U.S. milk production remains below that of a year ago. The USDA’s 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.

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.

California output was down 0.3% from a year ago. Cow numbers were down 5,000 head while output per cow was unchanged. Wisconsin was down 0.1%, thanks to a 5-pound drop per cow, while cow numbers were up 1,000 head. 

Idaho was down 1.0% on 1,000 fewer cows and 25 pounds less per cow. Michigan was off 0.9% on 3,000 fewer cows and a 5-pound drop per cow. Both states 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.

Minnesota was down 4%, New York was off 0.2%, and New Mexico again posted the biggest loss, down 8.9%.

Oregon was down 1.9% on 2,000 fewer cows and 5 pounds less per cow.

Pennsylvania was off 0.2% and South Dakota showed the biggest gain, up 7.4%.

Texas continued to build back, despite the avian flu, and was up a hefty 6.0%, thanks to 18,000 more cows and a 65 pound gain per cow.

Washington state was up 1.1% on 3,000 more cows. Output per cow was unchanged.

Culling remains below 2023

USDA’s latest Livestock Slaughter report showed an estimated 225,900 dairy cows 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 cows had been culled, down 288,400 or 14.6% from 2023.

Dairy stocks slip

Butter and cheese stocks shrank some more in July. The latest Cold Storage report showed the July 31 butter inventory at 353.8 million pounds, down 23 million pounds or 6.1% from the June count, which was revised down 3.3 million pounds, but was up 24.4 million or 7.4% from July 2023.

American type cheese stocks were down 0.9% from the June level and 47.7 million pounds or 5.7% below a year ago.

The “other” cheese category was down 2.8 million pounds from June and down 37.7 million pounds or 6.0% from a year ago.

The total cheese inventory stood at 1.407 billion pounds, down 10.2 million or 0.7% from June, and 85.9 million pounds or 5.8% below a year ago.

“The June to July decline in cheese is not overly surprising as cheese stocks tend to drop starting in June,” says HighGround Dairy, “But this year’s 10.2 million-pound slide was more significant than the five-year average decline of 6.4 million and helps explain the rally in the CME spot market that started in mid-July.”

Big surprises

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 as large of a revision as we saw in the June milk production data.

“It confirms that milk output is the wild card in price and will support the U.S. market well into 2025,” he said.

Commenting on the surprise increase in Aug. 20 GDT, Kurzawski said China’s demand has been weak since the end of COVID 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.”

Class I up 28 cents

The September Federal order Class I base milk price was announced at $21.60 per hundredweight, up 28 cents from August, $2.70 above September 2023, and the highest Class I since January 2023. The nine-month average stands at $19.67, up from $19.05 a year ago and compares to $23.84 in 2022.

Cheese falls, then recovers

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.

The barrels climbed to $2.2825 per pound last 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 sales of block last week and 2 of barrel.

The blocks jumped 10.25 cents Monday on 7 trades, hitting $2.14 per pound, highest since Jan. 11, 2023. They were unchanged Tuesday.

The barrels were up 15 cents Monday on a trade, hitting $2.25, but were also unchanged Tuesday.

StoneX says that “last week’s spot weakness Thursday and Friday tested the mettle of spot buyers. What number, if any, do they come back in and start buying more aggressively? We know that number now. It was $2.0375 for block and $2.100 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. Concern was growing that the block and barrel price 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 is tight but adequate. Block production was strengthening as new capacity came on line.

Domestic demand is stronger to steady. Exports were steady to moderate.

Cash butter hit $3.1850 per pound last Monday. However, it 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.

Monday’s butter climbed to $3.18 per pound on a trade, but an offer took it back to $3.1750. It added 2.25 cents Tuesday on 13 more trades, hitting $3.1975, highest CME price since Oct. 31, 2023.

Midwest butter makers say demand is continuing its seasonal shift higher. Cream remains very tight in the region and churning continues to slow down. More cream has been available in the South Central states, but Upper Midwest contacts say that “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.

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

Traders took the powder up 1.50 cents Monday, with 14 loads exchanging hands. It was up 1.75 cents Tuesday, with 13 more loads finding new homes, and hit $1.3150 per pound, highest since Jan. 3, 2023.

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.

The whey was unchanged Monday and Tuesday.

Stronger Pulse

Tuesday’s Global Dairy Trade Pulse saw 4.3 million pounds of product sold, down from 4.4 million in the last Pulse. Prices of skim milk powder and whole milk powder were both up from the Aug. 13 Pulse.