U.S. milk output is hesitating. The Agriculture Department’s latest preliminary data shows November output at 17.9 billion pounds, down 1.0% from Nov. 2023, after inching up 0.4% in October. Output in the top 24 states totaled 17.2 billion pounds, down 0.8%, after rising 0.6% in October. October output was revised up 35 million pounds from last month’s estimate, and up 32 million in the top 24 states.

November cow numbers were down 5,000 head from October, though the October count was raised 5,000, however the herd is up 20,000 from a year ago and 42,000 more than the January count. The 24-State count, at 8.9 million head, was down 2,000 from October but 32,000 more than a year ago.

October output per cow in the 50 states averaged 1,909 pounds, down 23 pounds or 1.2% from a year ago. The 24-State average, at 1,925 pounds, was down 22 pounds or 1.1% from a year ago. 

California production again took a hit from avian influenza. Output plunged to 2.96 billion pounds, down 301 million or 9.2% from a year ago. Cow numbers were down 1,000 head and output per cow was down 175 pounds. October production was revised up 12 million pounds however, resulting in output being down 3.5% from a year ago, instead of the 3.8% originally reported. 

Wisconsin’s November output, at 2.58 billion pounds, was down 8 million pounds or 0.3% from a year ago, on 4,000 fewer cows, and output per cow unchanged.

Idaho was up 2.1%, thanks to 11,000 more cows and a 10 pound gain per cow. Kansas was up 2.6%, on 5,000 more cows, but output per cow was down 5 pounds. Michigan was up 0.5% on a 10 pound increase per cow. Cow numbers were unchanged. Minnesota was unchanged, thanks to a 30 pound gain per cow offsetting the loss of 7,000 cows. New York was up 1.2% on a 25 pound increase per cow. Cow numbers were unchanged. 

New Mexico was down 5.4%, on 15,000 fewer cows, although output per cow was up 10 pounds. South Dakota was up 7.2%, thanks to 13,000 more cows and a 15 pound gain per cow.  

Oregon was down 1.5% on 3,000 fewer cows. Output per cow was up 15 pounds. Pennsylvania was up 1.0% on a 20 pound gain per cow offsetting a drop of 1,000 cows.

Texas saw the biggest increase this month, up 7.3%, thanks to 40,000 more cows and a 20 pound gain per cow. Vermont was down 1.0%, on 3,000 fewer cows, although output per cow was up 25 pounds. Washington State was down 1.0%, on a 25 pound drop per cow. Cow numbers were up 1,000 head.

The impact of bird flu is significant, especially in California. StoneX Dec. 19 Early Morning Update stated that farm milk expansions will be needed to fill new or expanded cheese plants. “In the three months from July through October, U.S. farmers added 46,000 dairy cows to the milking herd. That is a 0.5 percent increase in just three months. They did this despite record tight heifers, record high replacement cow prices, the cost of building new barns, high interest rates, etc. How many more of these big expansions have been planned over the next year? In rough numbers it would take an additional 350,000 cows to fill the new processing capacity, when the capacity is running at 100 percent. So, there could be another 50,000 or 100,000 or 150,000 more cows that could come into this herd in the next year,” says StoneX. “If the herd grew another 20,000 head in November that would help to cushion the weakness in California.”

HighGround Dairy’s Betty Berning, stated in the Dec. 23 “Dairy Radio Now” broadcast that over half the herds in California have been impacted by bird flu, however she believes U.S. dairy producers will meet the demand of the expanded cheese plants. Most of it is in the Plains states Kansas and Texas, and producers in those states have been expanding in response to the new capacity.

She looks for growth in the Mountain and Plains states in 2025, which leads to the question, will demand absorb the extra cheese making capacity? That remains to be seen, she said, however demand for protein is growing, as popular weight loss drug use increases and drives consumers to eat more high protein foods, of which dairy is a great source.

Whey protein isolate production is setting records, she said, as are other high protein dairy products, and they are being consumed, but there will also be more cheese available and that demand remains to be seen.

Speaking of the bird flu, the Agriculture Department’s latest Livestock, Dairy, and Poultry Outlook, reported that, as of Dec. 12, highly pathogenic avian influenza (HPAI) was confirmed in 16 states and 832 dairy herds. However, since the beginning of December, out of the 832 herds, HPAI had been detected in 142 herds in California and 1 in Nevada. Affected cows and herds are quarantined until they recover and once recovered, most cows return to producing milk.

