U.S. milk production remains below that of a year ago. The Agriculture Department’s latest preliminary data shows July output at 18.915 billion pounds, down 0.4% from July 2023, the 13th consecutive month output was below a year ago. The 24-State production, at 18.2 billion pounds, was down 0.2%.

June output in the 50 states was revised down a whopping 137 million pounds, and down 1.7% from a year ago, instead of the 1.0% decline originally reported. 

July cow numbers totaled 9.325 million head, up 5,000 from the June count which was revised down 15,000 head, and was 43,000 or 0.5% below July 2023. The 24-State count, at 8.878 million head, was up 3,000 from June but 31,000 or 0.3% below a year ago. The June count was revised down 13,000 head.

July output per cow in the 50 states averaged 2,028 pounds, up 1 pound or 0.05% from a year ago. The 24-State average, at 2,047 pounds, was up 2 pounds. June output per cow was revised down 11 pounds in the 50 states.

Michigan production was off 0.9% on 3,000 fewer cows and a 5 pound drop per cow. Colorado and Michigan were dealing with avian flu, though Colorado has the most confirmed cases and saw July output down 1.8%, while cow numbers were up 1,000 head.

HighGround Dairy says the disease is more prevalent than reported and likely present in more states than the 13 named. In the states where the flu was detected, more operations are likely impacted than what’s officially reported.

StoneX broker Dave Kurzawski, speaking in the Aug. 26 “Dairy Radio Now” broadcast, said that in his 22 years in the industry, he has never seen this large of a revision as we saw in the June data. It confirms that milk output is the wild card in price, he said, and will support the U.S. market well into 2025, though StoneX points out that milk components remained strong in July so even with output being down, component adjusted production was up 1.4%.

The climb continued in Tuesday’s Global Dairy Trade auction which saw the weighted average unexpectedly jump 5.5%, biggest gain since March 2, 2021, after creeping 0.5% higher on August 6 and 0.4% higher on July 16. Volume slipped to 77.0 million pounds, down from 79.3 million on Aug. 6. The average metric ton price climbed to $3,920 U.S., up from $3,680.

The gains were led by whole milk powder, up 7.2%, following a 2.4% advance on Aug. 6. Skim milk powder was up 4.0%, after falling 2.7%. Anhydrous milkfat was up 4.8%, following a 1.2% climb, and butter was up 3.7%, after falling 2.4%. Lactose was up 2.7%. The only decline was Cheddar, down 0.2%, after a 1.3% gain last time, while GDT Mozzarella was up 5%.

StoneX says the GDT 80% butterfat butter price equates to $2.9677 per pound U.S., up 9.6 cents from Aug. 6, and compares to CME butter which closed Friday at $3.13. GDT Cheddar, at $1.9388, was down fractionally, and compares to Friday’s CME block Cheddar at $2.0375. GDT skim milk powder averaged $1.1955 per pound, up from $1.1516, and whole milk powder averaged $1.5794 per pound, up from $1.4781. CME Grade A nonfat closed Friday at $1.2825.

Analyst Dustin Winston reported “North Asia market share, which includes China, increased considerably. After six consecutive events with SE Asia purchases exceeding North Asia, North Asian buyers have now returned to holding the largest marketshare for the last two events. This event was the largest share of whole milk powder purchases that North Asia has had since May of 2023.” 

China’s demand has been weak almost since the end of COVID, according to Kurzawski, but that appears to have changed. “We had pockets of this before,” he said, “where demand was strong, and then headed south again, and we may be seeing that now.” StoneX “Boots on the Ground” people in China think the increase is due to bearish sentiment that physical traders and distributors have held for some time and therefore trimmed their inventories. If demand has grown, they’ve been caught short and need to buy. It remains to be seen, Kurzawski concluded, but “It has the potential of turning the markets around globally.”

Meanwhile, China’s July dairy imports were down from a year ago, according to HighGround Dairy’s analysis. 

Imports of whole milk powder totaled 95 million pounds, down 3.5% from a year ago, while skim milk powder, at 44.9 million pounds, was down 38.3%. Year to date the two together are down 20.8%.

Cheese imports totaled 34.8 million pounds, down 9.7%, while butter imports, at 19 million pounds, were up 42.2% from July 2023. Whey products totaled 129.4 million pounds, up 13.2%, the second consecutive month to top prior year levels, with sailings from the U.S. up 11%, according to HGD.

Back home; the latest Livestock Slaughter report showed an estimated 225,900 head were slaughtered under federal inspection in July, up 39,500 from June, but 18,300 head or 7.5% below July 2023. As of the week ending August 10, 1,686,200 dairy cows had been culled, down 288,400 or 14.6% from 2023.

