April Sees Sharp Decline in US Fluid Milk Sales as Cash Injections for Americans Come to an End

April Sees Sharp Decline in US Fluid Milk Sales as Cash Injections for Americans Come to an End

Within the USDA’s Estimated Fluid Milk Products Sales Report, last released on June 20th, there was a truly ugly figure for the month of April. Dropping 6.7% from prior year, US fluid milk sales recorded the steepest drop from prior year on a percentage basis since June 2021.  In order to find losses comparable to what was observed in April 2023 in the US pre-COVID, one would have to go back to May 2004 but these were indeed the worst losses noted on record before March 2020. 

For nearly three years, Americans using the Supplemental Nutrition Assistance Program (SNAP) were receiving an extra cash injection of at least $95 per month, which had been put in place during the pandemic. The SNAP emergency allotments were never intended to be permanent. They were supposed to last until the federal government declared an end to the COVID public health emergency, which the Biden administration announced in May. However, a last-minute provision in the government’s omnibus spending bill curtailed the SNAP surplus after February. Some critics argue that ending the emergency SNAP allotment while inflation remains a reality and food prices are high is detrimental to low-income individuals. It is evident in the fluid milk sales data as well that the loss of extra cash has dug into sales for the US dairy industry. Of the top 100 commodities purchased with SNAP dollars, fluid milk ranks second and cheese ranks fifth! 

The extensive loss in fluid milk sales in April would have meant that there was more milk backing up into manufacturing channels throughout the second quarter. As a result, there has been a notable drop in CME spot dairy values as well during that timeframe. From Q1 to Q2, US CME cheddar cheese blocks have dropped 18.1%, barrels are DOWN 9.1%, nonfat-dry milk has fallen 3.7% and dry whey is DOWN 23.7% and trading at record lows (since trading began in March 2018).

Putting pen to paper, the 6.7% drop in fluid milk sales was a loss of 242 million pounds from prior year, equivalent to 1.3% of April’s total milk production of 19.232 billion pounds. Further, that would equal about 24.2 million pounds of cheese, around 2.1% of total cheese production during April. Additional milk for processing was not necessarily fresh news but this does help explain recent price behavior and cheap spot milk throughout the country.

 

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