Dairy Skim – March 2024 US Dairy Products Report

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Betty Berning discusses the March 2024 US Dairy Products Report. Customers can view the snapshot report here. Subscribe so that you never miss an episode!

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Transcript:

(0:14) Betty Berning:
Hello everyone, I hope you’re not having a case of the Monday’s spring has sprung. This is Betty Burning, contributing dairy economist with High Ground Dairy. The team at High Ground had a great time this past week seeing many of you at ADPI. And today we had a couple of exciting things happen.

First, we actually released a white paper that was written by our Senior Manager of Advisory Services, Alex Gambonini, and it provides a comprehensive overview of the 21 proposals currently being considered by USDA in the Federal Milk Marketing Order amendment process. It’s a great document to help you understand kind of what’s been said to date. If you are a subscriber, log into our site to see it.

Then, the other big news, of course, was today was the March Dairy Products Report just a little bit ago. So let’s jump in.

(1:08) Cheese production rose slightly in March. It rose for the first time year over year in 2024, totaling 1,226,000,000 pounds, eking up 0.1% year over year. And this total was neutral to our expectations. The complex was a tale of two commodities. Mozzarella volumes climbed 6.8% year on year, totaling 396.5 million pounds. And that is an all time high. This was likely due to strong export demand. Pizza demand stateside has been reportedly pretty poor. And if we look at the export data that we got early last week, fresh cheese exports climbed 37% year on year in March.

Cheddar was down again in March. By 3.4%, but smaller than the year over year losses that were experienced in January and February. And notably, February’s cheddar totals were revised upward by 3% of the actual 9 to 10 million pound change. Pretty drastic, providing some pretty bearish undertones to that category. Gouda was also notable, turned out a big number, notching the second highest total all time of 7.8 million pounds.

(2:30) Let’s talk butter. Butter churns continue to improve on throughput on an annual basis. Things are up 1.4%. Volumes totaled 201.8 million pounds. And there was a slight decline from February to March in terms of production. But that 1.3% decrease was not far off from the five-year average of a 3% drop. And this honestly was neutral to our expectations. The butter market has been on an absolutely wild ride, maybe a wild trip as of late. Strong demand for all butter products, specifically at retail, has been one of the catalysts helping to drive markets to these record high prices this time of year.

(3:16) Dry whey production was up 5.2% from February to March with volumes of 74.5 million pounds. This 5.2% gain bucked the five year average trend, but it was very similar to what we saw last year in 2023. And that indicates that product this year is tracking on the same trajectory. Volume totaled 74.5 million pounds in March. However, it does appear much of this made its way to stocks, which rose over 13% from February, providing some bearishness to the complex and making this bearish to our expectations as well.

(4:03) Whey protein concentrates and whey protein isolates were bullish though. Whey protein concentrate continued on the same path it’s been on. There was less product made in the low protein space, that’s WPC 25-49.9%. And more output occurred in the high protein space, WPC 50-89.9%. However, stacks of both of these items fell year over year and month on month. WPI made an all-time record mark, besting December 2023’s mark. March’s total summed 16.9 million pounds. And despite the big volumes of WPI, inventories dropped monthly and annually, hitting their lowest point in nearly two years.

(4:50) Nonfat dry milk and skim milk powder combined volumes turned out another dismal result, summing to slightly more than 205 million pounds, the smallest total for the month since 2019. Nonfat volumes were better than in February, rising almost 17% month on month, with dryers turning out 177.8 million pounds. This was down from a year ago but is the highest nonfat dry milk production since May 2023. Stocks rose by over 20 million pounds despite this week’s production. And manufacturer shipments were poor, totaling 148.4 million pounds, and falling 30% from prior year. And manufacturer shipments are a great indicator of what’s going on with demand. So these falling shipments really indicate that there’s just poor demand for a product.

(5:48) Skim milk powder, which is used in the export market, was way down. And we saw that in the trade data this last week, that export demand was very poor. Dryers made 27.4 million pounds of product, and that’s the lowest total in the category since May 2019.

That is what I have for now. Subscribers, watch your inbox for more detailed analysis. Also, don’t forget that our early bird registration for our June Outlook Conference ends this Friday, May 10th. Sign up now at highgrounddairy.com/conference. Thanks, everybody, and have a great night.