Dairy Herd Expansion Neutralized to Balance Dairy Market Values

Dairy Herd Expansion Neutralized to Balance Dairy Market Values

The NASS estimate of milk cows in the U.S. at mid-year was unchanged from a year earlier. This reconciles with other data from NASS showing less than half a percent increase in cows being milked during the spring quarter compared to the same quarter in 2017, which was a decline from the winter quarter milking herd of 3,000 cows (9.403 million cows). Milk production during the spring quarter was up 0.8% from a year earlier, which compares to a 1.5% increase, year-over-year, during the winter quarter. The slowdown in production reflects a sensitivity to lower milk prices (down close to 10% this spring from a year earlier while alfalfa hay prices are up close to 20% over the same interval. The milkfeed price ratio published by NASS is at its lowest level since the spring of 2016.

The crux of the challenge for the dairy industry is ebbing demand for fluid milk. Fluid milk product sales have been in a downtrend for several years, with no sign of stabilization yet. Fluid milk product sales volumes in May were down 3.2% from a year earlier, one of the bigger year-over-year declines in the last few years. Countering these declines, usage of cheese and butter are gaining, but not by enough to offset fluid milk usage declines and increases in milk production.

American-type cheese usage has been on a stellar growth path this year, resulting in a reversal of trend in building inventories of this type of cheese in cold storage. Mid-year American-type cheese inventories in cold storage were down 1% from a year earlier and cheddar cheese prices at the wholesale level were slightly higher than a year ago during the spring quarter. The situation for Italian-type and other cheeses is not as sanguine as the American-type cheese market. Domestic usage growth was impressive during the winter quarter but lost some momentum during the spring. This is a bit of surprise, given the impressive growth in restaurant and foodservice sales during the quarter. Inventories of these types of cheese in cold storage are up 16% from a year ago at mid-year. The Class III milk price has suffered, accordingly.

Wyatt Bechtel
Mon, 08/06/2018 – 03:57


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Dairy cattle diets are often deficient in the essential amino acid methionine; supplements have been shown to increase milk production and protein concentration.
Source: Dairy Herd