As I reported last week, USDA began its National Milk Testing Strategy, mandating raw milk samples be collected and tested nationwide from U.S. farms. The second round of states was announced this week, requiring raw milk samples be collected and shared with USDA for testing. They included Indiana, Maryland, Montana, New York, Ohio, Vermont and Washington.

Fluid milk sales recovered in October, after slipping in September, and have topped year ago levels in six out of 2024’s first nine months. USDA’s latest data shows October packaged sales at 3.8 billion pounds, up 1.3 percent from October 2023.

Conventional product sales totaled 3.5 billion pounds, up 1.0 percent from a year ago. Organic products, at 256 million pounds, were up 5.9 percent, and represented 6.8 percent of total sales for the month, down from 7.1 percent in September.

Skim milk sales, at 161 million pounds, were down 5.5 percent from a year ago and down 10.8 percent YTD.

Packaged fluid sales in the 10-month period totaled 35.6 billion pounds, up 0.9 percent from 2023. Conventional product sales totaled 33.1 billion pounds, up 0.5 percent from a year ago. Organic products, at 2.5 billion pounds, were up 6.8 percent, and represented 7.1 percent of total milk sales in the 10 months.

Speaking of fluid milk; the first Federal order Class I base milk price of 2025 was announced this week by the USDA at $20.38 per hundredweight, down $1.05 from December and the lowest Class I since June 2024 but is $1.90 above January 2024. It equates to $1.75 per gallon, up from $1.59 a year ago.

Dairy margins strengthened the first half of December as milk prices rose sharply in nearby expirations while feed costs were steady to slightly higher, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. The MW stated, “Class 3 Milk in particular has been supported by strong whey prices. U.S. whey powder inventories declined to 47.7 million pounds in October, which was down 33.1 percent from a year ago and the lowest stocks level since 2012. Manufacturers continue to direct historically high volumes of whey from strong cheese production into high protein concentrates and isolates, leaving less product available to dry into powder. As a result, production of dry whey powder for human consumption has declined with only 62.7 million pounds produced in October, the lowest volume since 1984. Dry whey cash prices at the CME spot call market have climbed to 79.25 cents per pound, a new 15-year high for this time of year and not far from the all-time high of 85.95 cents.

“While total dairy exports during October declined 1.9 percent from last year to 478.3 million pounds, total cheese exports of 88.8 million pounds were up 12.4 percent from 2023, with 38.1 million pounds shipped to Mexico during the month representing 40 percent of the total and 27.2 percent higher than last year as well as the third largest month of cheese sales ever recorded south of the border.”

The MW concluded with details on USDA’s new mandatory milk testing for bird flu and reported that the corn market rose slightly as USDA cut U.S. corn ending stocks 200 million bushels based on increased demand projections.

The last Global Dairy Trade auction of 2024, Event Number 183, ended with a fall. Fat and powder pulled Tuesday’s weighted average down 2.8 percent, following a 1.2 percent rise on Dec. 3. Volume fell to 70.8 million pounds, down from 74.1 million, and the lowest since July 16. The average metric ton price, slipped to $4,148 U.S., down from $4,193 on Dec. 3.

Anhydrous milkfat led the declines, down 3.8 percent, after slipping 0.5 percent on Dec. 3. Butter was off 0.6 percent, following a 5.2 percent fall. Skim and whole milk powder were both down 2.9 percent, following a 1.0 percent fall in skim milk powder on Dec. 3, while whole milk powder was up 4.1 percent. GDT Cheddar was off 0.2 percent, after dropping 3.2 percent, and Mozzarella was down 1.8 percent, after dropping 4.5 percent last time. Lactose was the only product in the black, up 0.5 percent, following a 7.7 percent rise last time.

StoneX says the GDT 80 percent butterfat butter price equates to $2.9343 per pound U.S., down 2.2 cents, after losing 14.5 cents last time. GDT Cheddar equated to $2.1235, down from $2.1271. GDT skim milk powder averaged $1.2505 per pound, down from $1.2917.

North Asia market share was reduced considerably from the last event, says analyst Dustin Winston, and down slightly from last year. “This was in particular a result of less demand for WMP. On the other hand, North Asia SMP market share was up from last event and last year.”