May output totaled 17.2 billion pounds, up 1.4 percent from a year ago in the top 23 producing states, according to preliminary data in USDA’s latest Milk Production report issued Thursday. Revisions added 3 million pounds to the April estimate, now put at 16.6 billion pounds, up 1.8 percent. Cow numbers were revised up 2,000 head
May cow numbers totaled 8.63 million head, up 4,000 from April and 72,000 more than a year ago. Output per cow averaged 1,990 pounds, up 11 pounds from May 2014 and the highest May output since the series began in 2003.
The 50 state milk output total, at 18.4 billion pounds, was also up 1.4 percent from a year ago. Cow numbers totaled 9.3 million head, up 3,000 from April and 58,000 more than a year ago.
California continues to lag year ago levels, down 2.9 percent, thanks to a 60 pound drop per cow. Cow numbers were unchanged. But, Wisconsin almost made up the difference, up 4.4 percent from a year ago, thanks to 9,000 more cows and 70 pounds more per cow.
Idaho was up 2.4 percent on 11,000 more cows and 10 pounds more per cow. New York was up 2.6 percent, thanks to a 40 pound gain per cow and 3,000 more cows. Pennsylvania was up 3.1 percent on a 55 pound gain per cow and Minnesota saw a healthy 3.8 percent gain, on a 65 pound per cow increase.
While South Dakota saw the biggest increase, up 8.9 percent, Michigan grabbed the headlines with a 7.6 percent, thanks to a whopping 22,000 more cows than a year ago, and a nice 40-pound gain per cow.
California had the biggest decline, followed by New Mexico, off 2.3 percent on a 50-pound drop per cow, followed by Oregon, down 2.2 percent due to a 25 pound drop per cow. Texas was down 1.6 percent, on a 20-pound loss per cow and 3,000 fewer cows. Most analysts view the report as neutral to the market.
This week’s Global Dairy Trade (GDT) auction saw the weighted average for all products offered slip 1.3 percent, following a 4.3 percent decline June 2, and a 2.2 percent decline in the May 19 event. This is the seventh consecutive session of loss but the smallest since March 3, 2015.
The declines were led by anhydrous milkfat (AMF), down 8.9 percent, following a 7.4 percent loss last time. Butter led the losses in the June 2 event, down 10.0 percent. Lactose was the next biggest loser Tuesday, down 2.8 percent, following a 6.9 percent drop last time. Skim milk powder was off 0.2 percent, following a 1.3 percent decline last time, and whole milk powder (WMP) was off 0.1 percent Tuesday, following a 3.1 percent drop last time.
Moving to positive territory, buttermilk powder led the way, up 10.0 percent, after dropping 7.0 percent last time. Rennet casein was next, up 4.3 percent, after dropping 4.4 percent last time. Butter was up 3.3 percent Tuesday, and Cheddar cheese was up 2.4 percent, a commodity that didn’t even trade last time but had dropped 7.1 percent in the May 19 event.
FC Stone reports the average GDT butter price equated to about $1.2280 per pound U.S., up from $1.1882 per pound in the June 2 event. Contrast that to CME butter which closed Friday at $1.9150 per pound. GDT Cheddar cheese equated to about $1.4187 U.S., up from $1.3856, and compares to Friday’s CME block Cheddar price of $1.70 per pound. GDT skim milk powder, at 89.71 cents per pound U.S., is down from 89.92 cents per pound, and the whole milk powder average at $1.0556 per pound U.S., compares to $1.0473 in the last event. The CME Grade A nonfat dry milk price closed Friday at 87 1/2-cents per pound.
HighGround Dairy’s Eric Meyer, speaking in Friday’s DairyLine, said there’s an air of bearishness in the market, domestically and internationally. He said that cheese tested the upper $1.70s the last few weeks and failed twice. Sellers are starting to come out of the woodwork, he said, powder is at multi-year lows, there’s plenty of milk and it’s starting to show up, and demand is slowing.
As to the GDT, Meyer pointed to whole milk powder (WMP) which he called the «global benchmark.» Tuesday’s event saw the least amount of WMP offered by Fonterra in over two years but the fact that it made no significant move higher or at all, is deemed bearish because «we know more volume will be coming to that auction as the new production season comes about.»
Meyer looks for prices to fall at the CME. The good news is that he believes cheese is limited on the downside as «There are plenty of buyers willing to pick up product in the low to mid $1.60s,» and he sees that as a «solid benchmark heading into the second half of the year.» «There’s plenty of uncertainty in the summer months, El Nino, different weather patterns globally, anything is possible,» he concluded.
Meyer also reported in his Pre-GDT analysis that there were numerous stories regarding former Fonterra patrons/shareholders selling their shares and moving to competitor processors as they are offering slightly better milk prices for the upcoming season.
