Tuesday’s Global Dairy Trade auction saw its weighted average of products offered slip 0.4%, following a 0.2% slippage on Aug. 20 and 2.6% on Aug. 6. Sellers brought 87.5 million pounds of product to the market, up from 75.9 million in the last event and the highest since Nov. 20, 2018.

The losses were led by anhydrous milkfat, down 1.5%, which follows a 3.7% drop on Aug. 20. Butter, interestingly was unchanged after falling 3.4% last time. Lactose was down 0.9%, Cheddar was off 0.8%, after advancing 0.8% in the last event, and whole milk powder was off 0.8%, following a 2.1% rise. Buttermilk powder was up 3.4% and rennet casein was up 4.6%.

The U.S. produced more cheese in July than in June and a year ago. The USDA’s latest Dairy Products report shows total output at 1.09 billion pounds, up 2.3% from June and 0.5% above July 2018. Year-to-date output is at 7.6 billion pounds, up just 0.7% from a year ago.

Wisconsin produced 282.2 million pounds of that total, up 1.9% percent from June but 2.1% below a year ago. California produced 210.3 million pounds, up 3.7% from June but 0.4% below a year ago. Minnesota output slipped to 60.6 million, down 1.0% from June and 0.5% below a year ago.

Nonfat dry milk production totaled 168.8 million pounds, up 8.3% from June and 12.4% above a year ago. YTD powder is at 1.15 billion pounds, up 1.7% from 2018. Stocks climbed to 291.2 million pounds, up 2.4 million pounds or 0.8% from June but were 26.2 million pounds or 8.3% below the 2018 level.

Skim milk powder fell 36.7 million pounds, down 7.7 million or 17.3% from June and were 10.8 million or 22.7% below a year ago. YTD skim hit 273.4 million pounds, down 17.4% from a year ago.

Matt Gould, editor and analyst of the Dairy and Food Market Analyst newsletter, pointed out in the Sept. 9 Dairy Radio Now broadcast that in the recent July Cold Storage report, we saw a second consecutive month that butter stocks counter-seasonally increased but “The July Dairy Products report showed us why.”

Meanwhile, in the midst of the trade war with China, the July percentage of milk-solids basis exports was virtually unchanged from June, according to Gould’s analysis. He says 13.8% of the milk-solids produced in July were exported, “so the U.S. appears to be making adjustments to find new markets outside of China,” though he adds the caveat that 13.8% isn’t a particularly big number. We have seen that as high as 19% “so there certainly is an impact from the trade war.”

FC Stone reports that “U.S. exports fell 6.9% from July 2018 on a milk equivalent basis. Cheese exports continue to be stable, up 1.8%, which is right in line with July 2017 too. Exports to China were down 41% YoY (an improvement from 65% in April/May) while exports to all other countries were up 6%. In order for orders from ‘all other countries’ to offset China’s declining shipments, demand from ‘all other countries’ would have needed to be up 14% in July,” according to FC Stone.

Skim milk powder exports were down 8.9%, at 109.3 million pounds, according to the USDA, but they have been down 6.3% over the past 12 months, according to FC Stone, “as EU exporters have been taking more market share.” Confirmation of that may be in the Dairy Products reports, says FC Stone, as the report showed NFDM production up 12.4%, “and the bellwether state of California was up 50.8% in July.”

Skim milk powder production was down a sharp 22.7%, according to FC Stone, “4th straight month we have seen substantial declines in SMP. This does not bode well as manufactures make skim milk powder to meet the specs of export customers. With this in mind we could see exports continue to soften in the months ahead,” they warn. “Mexico sales have slowed down slightly as aid from Mexico to Venezuela has slowed to a trickle.”

A higher All Milk price and lower hay price inched the July milk feed price ratio higher, first positive move since March. The USDA’s latest Ag Prices report put the ratio at 2.16, up from 2.08 in June and compares to 1.93 in July 2018.

The U.S. All-Milk price averaged $18.70 per hundredweight, up 60 cents from June and $3.20 above July 2018.

California’s All Milk price was $18.60, up 50 cents from June and $3.46 above a year ago. Wisconsin’s, at $18.80, was up 90 cents from June and $3.40 above a year ago.

Looking at the cow side of the ledger; the July cull price for beef and dairy combined averaged $67.00 per hundredweight, up $1.10 from June, 20 cents above July 2018, but $4.60 below the 2011 base average of $71.60 per hundredweight.

The Daily Dairy Report’s Sarina Sharp says “The Dairy Margin Coverage program’s national average income-over-feed margins reached $9.47 per hundredweight. in June, up 47 cents from May. Margins slipped 4 cents from June to July, as higher cash corn prices offset a 60 cent increase in the All-milk price. Despite larger milk checks, dairy producers are still strapped for cash,” she concludes.

Cooperatives Working Together members accepted 24 offers of export assistance this week to help capture sales of 1.025 million pounds of Cheddar, Gouda and Monterey Jack cheese; 88,185 pounds of anhydrous milkfat, 485,017 pounds of whole milk powder, and 478,403 pounds of cream cheese.

The product is going to customers in Asia, Central and South America through February 2020. CWT’s 2019 exports now total 40.2 million pounds of American-type and Swiss cheeses, 277,782 pounds of anhydrous milkfat, 4.2 million pounds of butter (82% milkfat), 4.3 million pounds of cream cheese and 37.8 million pounds of whole milk powder. The products are going to 26 countries and are the equivalent of 783.5 million pounds of milk on a milkfat basis.