traumatized by Covid lockdowns and it will take time come out of that.” 

Speaking of China, June imports looked a little better. Skim milk powder imports totaled 63.6 million pounds, up 20.3% from June 2022 and up 21% year to date. Whole milk powder, at 107.6 million, was up 37.6% but down 44.4% YTD. 

Whey product imports totaled 115.3 million pounds, up 1.9% from a year ago and up 32.4% YTD. The U.S. loss marketshare, according to HighGround Dairy, as more product came in from Belarus, Poland, Finland and Ireland. Lactose remains a strong point for both the U.S. and Europe, adds HGD, and was up 91.4% from 2022.

Cheese imports, at 36.8 million pounds, were up 74.2% from a year ago, jumping to 13-month highs due to a 122% boost in product from New Zealand. 

 Butter imports totaled 19.4 million pounds, up 47%, but YTD was down 10.4%.