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Larger Farms Have Housed a Larger Number of Animals Than Ever Before

USA 27.02.2024
Source: The DairyNews
436 EN 中文 DE FR عربى
Dairy farm milk production continues to struggle and remained below a year ago for the seventh consecutive month.
Larger Farms Have Housed a Larger Number of Animals Than Ever Before
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The Agriculture Department’s preliminary data for January showed output at 19.09 billion pounds, down 1.1% from January 2023.The top 24-state total, at 18.3 billion pounds, was down 0.9%.

This was the biggest decline in milk output since January 2022, however, components were very strong, with component adjusted production increasing from plus 0.7% to plus 1.0%, according to StoneX broker Dave Kurzawski in the Feb. 26 “Dairy Radio Now” broadcast.

The December 50-state total was revised down 10 million pounds from last month’s estimate, which put output down 0.4% from 2022, instead of the 0.3% originally reported. The 24 state revision was down 8 million pounds, down 0.2%, instead of the 0.1% reported.

Nobody expected that, Kurzawski said, but the biggest surprise was cow numbers. January cows totaled 9.325 million, down 23,000 from the December count which was revised 9,000 head lower, and is down 76,000 or 0.8% from a year ago. The herd peaked at 9.433 million head in March last year but is the smallest since August 2019. The 24-state January count, at 8.87 million head, was down 21,000 from the December count, which was revised down 7 million, and is 49,000 below a year ago.

“Generally we add cows in first quarter,” he said, “but we lost 23,000 however that’s only one side the equation.” The data is also interesting, considering January slaughter numbers ran 20% below a year ago and heifers are limited.

Output per cow in the 50 states averaged 2,047 pounds, up 32 pounds from December, but 7 pounds or 0.3% below January 2023. The 24-state average, at 2,062 pounds, was up 40 pounds from December but 9 pounds or 0.04% below a year ago.

California milk output was down 0.1% from a year ago. Cow numbers were down 9,000 head while output per cow was up 10 pounds. The last time output topped that of a year ago was Aug. 2022. Wisconsin production was up 0.9% from a year ago, thanks to a 20 pound gain per cow. Cow numbers were unchanged.

Idaho was down 2.1%, on a 40 pound drop per cow and 1,000 fewer cows. Michigan was off 0.6%, due to a 35 pound drop per cow offsetting an additional 4,000 cows.

Minnesota was down 0.8% on 5,000 fewer cows and a 5 pound drop per cow. New Mexico again posted the biggest loss, down 16.0%, on 42,000 fewer cows and 25 pounds less per cow. New York was off 0.4% on a 10-pound drop per cow while cow numbers were unchanged.

Oregon was down 6.0%, on 6,000 fewer cows and a 20 pound drop per cow. Pennsylvania was down 1.5% on a 25-pound drop per cow and 1,000 fewer cows. South Dakota again had the biggest gain, up 10.8%, thanks to 21,000 more cows offsetting a 5-pound drop per cow. Texas was down 3.9% on 15,000 fewer cows and a 35-pound drop per cow. The cow count still reflects the fire in Dimmitt last spring. Vermont was down 3.7%, on 2,000 fewer cows and a 35-pound drop per cow. Washington State was up 0.9%, thanks to 2,000 more cows offsetting a 15 drop per cow from a year ago.

The report shows there’s problems on the farm, Kurzawski said, and we have new processing coming online mid-year and into 2025. “We’re not going into that on a real strong footing on the farm and people need to pay attention to that,” he said. “We believe output will grow in the second half however we have lowered our estimate for the year to a plus 0.2% and that might be a little rich.”

The tally for 2023 milk production is 226.36 billion pounds, down 0.02%from 2022. Revisions to 2022 output decreased the annual total 46 million pounds. Revised 2023 output was down 187 million pounds from last month’s estimate. Annual total milk production has increased 9.9% from 2014, according to the USDA. Production per cow averaged 24,117 pounds, up 30 pounds from 2022. The average annual rate of output per cow has increased 8.4% from 2014.

The average number of milk cows on U.S. farms in 2023 was revised down 9,000 head to 9.39 million, according to the USDA, down 0.1% from 2022. The average cow number has increased 1.3% from 2014.

