The Agriculture Department reports preliminary October milk output at bearish 18.1 billion pounds, up 1.3% from October 2018. Output in the top 24 states totaled 17.3 billion, up 1.7%. Revisions added 7 million pounds to the original September total, now put at 17.7 billion pounds, up 1.3% from September 2018.
Cow numbers were up in October. The 50-state count totaled 9.327 million head, up 5,000 from the September count, which was revised up 7,000 cows, but is still 40,000 head below October 2018. Output per cow averaged 1,941 pounds, up 51 pounds from September and 33 pounds above a year ago.
California output was up 2.8%, thanks to a 60 pound gain per cow offsetting 5,000 fewer cows milked. Wisconsin was up 1.0%, on a 30 pound gain per cow. Cow numbers were down 6,000 from a year ago.
Virginia again showed the biggest loss, down 7.0% on 7,000 fewer cows. Arizona was down 5.6% on 11,000 fewer cows. Texas showed the biggest increase, up 9.3%, thanks to 31,000 more cows and a 65 gain per cow.
Idaho was up 2.3%, on 20,000 more cows offsetting a 20 pound loss per cow. New York was up 1.8%, on 5,000 more cows and a 20 pound gain per cow, and Minnesota was up 1.8% on a 50 pound gain per cow offsetting 4,000 fewer cows.
Michigan was up 3.0% on a 35 pound gain per cow and 6,000 more cows. Strength remains in the international dairy market as this week’s weighted average of products offered in the Global Dairy Trade auction was up 1.7%, down from the 3.7% jump on November 5, but is the fifth consecutive session of gain. Sellers brought 83.7 million pounds of product to the market Tuesday, down from 85.3 million in the last event.
Rennet casein led the gains, up 5.6%, which follows a 5.1% gain last time. Skim milk powder was up 3.3%, after jumping 6.7%, and GDT Cheddar was up 2.5%, after slipping 0.6%. Whole milk powder was up 2.2%, following a 2.6% rise, and lactose was up 1.3%, after falling 1.9% last time.
Anhydrous milkfat and butter made up the losses, down 1.5% and 1.3% respectively, after respective gains of 2.6% and 0.2% in the last event.
Cooperatives Working Together member cooperatives accepted eleven offers of export assistance this week to help capture sales of 1.219 million pounds of Cheddar cheese, 606,271 pounds of whole milk powder, and 112,436 pounds of cream cheese. The product is going to customers in Asia, Central and South America through April 2020 and puts CWT’s 2019 exports at 46.7 million pounds of American-type and Swiss cheeses, 277,782 pounds of anhydrous milkfat, 4.6 million pounds of butter (82% milkfat), 6 million pounds of cream cheese and 44.1 million pounds of whole milk powder.
The December Federal order Class I base milk price was announced by the USDA at $19.33 per hundredweight, up $1.19 from November, a hefty $4.28 above December 2018, and the highest Class I price since December 2014. It equates to about $1.66 per gallon, up from $1.29 a year ago. The 2019 Class I average is $16.99, up from $14.84 in 2018 and $16.45 in 2017.
The Agriculture Department’s November 15 Livestock, Dairy, and Poultry Outlook stated that “Lower expected growth in milk cow numbers and higher expected milk per cow for the latter part of 2019 are expected to carry into 2020. Milk cows are forecast to average 9.335 million head in 2020, 5,000 less than last month’s forecast. Milk per cow is forecast at 23,830 pounds, 105 pounds higher than last month’s forecast. With higher yields expected to more than offset lower growth in the milking herd, milk production for 2020 is forecast at 222.4 billion pounds, 0.8 billion pounds higher than last month’s forecast.”
Matt Gould, editor of the Dairy and Food Market Analyst, warned of rising milk output in the U.S. in the Nov. 25 Dairy Radio now broadcast. He said the weather was cold in the U.S. in October so output would likely have been higher, had it not been for the cold, and that the milk supply is growing in Europe.
“If you just look at the supply side of the equation, you might conclude things are pretty price negative,” he said, “However there’s a number of very positive things on the demand side,” and he pointed to the five year highs on nonfat dry milk and skim milk powder prices, driven by purchases from Southeast Asia and China.
He said he’s hearing rumblings that China is getting its hands around its African Swine Fever situation and is coming back to the U.S. for feed for those new born piglets. “There’s a lot to be optimistic on the international demand side” he said. Cheese prices hit the highest levels since 2014 and remain strong, despite the recent fall.
When asked if he agreed with USDA’s prediction of a 1.7% increase in milk output in 2020 over 2019, Gould said, yes, as we are adding cows again. “If you hold cow numbers flat, we tend to increase milk production by a little over 1% so 1.7% growth rate means more cows, but USDA is also projecting the highest milk prices in 2020, highest since 2014,” he concluded.
Dairy margins strengthened further over the first half of November as milk prices continued to advance while feed costs remained relatively steady, according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC.
The MW stated that “Forward margins remain above the 90th percentile of historical profitability through the first half of 2020, with third quarter very close to that benchmark as well. Nearby Class III milk corrected following a drop in cheese futures, although extreme volatility remains between block and barrel prices in the spot market. The CME Group announced a new block cheese futures contract will be launched in January to address this volatility and provide both producers and end users with a better hedge.”
In politics, the National Milk Producers Federation thanked Senator Tammy Baldwin for “her advocacy for public health and labeling transparency in her questions for Dr. Stephen Hahn during this week’s hearing on his nomination to be commissioner of the U.S. Food and Drug Administration.”
NMPF president and CEO, Jim Mulhern stated in his press release that “As the nation’s top health official, Dr. Hahn would face many challenging issues, labeling integrity high among them. It’s heartening to hear the nominee pledge that an FDA under his leadership will immediately examine this crucial unfinished business.” “Given his stated commitment to science and data-based decision-making and his concern for public nutrition, we expect FDA will soon begin enforcing its own standards, which clearly reserve dairy terms for real dairy products, not plant-based imposters who mislead consumers by mislabeling nutritionally inferior products.”
In response to a question from Senator Baldwin asking him whether and when the FDA will begin enforcing its own labeling standards, Dr. Hahn voiced his support for “clear, transparent, and understandable labeling for the American people. The American people need this so that they can make the appropriate decisions for their health and for their nutrition. I very much will look into this issue,” Dr. Hahn said, later adding he would “look at this as soon as I am confirmed.”