You’ll recall June milk production was down 4 million pounds or 0.2% from June 2022 however strong component levels offset the small decline and resulted in good product output, according to the June Dairy Products report. 

Cheese production totaled 1.169 billion pounds, down 2.8% from May but 0.4% above June 2022, ending three months of output being below a year ago but was less than the typical build of 1.3%, according to HighGround Dairy. Cheese output in the first half of the year totaled 7.1 billion pounds, up 0.5% from 2022.

Butter output plunged to 162.6 million pounds, down 32 million pounds or 16.4% from May, but was up 3.6 million pounds or 2.3% from a year ago. YTD butter production stood at 1.15 billion pounds, up 4.2% from a year ago. The drop from May points to weaker milk production in butter-heavy places like California, says HGD, where butter volumes dropped year-over-year and from May to June.

Yogurt production totaled 395.5 million pounds, up 1.1% from a year ago. Hard ice cream output, at 67.1 million pounds, was up 0.3% from 2022.

Dry whey production totaled 83.5 million pounds, up 1.7 million pounds or 2.1% from May, and up 3.4 million pounds or 4.3% from year ago. YTD whey stood at 466 million pounds, up 1.8%. Stocks grew to 82.1 million pounds, up 4 million pounds or 5.1% from May and up 10.5 million or 14.7% from a year ago.

Nonfat dry milk output dropped to 182.5 million pounds, down 26.3 million or 12.6% from May but up 13.5 million or 8.0% above a year ago. Stocks slipped to 296.5 million pounds, down 3.8 million pounds, or 1.3% from May, and were down 12.3 million pounds or 4.0% from a year ago.

Skim milk powder production crept to 37.4 million pounds, up 2.7 million pounds or 7.9% from May, but down 17 million or 31.2% from a year ago.

StoneX stated in the August 9 ‘Early Morning Update;’ “Cheese prices have flipped the 2023 script in short order leaving market participants wrestling with the wide-spread availability of aged Cheddar against the rather acute tightness on fresh Cheddar. Due to this disparity between aged and fresh, and given the bearish mindset many traders developed during the first 6 months of the year, there remains a reluctance to believe that spot cheese prices can stay up here.”

Midwest butter makers report that for the past two weeks, spot cream is beyond their fiscal grasp. They are bidding, but the bids are well below current market figures. Processors say they are still churning but using contractual cream. Butter demand is steady, but availability is noted as “light to very limited” in the region. Traders are looking to western suppliers for any extra loads, says DMN.

June U.S. dairy exports looked pretty sad as global demand remains depressed. Milk equivalent exports were down 14.1% and the only bright spot was nonfat- skim milk powder which was up 2.1%, although down 10.2% from May. 

Total cheese exports were down 19%, with Cheddar plummeting 38%. HGD says “The last time cheese sales dropped this much annually was in 2020.” Exports to South Korea, the U.S. Number 2 international cheese market, were down 46.7%, according to HGD. China, surprisingly, upped its purchases and shipments to Mexico continued and even set a June volume record, although Cheddar shipments there were down 39% from a year ago.

Butter exports were down 60.3% from a year ago and down 37.8% year to date.

Whey shipments were down 33.7%. HGD says the U.S. moved 32.5% of its June whey production abroad, the lowest percent export share since October 2019, and a far cry from the five-year average of 49.3%. Smaller purchases from China to the tune of 32%, were the main driver, according to HGD, along with smaller purchases from Southeast Asia and Canada.

 June U.S. imports of cheese were down 17.6%. Butter was down 11.5%, although butter imports YTD were up 38.2%, as high prices acted like a magnet. Anhydrous milkfat imports were down 46.5% in June and down 8.0% YTD.

Tuesday’s GDT Pulse auction saw just under 2.2 million pounds of Fonterra whole milk powder sold at $2,775 per metric ton, down $225.00 from the last Pulse and the lowest Pulse price ever, and down $20 from the August 1 GDT. 

HighGround Dairy warned; “With SGX futures trading below the Pulse Auction settlement, it appears the market expects further downward price movement in the coming weeks.”

Furthermore StoneX warns “Fonterra’s forecasted volume on offer over the next 12 months was changed for both whole milk and skim milk powder. WMP volume offerings were increased by 44.1 million pounds, “a result of movements in market demand.” SMP offer quantity was increased by 11 million pounds.

The week ending July 29 saw 60,100 dairy cows go to slaughter, down 1,100 head from the previous week, but 4,100 or 7.3% more than a year ago. Year to date 1,852,200 have been culled, up 101,300 head or 5.8% from a year ago.

In politics; the International Dairy Foods Association had praise for the 2020-2025 Dietary Guidelines for Americans (DGA) which highlights that 90% of Americans do not consume enough milk and other nutritious dairy products. 

“Bipartisan legislation introduced in the House and Senate seeks to address this significant gap by increasing access to nutritious dairy products like milk, cheese, yogurt and other cultured dairy products among participants in the Supplemental Nutrition Assistance Program, or SNAP,” says the IDFA.

“The Dairy Nutrition Incentives Program Act of 2023 (H.R.5099), introduced by U.S. Reps. Jim Costa (D-Calif.) and Nick Langworthy (R-N.Y.), would provide SNAP participants a dollar-for-dollar match for the purchase of dairy products.”

“The Senate version (S.1474) was introduced in May by U.S. Sens. Amy Klobuchar (D-Minn.) and Roger Marshall (R-Kan.). The dairy incentive program would expand the Healthy Fluid Milk Incentive (HFMI) projects, a 2018 Farm Bill program currently testing best practices for incentivizing milk purchases among SNAP beneficiaries, to include whole and reduced-fat milk as well as additional nutritious dairy products like cheese and yogurt,” according to the IDFA.

IDFA President and CEO Michael Dykes, stated “In this time of chronic food insecurity, it is critical that we find new ways to improve access to foods that nourish and promote good health and well-being, particularly for our nation’s most food-insecure individuals. Dairy products like milk, cheese and yogurt are nutritional powerhouses, packing essential nutrients that promote healthy immune function, hydration, cognition, mental health, bone health, and lower the risk for type 2 diabetes and cardiovascular disease,” says Dykes.

In another issue facing dairy, the National Milk Producers Federation warned; “While the Food and Drug Administration’s (FDA) draft guidance on plant-based beverages acknowledges the public health concern regarding nutritional confusion, it falls woefully short of ending the decades-old problem of misleading plant-based labeling using dairy terminology.”

In comments submitted to the agency this week, NMPF emphasized “The importance of transparent product labeling to ensure consumer understanding and informed purchasing decisions, and urged FDA to take prompt enforcement action against misbranded non-dairy beverages that resemble milk.”

“For far too long, plant-based beverage manufacturers have blurred well-defined standards of identity to inappropriately and unfairly capitalize on dairy’s nutritional benefits while FDA has ignored its enforcement obligations,” said Jim Mulhern, NMPF president and CEO. 

“FDA’s draft guidance is an encouraging first step toward promoting labeling transparency in the marketplace, but it’s not enough. Our comments outline a solution to the misleading labeling practices existing in the marketplace today, and provide clear, truthful labeling options for marketers of plant-based beverages,” Mulhern said.