Meanwhile, dairy cow culling jumped the first month of 2024. The latest Livestock Slaughter report showed an estimated 250,200 head were sent to slaughter under federal inspection in January, up 25,500 head from December, but that was 47,700 head or 16.0% below January 2023.

The week ending Feb. 10 saw 61,700 head go to slaughter, up 1,700 from the previous week, but 5,700 or 8.5% below a year ago. Year to date, 337,400 head have been culled so far, down 68,600 or 16.9% from a year ago.

CME block cheddar closed the last Friday of February at $1.55 per pound, up 7 cents on the President’s Day holiday shortened week and reversed two weeks of decline, as traders anticipated the afternoon’s January Cold Storage report. The blocks closed 33 cents below that week a year ago.

The barrels finished at $1.6150, 0.75 cents higher, 0.75 cents above a year ago, and 6.50 cents above the blocks. Sales totaled 19 loads of block and 6 of barrel.

Cheese buying interest remain quiet according to most Midwest contacts, says Dairy Market News (DMN). Barrel producers say orders are steady, if not strong. “Loads are going at above-market pricing, and if one customer backs away, another one will step in,” says DMN. Milk pricing was holding around Class III for the most part, ranging 50 cents under to 50 cents over at mid-week. Last year, the range was $10-$2.50-under Class III. Cheese production has held steadier in recent weeks, says DMN, as cheddar inventories are slowly increasing in the region.

Retail cheese demand is steady to lighter in the West. Food service is stronger, and International demand is steady to moderate. Milk availability varies from “somewhat tighter to somewhat looser.” A health safety recall of product by an ethnic cheese manufacturer and a major processor scheduling some downtime for a system changeover, was expected to further contribute to milk availability and tighten available processing capacity for some parts of the West. Cheese makers note steady production and a few note near term inventories are tight.

Butter remains strong, closing Friday at $2.85 per pound, up 10 cents on the week, highest since Nov. 7, 2023, and 42 cents above a year ago, with 24 sales.

Cream is still abundant in the Midwest and a number of contacts expect that to continue for the month. Cream multiples are hovering at market up to 1.15 for churners. Slower ice cream production remains a factor. Butter demand is seasonally standard both in food service and retail, says DMN.

There’s plenty of cream in the West and churns are busy or near capacity as manufacturers build inventory for second and third quarter demand. Some contacts say butter supplies are tighter compared to the last couple years. Unsalted butter loads are somewhat tight while domestic demand is stronger. International inquiries have been more frequent and export demand is steady.

Grade A nonfat dry milk climbed to a Friday finish at $1.20 per pound, 3 cents higher on the week but 1.50 cents below a year ago, with 15 sales for the week.

Dry whey closed at 52.25 cents per pound, up 0.25 cents on the week and 5.75 cents above a year ago, again with only 1 sale reported at the CME.

“Dairy margins improved modestly over the first half of February as projected feed costs declined to new lows while milk prices were steady to slightly weaker,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. “CME Class 3 milk futures continued their recovery that started in late January,” the MW stated, “but have since backed off the past couple weeks.

Cheese production and demand have been improving, helping to support Class 3 prices.” The MW reported highlights from the latest Dairy Products report and warned “The export market will need to improve in 2024 to help support higher dairy product values and milk prices. Recent declines in EU milk production are “encouraging,” the MW stated. It also reported “2023 U.S. dairy product exports totaled slightly more than 5.8 billion pounds, down 7.3% from the prior year and the lowest annual volume since 2020. A struggling global economy led by weak demand in China worked against exports last year,” according to the MW.

Fluid milk sales returned to their norm in December. The Agriculture Department’s latest data shows packaged sales at 3.7 billion pounds, down 2.8% from 2022, following a 0.3 % tick up in November and 1.0% rise in October.

Conventional product sales totaled 3.4 billion pounds, down 3.4% from a year ago. Organic products, at 245 million pounds, were up 6.8%, and represented 6.7% of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, down 1.1% from a year ago, but 1.0% ahead of a year ago, and represented 35.0% of total sales for the year. Skim milk sales, at 167 million pounds, were down 12% from a year ago and down 8.8% for all of 2023.

