U.S. milk production continues to sputter thanks to bird flu, a shortage of replacement heifers, and scorching high temperatures. The UDSA’s latest preliminary data shows June output at 18.77 billion pounds, down 1.0 percent from June 2023, the 12th consecutive month output was below a year ago. The 24-state production was 18.0 billion pounds, down 0.8 percent.

Production for Second Quarter totaled 57.5 billion pounds, down 0.8 percent from a year ago. Cow numbers averaged 9.33 million head, down 3,000 from First Quarter and 76,000 less than the same period a year ago.

May output in the 50 states was revised down 28 million pounds, down 1.0 percent from a year ago instead of the 0.9 percent originally reported. The 24-state total was revised 30 million pounds lower, down 0.8 percent, not the 0.7 percent reported.

June cow numbers totaled 9.335 million head, up 2,000 from the May count, which was revised down 17,000 head, and was 62,000 below June 2023. The 24-state count, at 8.89 million, was up 2,000 from May but 37,000 below a year ago. The May count was revised down 7,000 head.

Output per cow in the 50 states averaged 2,010 pounds, down 6 pounds or 0.3 percent from a year ago. The 24-state average, at 2,025 pounds, was down 8 pounds from 2023. May output per cow was revised down 1 pound on both.  

California milk production was down 61 million pounds or 1.8 percent from a year ago. Cow numbers were down 5,000 head while output per cow was unchanged. Wisconsin output was up 25 million pounds or 0.8 percent from a year ago, thanks to a 15-pound gain per cow and 3,000 additional cows.

Idaho was down 1 percent, on 2,000 fewer cows and 15 pounds less put per cow. Michigan was off 0.9 percent on a 20-pound loss per cow. Cow numbers were unchanged. Both states are dealing with avian flu. Minnesota was down 1 percent on 6,000 fewer cows but output per cow was up five pounds. New York was down 1.2 percent on a 25-pound drop per cow. Cow numbers were unchanged.

New Mexico again posted the biggest loss, down 12.5 percent, on a drop of 37,000 cows, although output per cow was up 20 pounds. Oregon was unchanged on 1,000 fewer cows. Output per cow was up 15 pounds. Pennsylvania was down 2.2 percent on a 35-pound drop per cow and 1,000 fewer cows. South Dakota posted the biggest increase, up 8.3 percent, thanks to 17,000 more cows, though output per cow was down 10 pounds. Texas jumped 3.1 percent, thanks to 13,000 more cows and 20 pounds more per cow.

Replacements remain hard to find and expensive, thus cows are staying in the herd longer. The latest Livestock Slaughter report showed an estimated 186,400 head were slaughtered under federal inspection in June, down 29,600 from May, and 69,300 head or 27.1 percent below June 2023. As of the week ending July 13, 1,481,400 head have been culled, down 250,400 head or 14.5 percent from 2023.

The USDA published its Recommended Decision on Federal Milk Marketing Order amendments in the Federal Register. Industry comments must be submitted by Sept. 13, 2024. USDA will have 60 days thereafter to issue the Final Decision, likely around Nov. 12, followed by a producer referendum.

Details are lengthy and complicated and producers will best be served by going online to read accounts provided by HighGround Dairy, StoneX Dairy Group, the National Milk Producers Federation, and others.

HighGround’s Betty Berning talked about the five areas addressed in the July 29 “Dairy Radio Now” broadcast. The first was USDA’s recommendation to update skim component factors, though not to the extent NMPF and National All Jersey Inc. requested, and agreed that a 12-month implementation lag would benefit the industry but didn’t grant automatic updates. Berning said U.S. cows are producing more components so this change will reflect that more accurately.

USDA recommends removing barrel Cheddar cheese from the Dairy Product Mandatory Reporting survey and solely use the block price. Increases to make allowances are also recommended, based on input from NMPF, the International Dairy Foods Association, and Wisconsin Cheese Makers.

The butterfat recovery factor would be updated in the Class III formula and USDA proposed two recommendations for the base Class I skim milk price. It recommends that the base Class I skim milk price return to the “higher of” the advanced Class III or Class IV skim milk prices. A separate Class I price is also recommended for extended shelf-life products.

This change was one producers really hoped for, Berning said. Lastly, USDA calls for the base Class I differential to remain at $1.60 per cwt, but recommends updating Class I differentials to reflect current marketing conditions.

“Some are pluses, some are minuses,” Berning said, “The victory for producers is returning to the ‘higher of’ in the advanced Class III or IV skim milk pricing.” Several organizations have cited what not having this provision cost producers, particularly during the COVID-19 pandemic, she concluded.

StoneX stated, “The overall impact to the farmers is probably small. There are some regional differences driven by the changes in Class I differentials and by Class II/IV mostly shifting lower while Class III shifts higher. Also, farmers in Federal Orders that pay based on actual pounds of fat and protein delivered may not fully benefit from the yield/technical changes in the formulas.” National Milk is studying the decision but said it “aligns well” with NMPF’s own proposals.

Meanwhile, butter and cheese stocks shrunk during June Dairy Month. The USDA’s latest Cold Storage report showed the June 30 butter inventory at 373.5 million pounds, down 6.2 million pounds or 1.6 percent from the May count, which was revised down 479,000 pounds, but was up 23.8 million or 6.8 percent from June 2023, topping year ago levels for the fifth month in a row and sit at the highest June value since 2021, according to HighGround Dairy. “Before 2021, 1993 was the last time June stocks were so strong.”

American type cheese stocks dropped to 804.8 million pounds, down 11.3 million or 1.4 percent from the May level, which was revised 4.9 million pounds lower, and were down 48.7 million pounds or 5.7 percent from a year ago.

The “other” cheese category, at 596.5 million pounds, was down 127,000 pounds from May’s count, which was revised 3.3 million pounds lower. Stocks were down 37.7 million pounds or 5.9 percent from a year ago.

The total June 30 cheese inventory fell to 1.423 billion pounds, down 11.2 million pounds or 0.8 percent from the May count, and was 87.1 million pounds or 5.8 percent below a year ago. It is the lowest total cheese inventory since Nov. 2021.

The July 25 Daily Dairy Report stated, “While many analysts expected a larger drawdown given strong export sales and ongoing milk production challenges, the flat performance suggested more milk has been routed to cheese production while domestic demand remained tepid.” StoneX wrote; “Given that level of inventory, the model would argue that CME blocks in June were a little undervalued and should have been closer to $2 per pound.”