U.S. milk production remains above a year ago but not by much. The Agriculture Department’s latest Milk Production report showed preliminary output at 18.28 billion pounds, up 0.2% from August 2018. Output in the top 24 states hit 17.4 billion pounds, up 0.4%. Revisions added 40 million pounds to the original July total, now put at 18.37 billion pounds, up 0.2% from July 2018.

August cow numbers in the 50 states totaled 9.32 million head, down 2,000 from July’s number which was revised higher by 10,000 cows, but is 71,000 head below a year ago, and the lowest in three and a half years. Output per cow averaged 1,962 pounds, down 9 pounds from July but 19 pounds above a year ago.

California output was up 1.5%, thanks to a 35 pound gain per cow offsetting the 6,000 fewer cows milked. Wisconsin was down 0.5% on 7,000 fewer cows. Output per cow was unchanged from a year ago.

July U.S. dairy product commercial disappearance had some good news and some of the other, according HighGround Dairy’s Lucas Fuess in the September 23 “Dairy Radio Now” broadcast.

Domestic disappearance has driven total nonfat dry milk and skim milk powder demand higher in both June and July, says HGD, “overcoming steadily lower exports seen in each month so far this year.”

The global market looked a little more positive this week. Tuesday’s Global Dairy Trade auction saw its weighted average of products offered end three consecutive declines. The average jumped 2.0%, following a 0.4% slip on September 3, 0.2% on August 20 and 2.6% on August 6. Sellers brought 82.3 million pounds of product to the market, down from 87.5 million in the last event.

The gains were led by lactose, up 5.6%, after a 0.9% slippage on September 3. Skim milk powder was next, up 3.4%, after it inched up 0.7% last time. Butter was up 2.7%, after holding steady last time. Whole milk powder was up 1.9%, after slipping 0.8 percent. Anhydrous milkfat was up 0.6%, following a 1.5% drop, and GDT Cheddar was up 0.4%, after a 0.8% loss last time.

Subsidized exports continue under the Cooperatives Working Together. Member cooperatives accepted 8 offers of export assistance this week on sales of 79,366 pounds of butter, 456,357 pounds of Cheddar cheese, 220,462 pounds of cream cheese and 2.425 million pounds of whole milk powder.

The product is going to Asia, the Middle East, and South America from October through January 2020 and raised CWT’s 2019 exports to 41.7 million pounds of American-type and Swiss cheeses, 189,598 pounds of anhydrous milkfat, 4.3 million pounds of butter (82% milkfat), 4.6 million pounds of cream cheese and 40.2 million pounds of whole milk powder. The products are the equivalent of 818.2 million pounds of milk on a milkfat basis.

Spot milk markets were quiet though milk was on the tighter side in the region. Spots were reported $1.00 over to $1.50 over Class. More milk was moving into the Southeast region where farm milk output is light.

U.S. milk fat prices remain at a premium to prices elsewhere in the world. Some processors feel that while demand has been able to support prices domestically, a few customers may seek imports. U.S. stocks are readily available and growing, according to some.

The Agriculture Department announced the October Federal order Class I base milk price at $17.84 per hundredweight, down a penny from September but $1.51 above October 2018, and the highest October Class I since 2014. The price equates to $1.53 per gallon, up from $1.40 a year ago. The 2019 Class I average stands at $16.64, up from $14.76 a year ago and $16.41 in 2017.

Dairy margins improved significantly since August due primarily to surging milk prices as feed costs have held steady, according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC.

The MW warned: “There is concern that milk production will ramp up through next spring’s flush given the stronger indicated margins, and that is part of the reason for the significant discount in forward milk contracts relative to spot values.”