USDA: the milk production estimate for 2024 has been revised downward compared to the previous month
Source: The DairyNews
The Livestock, Dairy, and Poultry Outlook for February 2024, released by the United States Department of Agriculture (USDA), delves into the economic ramifications of month-to-month changes outlined in the USDA's "World Agricultural Supply and Demand Estimates."
In this month's report, the milk production estimate for 2024 has been revised downward compared to the previous month. The decrease stems from a lower expected yield per cow, which more than offsets the anticipated increase in milk cow numbers. Projections for wholesale prices in 2024 have been raised for key dairy products, including Cheddar cheese, dry whey, butter, and nonfat dry milk, now standing at $1.690, $0.480, $2.770, and $1.235 per pound, respectively. These adjustments are based on recent market strength, constrained supplies, and a more robust outlook for domestic demand.
In 2023, the U.S. dairy industry witnessed a reversal of the 2022 trend, experiencing year-over-year decreases in feed, dairy product, and farm-gate milk prices. This shift resulted in some of the most challenging margins since the inception of the Dairy Margin Coverage Program (DMC). Despite a lower national milking herd in 2023 compared to 2022, the milk per cow slightly increased, leading to only a fractional growth in total milk production.
The domestic use of dairy products showed robust growth on both milk-fat and skim-solids milk-equivalent bases. However, U.S. dairy exports declined from the peak levels seen in 2022, driven by both a lack of price competitiveness and slowing global demand for dairy products.
The average all-milk price in 2023 stood at $20.48 per hundredweight (cwt), marking a $4.86 decrease from 2022. While dairy farmers generally received lower prices in 2023 compared to the previous year, the decline in the average all-milk price exceeded the decrease in average feed costs. The feed-price proxy, as used by the USDA's National Agricultural Statistics Service (NASS) to calculate the milk-feed ratio, decreased by 8 percent from 2022 to 2023, whereas the all-milk price decreased by 19 percent. Additionally, average prices paid by farmers for labor and machinery increased year over year by 5.5 and 1.7 percent, respectively.
In June and July of 2023, the farm milk margin above feed costs, as reported by the DMC, fell below the catastrophic coverage margin ($4.00 per cwt), triggering indemnity payments to all enrolled producers, even those who only paid the $100 administration fee. For all months except November, the reported margins by DMC were below the $9.50 per cwt threshold that triggers payments for dairy producers opting for the highest coverage levels.
Total milk production in 2023 reached 226.6 billion pounds, just marginally higher than 2022 (+0.1 percent). Milk cow numbers peaked at 9.444 million head in March 2023 but trended downward thereafter, reaching 9.357 million head in December. Milk per cow averaged 24,115 pounds in 2023, showing a 0.1 percent increase over 2022. Although milk per cow was higher in the first half of 2023 compared to the same period in 2022, hot weather impacted production in the late summer, contributing to a year-over-year decline in the second half of 2023.
In 2023, the U.S. dairy industry witnessed a reversal of the 2022 trend, experiencing year-over-year decreases in feed, dairy product, and farm-gate milk prices. This shift resulted in some of the most challenging margins since the inception of the Dairy Margin Coverage Program (DMC). Despite a lower national milking herd in 2023 compared to 2022, the milk per cow slightly increased, leading to only a fractional growth in total milk production.
The domestic use of dairy products showed robust growth on both milk-fat and skim-solids milk-equivalent bases. However, U.S. dairy exports declined from the peak levels seen in 2022, driven by both a lack of price competitiveness and slowing global demand for dairy products.
The average all-milk price in 2023 stood at $20.48 per hundredweight (cwt), marking a $4.86 decrease from 2022. While dairy farmers generally received lower prices in 2023 compared to the previous year, the decline in the average all-milk price exceeded the decrease in average feed costs. The feed-price proxy, as used by the USDA's National Agricultural Statistics Service (NASS) to calculate the milk-feed ratio, decreased by 8 percent from 2022 to 2023, whereas the all-milk price decreased by 19 percent. Additionally, average prices paid by farmers for labor and machinery increased year over year by 5.5 and 1.7 percent, respectively.
In June and July of 2023, the farm milk margin above feed costs, as reported by the DMC, fell below the catastrophic coverage margin ($4.00 per cwt), triggering indemnity payments to all enrolled producers, even those who only paid the $100 administration fee. For all months except November, the reported margins by DMC were below the $9.50 per cwt threshold that triggers payments for dairy producers opting for the highest coverage levels.
Total milk production in 2023 reached 226.6 billion pounds, just marginally higher than 2022 (+0.1 percent). Milk cow numbers peaked at 9.444 million head in March 2023 but trended downward thereafter, reaching 9.357 million head in December. Milk per cow averaged 24,115 pounds in 2023, showing a 0.1 percent increase over 2022. Although milk per cow was higher in the first half of 2023 compared to the same period in 2022, hot weather impacted production in the late summer, contributing to a year-over-year decline in the second half of 2023.
