Dairy Skim – December 2023 US Milk Production & Cold Storage Reports

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Betty Berning and Cara Murphy discuss both the December 2023 US Milk Production and Cold Storage Report. Customers can view the snapshot reports here: US Milk Production Report Snapshot & US Cold Storage Report Snapshot. Subscribe so that you never miss an episode!

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Transcript:

[00:04] Betty: Hello, everyone, and welcome back to the Dairy Skim, HighGround Dairy’s bite-sized podcast intended to give the dairy industry some flavor into recent reports or events that can impact global commodity pricing. Today you are joined by Betty Berning, HighGround’s Contributing Dairy Economist, and Cara Murphy, Senior Manager of Market Intelligence!

[00:26] Cara: It’s a fun day of two USDA reports with December Milk Production and Cold Storage data being released. The crew is on the way back from IDFA so Betty and I had the formidable task of pulling together the data and analysis, with an assist from Eric Meyer, utilizing plane Wi-Fi. Thanks, Eric. Let’s start with Milk Production. Betty, what happened?

[00:51] Betty: Thanks, Cara. US Milk Production totaled just over 18.2 billion pounds in December, which was down 0.3% from prior year. The lower number comes as the US herd fell to 9.357 million cows and that’s the lowest size since December 2019. Milk per cow of 1,949 pounds (on a 30-day adjusted) rose 0.1% from December 2022. And, it’s important to not that the USDA did make some small revisions to November’s data, dropping milk cows by 2,000 head to 9.358 million, and lowering milk per cow by 3 pounds.

[01:34] Let’s talk about December, though—that’s the task at hand. There were fewer cows and less milk in some of the big dairy states than there was a year ago. California, our number one dairy state, was home to 9,000 fewer cows in December 2023 compared to December 2022, but the state did add 1,000 head from November to December of this past year. Milk yields there were lower in every month of 2023 compared to the same month in 2022, keeping production from the Golden State tempered throughout 2023. New Mexico continues to be a really big story, too, with milk volumes there in December down over 11% from the previous year and persisting below 500 million pounds in total. The state lost 5,000 head of cattle from November to December and the herd there is down 32,000 head since January 2023—big drops. Yields have also been down year-over-year for the past eight months and December’s total is the lowest for the month since 2015, so some big structural changes occurring there. Let’s touch on Texas and Idaho as well—some of the other big dairy states. So, Texas’ milk production fell in December as well, but that really was driven by the loss of cows earlier in 2023 and milk per cow is actually improving there. Idaho’s milk totals decreased by 0.7% relative to December 2022 and that was driven by poor yields.

[03:10] Now, let’s talk about some bright spots from the report. Throughout 2023, the Midwest and New York have been bright spots and that continues. Wisconsin, the number two dairy state, turned out a modest 0.5% year-over-year gain in milk totals and that was all from milk per cow—the herd is actually flat there relative to December 2022. New York’s herd has curiously sat at 630,000 head in every single month since December 2022, so it’s improved productivity there that has been driving their steady year-over-year growth in milk production. South Dakota actually added cows from November to December: 5000 head. Michigan’s milk per cow was down there year-over-year for the third consecutive month, but there’s more cows living there than there were in 2022 and that’s really what’s driven the state’s milk volumes higher. In December, they were up 0.9%.

[04:13] So, I am going to be looking at these data points further this evening, but we should jump to Cold Storage. Cara, you looked at that report. What are you noticing? Tell me about butter stocks – I think those totals and numbers surprised us!

[04:26] Cara: Absolutely. Butter stocks dropped 6.2% or 13.1 million pounds, the most significant November to December inventory decline since 2003. This drop was stark compared to the five-year average month-to-month gain of 12.2 million pounds. That said, inventories are still heavy at 200 million pounds. My takeaway here is that we are starting the year with inventories slightly behind where they were in 2023, while the drawdown could indicate that demand is stronger than initially thought, which is bullish for prices.

[05:01] On the cheese side, total cheese stocks appeared neutral overall, up 0.4% or 5.9 million pounds. This was the smallest November to December gain since 2014 and well below the five-year average increase of 14.7 million pounds. Even so, December inventory levels are in line with those we saw in 2022 and 2021. American cheese inventories grew by 9.4 million pounds or 1.1% from the last month—4.2 million pounds less than the five-year average, though. On the other hand, Other-cheese inventories shrank from November, down 0.6% or 3.5 million pounds counter to the seasonal gain of 1.1 million. It’s likely that less mozzarella and hard Italian cheeses were made at this time in favor of American cheese production.

[05:53] Betty: Thanks, Cara, that’s really thorough. Certainly some excitement there in the Cold Storage numbers. I will be looking at these reports further into the evening and writing up our more detailed analysis this evening. Subscribers, watch your inbox—it should be there tomorrow morning. Thanks, everybody. We hope you had a great time at IDFA if you were there and were able to reach out to the HighGround team. We will talk soon, take care.