Dairy Skim – March 2023 US Milk Production Report

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Eric Meyer discusses the March 2023 US Milk Production Report. You can view the snapshot report here. Subscribe so that you never miss an episode!

Subscribe on Spotify | Subscribe on Apple Podcasts | Subscribe on Amazon Music



[00:09] Eric: Good afternoon, everyone, and welcome to the HighGround Dairy Skim, a bite-sized recap and analysis for our subscribers of one of the dairy industry’s major reports.  This is Eric Meyer, President of HighGround Dairy and today, Wednesday, April 19th, the USDA just dropped the March 2023 US Milk Production report, giving us clues into what went on with raw supply last month.

[00:34] First, the big headlines.  All-US Milk Production in March was 19.805 billion pounds, a 0.5% increase the previous year, and up 0.6% in the Top 24 states.  This marks the ninth consecutive month of year-over-year growth, but also the slowest growth rate since the first month of annual gains, which was last July.

[01:01] Yet another surprise, the milking herd grew once again from the previous month, a 6,000 cow gain from February for both all-US and top 24 states, a little more than expected and when we dig into last month’s revisions coming u, you’ll be even more shocked.  Total cows in milk were up 31,000 head versus prior year across the country, which at total count was 9.435 million head, while UP 44,000 head in the top 24 States versus prior year, coming in at 8.952 million head.

[01:34] Milk per cow struggled to climb above the prior year levels but did so by just 3 pounds in March for both top 24 and all-US, which translated to just a 0.14% gain.  Milk per cow has been above the previous year now for the past 11 months but we may be running out of steam here.  Last April’s milk per cow was negative so maybe just one more month of gains before things turn over.

[02:01] But when will the herd begin shrinking?  Revisions continue to shock us with negative margins creeping in across the country for farmers, who still continue to build the herds, and USDA keeps finding more and more cows in milk when taking a deeper dive.  The government revised the January herd by 2,000 head and an incredible 12,000 cow upward revision in February, making for a pre-report build from January to March of 20,000 cows after increasing the March total by 6,000.  Believe it or not, this is the largest US milking herd since August 2021.

[02:39] Is this all about to come to an abrupt end once the calendar rolls to the second quarter?  Well, we do know Texas will lose somewhere between 12 and 18 thousand cows due to the massive barn fire which did kill 18,000 head, but there are rumors that the farmer who owns that property may begin milking freshening cows again very soon and with Panhandle Cheese coming online in a matter of months, farmers there may be adding cows to handle that extra cheese capacity.

[03:08] Milk per cow also saw a 3 pound upward revision in February’s US milk per cow and combined with the newfound cows, added a total of 51 million pounds of milk to the original production estimate.  That took the original growth headline from last month at 0.8% growth to up 1.1%.  That’s a sizeable change.

[03:32] Betty Berning, HighGround’s new Contributing Dairy Economist, is working hard right now crunching all the numbers to provide HighGround subscribers with a comprehensive written analysis, out later this evening, so I won’t spoil with all the details, but she mentioned during our call that the regional divide of production gains and weakness has remained intact, with California and the West struggling while Midwest and Plains States are doing great.  California milk production declined by 2% versus prior year, likely due to the heavy rains and flooding seen throughout the state last month while Wisconsin, Minnesota, Michigan, South Dakota along with states like Iowa, Kansas and Texas all showing year-over-year gains.

Stay tuned for more great analysis and commentary from the HighGround team—we’re looking forward to seeing many of you next week in Chicago for the American Dairy Products Institute Annual Meeting.  Cheers, everyone!

Be sure to subscribe so that you never miss an episode. And if you’re interested in receiving more information, as well as our analysis, please visit highgrounddairy.com to request a free 30-day trial today. Futures and options trading involves substantial risk and is not suitable for all investors.