January 2019 U.S. milk production continued a four-month streak in which year-over-year growth was less than 1 percent. However, while cow numbers were down from a year ago, the U.S. dairy herd increased about 2,000 head from December, ending a string of seven straight months of contraction.
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Dave Natzke
Editor / Progressive Dairy

January 2018-19 recap at a glance

Reviewing the USDA estimates for January 2019 compared to January 2018:

  • U.S. milk production: 18.6 billion pounds, up 0.9 percent
  • U.S. cow numbers: 9.355 million, down 83,000 head
  • U.S. average milk per cow per month: 1,988 pounds, up 35 pounds
  • 23-state milk production: 17.53 billion pounds, up 1.3 percent
  • 23-state cow numbers: 8.719 million, down 52,000 head
  • 23-state average milk per cow per month: 2,011 pounds, up 38 pounds

Source: USDA Milk Production report March 12, 2019

Nine states increased cow numbers compared to January 2018, led by Texas (+18,000 head) and Colorado and Idaho (each +10,000). Compared to a year earlier, Pennsylvania was down 25,000 cows, New Mexico was down 10,000, and Arizona, California, Florida, Illinois, Ohio and Virginia were each down 8,000 to 9,000 head. Michigan, Minnesota and Wisconsin were down a combined 16,000 head.

The number of dairy herds in the U.S. averaged 37,468 in 2018, down 2,731 from the average of 40,199 dairy herds in 2017.

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The latest milk production report included annual estimates for cow numbers, milk per cow and milk production for all states. Watch for the April 19, 2019, issue of Progressive Dairyman for our annual dairy statistics poster.

WASDE: USDA milk production forecast shrinks

Citing declining milk cow numbers, the USDA trimmed its 2019 milk production forecast, providing support for a small gain in milk prices.

According to the latest World Ag Supply and Demand Estimates (WASDE) report, the USDA cut its 2019 milk production forecast to 219.7 billion pounds, down 400 million pounds from last month’s forecast. If realized, it would be up about 1 percent from the 2018 estimate.

In its price projections for 2019, the USDA forecast averages will improve slightly from 2018. Most of the gain will come in Class IV, thanks to higher nonfat dry milk and butter prices, which offset further weakening in cheese prices. Projected prices are (midpoint of range): Class III – $15.20 per cwt, Class IV – $16.10 per cwt and all-milk – $17.30 per cwt.

A look back at last year puts the 2018 milk production estimate at 217.5 billion pounds. That’s up less than 1 percent from 2017’s production total of 215.5 billion pounds.

The USDA’s estimates for 2018 price averages were: Class III – $14.61 per cwt, down $1.56 from the average in 2017 and 26 cents less than 2016; Class IV – $14.23 per cwt, down 93 cents from 2017 but 46 cents more than 2016; and all-milk – $16.18 per cwt, $1.47 less than last year’s average of $17.65 per cwt and slightly below the 2016 average of $16.30 per cwt.

Beef, feed outlooks

The 2019 beef production forecast was reduced on lower projected slaughter in the first quarter and lower expected marketings in mid-2019. Partly offsetting the lower fed cattle slaughter is higher expected cow slaughter. The lower production forecast also reflects lighter carcass weights in 2019. Cattle price forecasts are raised for 2019 on current price strength and expectations of firm demand throughout the year, but prices will soften in the second half of the year.

Looking at the WASDE report’s feed situation and forecast:

• Corn: The projected 2018-19 season-average corn price received by producers was lowered 5 cents at the midpoint to $3.55 per bushel. That would be up from $3.36 per bushel in 2017-18.

• Soybeans: U.S. soybean supply and use changes for 2018-19 include higher crush and lower ending stocks compared with last month’s report. Projected 2018-19 marketing-year average prices paid to growers were unchanged from last month’s forecast. The soybean price was forecast in a range of $8.10 to $9.10 per bushel, yielding an average of $8.60 per bushel, below the $9.33 per bushel average in 2017-18. The soybean meal price forecast, in a range of $295 to $335 per ton, yields a midpoint of $315 per ton. That’s down from $345 per ton in 2017-18.

Dairy-RP second-quarter endorsement sales close March 15

Dairy producers have until March 15 to purchase revenue insurance on second-quarter 2019 (April-June) milk production through the Dairy Revenue Protection (Dairy-RP) program

Producers seeking Dairy-RP coverage can purchase endorsements through authorized crop insurance agents, up to five quarters into the future. Dairy-RP quarterly endorsements are available for sale until about the 15th of the month preceding the quarter to be covered.

Through March 11, U.S. dairy producers protected revenue on 18.3 billion pounds of milk marketings in 2019 and the first half of 2020.

The latest report shows 2,484 dairy producers had filed Dairy-RP applications in 35 states. Of the applications, 1,447 have purchased 4,583 quarterly endorsements. Total premium costs on purchased endorsements were about $61 million, with USDA Risk Management Agency subsidies covering about $25.3 million of that.

Under Dairy-RP, dairy producers can select coverage at 70 to 95 percent (in 5 percent increments) of expected quarterly milk revenue (production times price).

Based on data as of March 11, the revenue on about 16.7 billion pounds of milk was covered at the 95 percent level. That represents about 91 percent of all milk covered under Dairy-RP since the program was launched on Oct. 9, 2018.

Another 1.6 billion pounds of milk was covered at the 90 percent level or about 9 percent of all milk covered under Dairy-RP. Just 3.2 million pounds (0.02 percent of the total) was covered at the 85 percent level.

GDT index runs string to seven

The index of Global Dairy Trade (GDT) dairy product prices posted a seventh consecutive increase during the auction held March 5, up 3.3 percent.

Prices for all major product categories were modestly higher:

  • Skim milk powder was up 4.3 percent to $2,462 per metric ton (MT).
  • Butter was up 3.7 percent to $4,657 per MT.
  • Whole milk powder was up 6 percent to $3,186 per MT.
  • Cheddar cheese was up 6 percent to $3,888 per MT.

The next GDT auction is March 19, 2019.

Global dairy prices higher

Increasing dairy product prices pushed February 2019 global food prices higher, according to the latest United Nations’ Food and Agriculture Organization (FAO) Food Price Index.

The FAO Dairy Price Index includes global average prices for butter, cheese, skim milk (SMP) and whole milk powders (WMP). The February 2019 index jumped almost 6 percent from January.

All dairy products represented in the index registered higher prices in February, led by SMP. Strong import demand, especially for supplies from Oceania, drove up SMP, WMP and cheese prices. As for butter, a seasonal drop in production anticipated in Oceania over the coming months was supportive to prices.  end mark

Dave Natzke