Packaged fluid sales for the year totaled 42.6 billion pounds, down 1.5% from 2022. Conventional product sales totaled 39.8 billion pounds, down 1.6%. Organic products, at 2.8 billion pounds, were off 0.3%, and represented 6.7% of total milk sales for the year.

The March Federal order Class I base milk price is $18.80 per hundredweight, up 81 cents from February and 19 cents above March 2023. It equates to $1.62 per gallon, down a penny from a year ago. The three month Class I average sits at $18.42, down from $20.73 a year ago, and $21.41 in 2022.

The Agriculture Department issued its 2022 Census of Agriculture last week, a report issued every five years that examines the health of U.S. agriculture. Dairy farms totaled 24,082 in 2022, down from 39,303 or 38.7% from 2017.

The Feb. 16 Daily Dairy Report (DDR) stated “Consolidation has intensified in the U.S. dairy sector as larger farms have housed a larger number of animals than ever before. The census data showed that in 2022, nearly two-thirds of U.S. dairy cows were found on farms with more than 1,000 head. Furthermore, about 45% of cows were reported to be on farms with more than 2,500 head. In contrast, the percentage of the herd on small farms has declined. In 2022, just 6.5% of the national dairy herd was found on farms with less than 100 cows, a decrease from 12.7% in 2017 and much lower than the 28.9% reported in 2002.”

California was home to 255 of the largest dairies, the DDR says; “significantly more than any other state, up 57 farms since the last census in 2017. The number of dairies with more than 2,500 cows also rose in Michigan, Texas, and Wisconsin, while Idaho and New Mexico saw operations in this largest category fall,” according to the DDR.

Singapore Exchange futures led many to expect the first decline in Global Dairy Trade value in 11 events this week, however the weighted average was up 0.5%, sixth consecutive rise, and follows a 4.2% gain on Feb. 6.

Volume continued to slip as traders brought 53.6 million pounds of product to market, down from 54.8 million on Feb. 6, and the lowest since June 20, 2023. The average metric ton price crept to $3,664 U.S., up from $3,571 on Feb, 6, and the highest since Oct. 18, 2022.

Anhydrous milkfat led the gains, up 8.6%, after rising 3.3% on Feb. 6. Butter was up just 0.1%, after leading the gains last time with a 10.3% jump. Mozzarella was up 5.3%, after falling 1.8%, but cheddar was down 7.6%, following a 6.3% gain. Skim milk powder was up 1.3%, following a 4.6% gain, while whole milk powder was down 1.8%, following a 3.4% advance. Lactose was down 1.0%, after posting a 2.6% gain on Feb. 6.

StoneX says the GDT 80% butterfat butter price equates to $2.8879 per pound U.S., up fractionally, after gaining 27 cents on Feb. 6, and compares to CME butter which closed Friday at $2.85. GDT Cheddar, at $1.8791, was down 14.8 cents, after gaining 11.4 cents, and compares to Friday’s CME block Cheddar at $1.55. GDT skim milk powder averaged $1.2648 per pound, up from $1.2512, and whole milk powder averaged $1.5369 per pound, down from $1.5707. CME Grade A nonfat dry milk closed Friday at $1.20 per pound.

“North Asia (China) was more aggressive, especially on powders with volume and market share up compared to the last Event,” says StoneX. “That seemed to come at the cost of Middle East volumes. South-Central America and Africa were aggressive on anhydrous milkfat, while volumes by all other regions were down compared to last Event. Overall we’d call the event neutral despite coming in stronger than we were anticipating (we expected a 1.1% decline),” says StoneX.

Cooperatives Working Together (CWT) member cooperatives accepted 11 offers of export assistance this week that helped capture sales of 2.6 million pounds of American type cheese, 218,000 pounds of whole milk powder and 487,000 pounds of cream cheese. The product is going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and Oceania through June.

That raised CWT’s 2024 exports to 19.1 million pounds of American type cheeses, 7.1 million pounds of whole milk powder and 1.3 million pounds of cream cheese. The products are going to 15 countries and are the equivalent of 238.4 million pounds of milk on a milkfat basis.

Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.

Source
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