USDA’s latest Livestock, Dairy, and Poultry Outlook, says “Dairy cow slaughter for the first three quarters of 2024 has been below most recent historical levels.” “The low culling levels could be due to several factors, including a smaller herd resulting from last year’s higher slaughter rates, changes in producer management practices extending the productive life of older cows, dairy cow prices, replacement prices, and conditions in the beef market. Also, recent low feed prices might encourage farmers to keep older cows in the cycle.” 

“Dairy margins improved over the first half of August, mostly in nearby marketing periods, as higher milk prices helped boost profitability with feed costs holding steady,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

“CME Class III Milk futures have surged in response to strength in the cheese market as both block and barrel prices at the CME rose to new highs over the past week to the highest price since October 2022,” the MW stated. It credited lower cheese production in June, particularly Cheddar, but pointed out “The average butterfat percentage in milk has topped prior-year fat tests in every month since June 2020 even though U.S. milk production is down 0.9% year to date through June to the lowest level in four years.”

After gaining 25 cents the previous two weeks CME Cheddar block cheese closed Friday at $2.0375 per pound, down 6.25 cents on the week but 9.25 cents above a year ago, as traders awaited the afternoon’s July Cold Storage data. 

The barrels climbed to $2.2825 per pound Wednesday, highest since June 9, 2022, but closed Friday at $2.10, down 15.50 cents on the week, 30 cents above a year ago, and 6.25 cents above the blocks. There were 6 CME sales of block on the week and 2 of barrel.

Cheese demand in the Upper Midwest is steady, says Dairy Market News. Some manufacturers say higher market prices spurred near-term buying but they expect hesitancy once the dust begins to settle on the bullish pricing movement. Barrel processors relay that buyers’ interests are hearty, but spot load availability has been scant in recent weeks. Milk availability is drawing similar comparisons. Some processors reported some down days for maintenance but did not have difficulty finding a home for the milk. Mid-week prices ran $2.25-to $3-over Class but concern was growing that the block and barrel gap might “Create some flux in near-term market tones, as prices typically correct to narrow the gap.”

Cheese production varies from slightly stronger to slightly weaker in the West. Milk supplies are tight but adequate. Block production was strengthening as new production capacities came on-line. Butter price strength was thought to be incentivizing some producers to allocate more milkfats in that direction. Some say plenty of cheese is available while others report it’s tight. Domestic demand is stronger to steady. Export demand is steady to moderate, according to DMN.

Cash butter hit $3.1850 per pound Monday, highest since Oct. 31, 2023, but finished Friday at $3.13, down a nickel on the week but 46 cents above a year ago. 54 loads found new homes on the week, 22 on Friday alone.

Midwest butter makers say demand is continuing its seasonal shift higher. Traders echo that sentiment. Cream remains very tight in the region and churning is continuing its slowdown. More cream has been available in the South Central states, but Upper Midwest contacts say cream shipments will be unlikely to appear until Labor Day weekend, if then.

Western butter producers report retail production is generally steady while bulk lines are at a much slower pace. Cream volumes are more balanced than the Central/Eastern region. Butter demand varies from stronger to steady. Inventories are adequate, but not heavy, says DMN.

Grade A nonfat dry milk climbed to $1.2850 per pound Wednesday, highest mark since Jan. 12, 2023, but closed Friday at $1.2825, 2.75 cents higher on the week and 17.75 cents above a year ago, with 22 total sales for the week.

StoneX says “Tighter U.S. fundamentals, a short term need for product recently in Mexico, and stronger powder prices in New Zealand through August has supported U.S. nonfat.” So did the week’s GDT.

Dry whey closed the week at 56.50 cents per pound, 1.50 cents higher and 28.50 cents above a year ago, with 2 sales posted for the week.

Fluid milk sales took a dip in June, after inching 0.3% higher in May. The USDA’s latest data showed packaged sales totaled 3.2 billion pounds, down 2.9% from June 2023. Conventional product sales totaled just under 3.0 billion pounds, down 3.4% from a year ago. Organic products, at 234 million pounds, were up 4.4%, and represented 7.3% of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, down 2.4% from a year ago, but up 2.2% year to date, and represented 37.5% of total sales for the month. Skim milk sales, at 141 million, were down 13.9% from a year ago and down 12.9% YTD.

Packaged fluid sales in the six month period totaled 21.3 billion pounds, up 0.6% from 2023. Conventional product sales totaled 19.8 billion pounds, up 0.2% from a year ago. Organic products, at 1.5 billion pounds, were up 6.0%, and represented 7.0% of total milk sales in the period. 

The Agriculture Department announced the September Federal order Class I base milk price at $21.60 per hundredweight, up 28 cents from August, $2.70 above September 2023, the highest Class I since Jan. 2023. It equates to $1.86 per gallon, up from $1.63 a year ago. The nine month average stands at $19.67, up from $19.05 a year ago and compares to $23.84 in 2022.