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 April 2023 US Milk Production Report. You can view the snapshot report here. Subscribe so that you never miss an episode!
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[00:04] Hello everyone and welcome back to the Dairy Skim, HighGround Dairy’s bite-size podcast intended to give the dairy industry some flavor into recent reports or events that can impact global commodity pricing. Today is Friday, May 19th.—just one week until Memorial weekend and the unofficial start to summer! My name is Betty Berning, Contributing Dairy Economist, joining you today.
[00:31] USDA just released its April Milk Production report and I’ve been analyzing away. Total milk production was up 0.3% from April 2022, slightly bullish to expectations, and not as big of an increase as we were expecting.
[00:46] There were three things that stood out to me in this report: Number one: Cow numbers fell from March to April by 16,000 head, driven mainly by a 15,000 cow drop in Texas due to the barn fire in Dimmitt. Growth elsewhere was tempered, with a few states adding or subtracting 1,000 head, and Iowa lost 2,000 head month-over-month.
[01:10] The second thing that stood out was that California’s production dropped 2% in March, compared to the year prior, and the trend continued into April as production was down there 1.9%. Milk per cow was 40 pounds lower in April 2023 than in April 2022, a drop of 2% and the driver behind the big fall in production. California’s flush has certainly been clipped, and year-to-date, they’ve produced 183 million pounds less of milk in 2023 than in 2022.
[01:47] Lastly, milk per cow was up one pound from April 2022 to April 2023 and we at HighGround were a little surprised by this because the April 2022 number was actually down from April 2021. We had anticipated that this year’s April number would be a very easy comparison. The limited milk yields so far this year, particularly during flush may limit milk production growth, the balance of the year and keep a lid on supply. Producers are likely balancing base programs by managing cow numbers and milk yields by rations or otherwise.
[02:27] All this said, though, demand is very poor and driving prices presently, rather than supply dynamics. Although today’s milk production report is bullish to our expectations, it will take improved demand for prices to pop back to break-even levels or better for producers. While the forward curve is higher than today’s prices, we expect convergence and are not bullish to deferred months’ prices. However, HG doesn’t expect cheese and whey to move much lower and believes we are at or near bottom. Prices—unfortunately for producers— will likely grind along though, not racing sky-high anytime soon.
Watch your email for our more detailed report and have a wonderful weekend.