Whole milk sales continue to boost fluid category. First quarter U.S. dairy exports were weaker. Price swings may be changing the U.S. herd. This and other U.S. dairy economic news can be found here.

Natzke dave
Editor / Progressive Dairy

March fluid milk sales

March 2016 national fluid milk sales missed year-ago levels, but not by much, based on a monthly summary from USDA’s Dairy Market News.

Packaged fluid milk sales totaled 4.21 billion pounds, down 0.5 percent percent from March 2015. Sales of conventional products totaled 3.99 billion pounds, down 0.6 percent, while sales of organic products, at 214 million pounds, were up 1.6 percent. Organic represented about 5.1 percent of total sales for the month.

Whole and flavored whole milk sales continued to outpace last year’s sales. March sales of conventional whole milk were up 5.2 percent compared to the previous year, with flavored whole milk sales up 7.1 percent. Sales of organic whole milk were up 9.3 percent compared to a year earlier.

Both conventional and organic low fat and skim milk varieties saw the largest year-to-year sales declines.


Year-to-date, conventional packaged fluid milk sales totaled 11.9 billion pounds, down 0.8 percent from a year earlier. January-March organic milk sales total 645 million pounds, up 4.2 percent. Organic represents 5.1 percent of total fluid sales for the period.

The figures represent consumption of fluid milk products in federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the U.S.

U.S. exports lighter in March

First-quarter U.S. dairy exports continued weaker, according to Alan Levitt, with the U.S. Dairy Export Council.

U.S. exporters shipped 140,759 tons of milk powders, cheese, butterfat, whey and lactose in March, down 23 percent year-over-year.

Shipments of nonfat dry milk/skim milk powder (NDM/SMP) were just 41,180 tons, the first year-over-year decline since August. Sales to Mexico were down 30 percent, and also were the lowest since August. A lone bright spot was a record-high 3,858 tons shipped to Colombia. The value of U.S. NDM/SMP exports in March was $1,888 per ton ($0.86 per pound), the lowest since May 2005.

Cheese exports were down 26 percent from last year, the 18th straight month cheese volume has lagged the prior year.

Whey exports remained sluggish, down 20 percent from last year. Exports of whey protein concentrate held up better, down just 2 percent year-over-year, driven by improved sales to Southeast Asia.

Overall exports were valued at $378.9 million, down 31 percent, and the lowest figure since February 2011 (on a daily-average basis).

On a total milk solids basis, U.S. exports were equivalent to 12.1 percent of U.S. milk production in March, the lowest figure in 14 months. Imports were equivalent to 3.9 percent of production. This month’s report did not list export percentages for individual product categories.

Read the full USDEC report.

California Class 1 milk prices end first half of 2016 weaker

California's 2016 Class 1 minimum milk prices closed out the first half of the year lower.

Class 1 North and South prices are down about $0.49 from May 2016 and about $3.12 less than June 2015. Through the first six months of 2016, both are down about $2.00 from the same period a year earlier.

USDA will announce the June 2016 federal order Class I base price on May 18.

Class 1 North ($ per hundredweight)

June 2016 – $14.35

May 2016 – $14.84

June 2015 – $17.47

January-June 2016 – $15.45

January-June 2015 – $17.45

Class 1 South ($ per hundredweight)

June 2016 – $14.62

May 2016 – $15.11

June 2015 – $17.74

January-June 2016 – $15.72

January-June 2015 – $17.72

Source: California Department of Food and Agriculture

March dairy products report bearish

More milk pushed March U.S. production of cheese and butter higher, according to USDA’s monthly report.

HighGround Dairy called the report bearish for butter and whey protein concentrate, and neutral for all other commodities.

"While strong domestic demand had likely kept prices from making lows earlier this year, the weight of milk production growth in the Upper Midwest and Idaho, burdensome inventories and a severe trade imbalance have the potential to put further pressure on the market in the near term,” the HighGround summary stated. “We are unsure the U.S. market can step on the demand lever much further than they already have.”

A summary of March 2016 production compared to the previous year follows:

• Total cheese output was 1.03 billion pounds, up 1.8 percent.

• Italian type cheese production totaled 459 million pounds, up 4.3 percent.

• American type cheese production totaled 399 million pounds, 0.9 percent.

• Butter production was 182 million pounds, up 8.6 percent.

• Nonfat dry milk production was 172 million pounds, down 5.1 percent.

• Skim milk powders production was 40.6 million pounds, up 2.8 percent.