Meanwhile, current milk production in Australia is steady at typical low seasonal levels, according to USDA’s Dairy Market News (DMN). Production approaching the end of the season has been fairly strong and ahead of last year’s pace with estimates of seasonal output 2.5 percent above the previous year but an «El Nino» has been declared by Australian meteorology officials, which typically results in warm, dry conditions covering Oceania, Southeast Asia, China and India. Manufacturing milk volumes in Australia have declined as much of the milk currently produced is filling domestic fluid demand.
Milk production in New Zealand is at very low levels as most cows have been dried off and moved to winter pastures, according to DMN. Dairy commodity supplies are more than adequate to cover the carry-over period. Inventories for some commodities are more than anticipated for this time of year. Larger than anticipated supplies are having difficulty clearing as global demand remains sluggish with buyers feeling no urgency to make purchases in a weak market. New Zealand’s April milk production, as reported by DCANZ, was up 8.5 percent from April 2014 and 44.1 percent higher from two years ago.
Back home, cash cheese saw some slippage this week but staged a small rally Friday as traders awaited the May Cold Storage report to be issued Monday, June 22. The Cheddar blocks reversed six weeks of gain and closed the third Friday of June Dairy Month at $1.70 per pound, up 1 1/4-cents on the day, but down 5 1/2-cents on the week, and 30 cents below a year ago. The Cheddar barrels closed at $1.66, up a penny on the day, down 6 1/4-cents on the week, and 35 cents below a year ago. Eighteen cars of block traded hands on the week at the CME and 20 of barrel. The lagging NDPSR-surveyed U.S. average block price hit $1.6962, up 3.6 cents, while the barrels averaged $1.7040, up 3.2 cents.
Cash butter finished the week at $1.9150, up 1 1/2-cents, but 32 cents below a year ago. Only three cars were sold via the CME this week. NDPSR butter averaged $1.9345 per pound, up 3.1 cents.
One note of interest; the Food and Drug Administration’s (FDA) stripping of trans fat as «generally recognized as safe» status and giving companies three years to remove partially hydrogenated oils from food will surely exacerbate butter’s comeback to favor in consumer minds.
The FDA estimates that consumption of trans fat fell nearly 80 percent between 2003 and 2012, according to the June 17 Daily Dairy Report (DDR). «Since 2006, the FDA has required food companies to report trans fat content on nutrition labels.» The DDR says per capita butter consumption stands at 40-year highs.
Right along those lines, Julian Mellentin, director of New Nutrition Business, states in the June 15 Food Navigator that cheese could be the next health food. Elizabeth Crawford writes that «The tide may be changing for cheese, as science helps re-position the dairy food as a protein-dense, calcium-rich, healthy snack rather than as a high-fat and -sodium food to be enjoyed in moderation.»
She says that science is «poking holes» in previous arguments that demonised cheese as high in saturated fat which could raise cholesterol levels and heart disease risks and is high in sodium which threatens to elevate blood pressure levels. Read more at www.foodnavigator-usa.com/Markets/Cheese-could-be-the-next-health-food-industry-expert-suggests.
Grade A nonfat dry milk closed Friday at 87 1/2-cents per pound, down 2 1/4-cents on the week and 95 cents below a year ago. Twenty one cars traded hands this week, 15 on Thursday. NDPSR powder averaged 92.52 cents per pound, down 2.2 cents. Dry whey averaged 43.17 cents per pound, down 0.4 cent.
As it always does, USDA’s monthly Livestock, Dairy, and Poultry Outlook, issued Tuesday, mirrored dairy projections contained in the latest World Agricultural Supply and Demand Estimates report issued June 10. Dairy export forecasts on a milk-equivalent, skim-solids basis were raised to 38.7 billion pounds for 2015 and 39.5 billion pounds for 2016. Forecasts for milk production were raised to 208.7 billion pounds for 2015 and 213.9 billion pounds for 2016.
Recent low feed prices are expected to continue, according to USDA. The alfalfa hay price increased from $172 per ton in March to $184 per ton in April. Corn and soybean meal price forecasts for the 2015/16 marketing year were unchanged from last month’s forecasts at $3.20-3.80 per bushel and $305-345 per short ton, respectively.
Given robust skim-solids-basis exports in April and higher expectations for export demand, the 2015 forecast for commercial exports on a skim-solids basis has been raised to 38.7 billion pounds, 900 million pounds higher than forecast last month. This is still less than the record of 39.2 billion pounds for skim-solids-basis exports in 2014. Exports on a milk-fat basis were raised to 10.9 billion pounds, slightly more than forecast last month but 1.6 billion pounds less than 2014. The Russian trade ban has caused the European Union (EU) to find other dairy export outlets, some in competition with the United States. With the ban scheduled to end in August, U.S. exports in the second half of the year are expected to exceed those of the first half.
The Agriculture Department announced the July Federal order Class I base milk price Wednesday at $16.53 per hundredweight, up 39 cents from June but $6.49 below July 2014 and equates to about $1.42 per gallon, up from $1.39 in June.
The seven month Class I average stands at $16.34, down from $23.02 at this time a year ago and compares to $18.32 in 2013.
Source: FarmersAdvance