• Dry whey production was 83 million pounds, down 4.5 percent.

• Whey protein concentrate production was 38.3 million pounds, down 9.1 percent.

CWT assists with 668,000 pounds of cheese export sales

Cooperatives Working Together (CWT) accepted six requests for export assistance to sell 668,001 pounds of cheddar and Monterey Jack cheese to customers in Asia and Oceania.

Bids were accepted from Dairy Farmers of America and Northwest Dairy Association (Darigold). The products have been contracted for delivery from May through September 2016.

So far this year, CWT has assisted member cooperatives to sell 19.008 million pounds of American-type cheeses, 7.716 million pounds of butter (82 percent milkfat) and 18.113 million pounds of whole milk powder to 16 countries. The sales are the equivalent of 481.3 million pounds of milk on a milkfat basis.

Dairy cow culling slow

U.S. dairy cow culling continues to lag year-ago totals, based on USDA’s weekly cow slaughter estimates.

Cull dairy cow slaughter for the week ending April 30 slipped below 55,000 head for the third consecutive week. The last time that happened was August 2015.

Year-to-date dairy cow slaughter is running about 14,300 behind the coresponding week a year ago.

Will report, rally spur soybean acreage?

Farmers who have been delayed in planting corn could take advantage of a market rally in soybeans, according to Purdue Ag Economist Chris Hurt.

Soybean prices surged May 10 after USDA’s World Ag Supply and Demand Estimates report showed a sharp reduction in global soybean inventories and stronger-than-anticipated demand for U.S. exports.

Since March 1, soybean prices have risen 25 percent, or $2.20 per bushel, while corn prices are up only 4 percent, or about $0.14 per bushel.

"Given prospects for high priced soybeans and low priced corn, the financial incentive to shift intended corn acres to soybeans has reached new highs," Hurt said.

Based on crop budgets projected by Purdue agricultural economists, soybean farmers stand to earn $116 more per acre than corn producers this year.

"This is one of the highest incentives to shift from one crop to another we have ever seen," Hurt said.

Read Hurt: With prices rising, now could be the time to switch acreage to soybeans

Is 2017 a better year for prices? Milk output expected to climb

USDA’s May World Ag Supply & Demand Estimates (WASDE) report raised 2016 U.S. milk production and marketing estimates, adding more pressure on prices. Conditions should improve in 2017.

Milk production was projected at 212.4 billion pounds for 2016, up about 600 million pounds from last month’s forecast. If realized, the 2016 total would be up about 1.8 percent from 2015. The cow inventory is expected to expand slightly, and growth in milk per cow during the first half of the year is forecast higher.

USDA also offered its first dairy estimates for 2017, projecting near-steady cow numbers, improved forage availability and favorable feed costs will support increased milk production per cow. At 215.2 billion pounds, 2017 production would be up about 1.3 percent from 2016.

Read the full Progressive Dairyman dairy outlook report.

CoBank: Price swings changing U.S. dairy herd

From highs in milk, cull cow and bull calf prices in 2014 to today’s much lower price levels, the economic swings affected the U.S. dairy herd in two distinct ways, according to a report from CoBank’s Knowledge Exchange.

First, while cull cow prices were high, dairy producers had incentives to liquidate older cows, leading to the youngest average dairy herd in history. The dairy heifer-to-cow ratio accelerated to a record high of 52 percent as of January 2016. That younger mix of females is contributing to ever-increasing productivity of the U.S. dairy herd.

The second effect will take shape through the remainder of 2016 and beyond. More than ever, dairy producers are searching for ways to improve short-term cash flow and long-term profitability. As a result, dairy producers are increasingly turning to genetics and strategic alliances with the beef industry to improve operational efficiencies and create additional revenue streams.

With milk prices down 40 percent from their highs, and calf and slaughter cow prices retreated to historical averages, dairies are innovating to improve efficiencies and remain viable, said Trevor Amen, CoBank animal protein economist.

Genetic tools such as sexed semen, genomic testing, in vitro fertilization, synchronization techniques and herd management technology are less expensive and becoming more common in today’s commercial dairies.

Improved genetics are already boosting milk per cow, increasing fertility rates, improving calving ease, reducing stillbirths and enhancing calf quality.

Genomic testing is being used to identify elite females for breeding, and crossbreeding dairy cows with proven beef sires is adding value to the bull calf crop. Higher quality beef traits are also enabling dairies to capture premiums in the beef market.

Find more information at CoBank’s Knowledge Exchange. PD

Dave Natzke