Dairy Skim – September 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, Alyssa Badger discusses the September 2023 US Milk Production Report. Customers 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

Transcription:

[00:04] Alyssa: 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. This is Alyssa Badger, Vice President of Global Operations at HighGround Dairy. The USDA released the September Milk Production Report this afternoon, and I am excited to dig in and give you guys the highlights.

[00:29] If you remember, there was a heatwave spreading throughout the US as well as Europe last month that extended from August. The Mid-Atlantic, the Northeast, the Desert-Southwest—they all experienced what headlines called an absolute scorcher into the first week of the month. That heatwave also moved into Iowa, Minnesota, and all around the Midwest into the Labor Day holiday. So, from the Great Plains to the Great Lakes and beyond, we saw record heat. Feed prices didn’t really react because there was some bearish demand fundamentals from China and strong yield potentials from South America but Class III and IV Milk certainly continued to find some support, climbing out of those decade-low margins that farmers experienced this past July.

[01:15] That being said, the September Milk Production Report reflected minimal losses against prior year, down just 0.2% below prior year which was neutral versus our market expectations. There continues to be some notable gains against prior year from New York, Michigan and South Dakota but it was Wisconsin that reported the largest gains with production moving counter-seasonally higher from August to September. The state added 1,000 cows to the herd during the month with yields remaining unchanged from August when they would typically drop around 1%. That was all part of what were some pretty strong revisions in the August data and I think that the revisions are the most interesting story here. Similar to what was observed last month when the USDA made those July revisions.

[02:07] A bit more on the September report, though, California’s herd size stopped consolidating lower for the first time all year, remaining unchanged month over month which helped reduce the larger losses that the markets have seen for much of Q3. California’s milk production dropped 1.8% from prior year—a big improvement from the 4.5% loss in August and 5.5% drop in July. Of course, after California, New Mexico recorded the second-largest losses, followed by Colorado, Kansas and Texas. Wisconsin reported a gain of 1.1% from prior year, Michigan was up 2.7% and New York up 2% from prior year. South Dakota continues its impressive streak, up 5.9% from prior year.

[02:58] Okay, back to the August revisions. The largest revision lower was on California: the original production loss in August was down around 3.7% but the revision did push losses down to that 4.5% from prior year that I mentioned earlier, due to a 26-million-pound revision lower. Wisconsin then saw the second-largest revision, taking 25 million pounds from the August figure which meant the state saw a 0.3% rise from prior year versus the originally reported 1.2% gain in the month—a pretty different story there. The other notable revisions was from Idaho as well as Michigan: they removed 14 million pounds of milk from Idaho’s August production figure and 5 million pounds from Michigan’s milk production figure. In total, this dragged the original 0.2% loss reported in the month down to negative 0.8% from prior year. If you listened to the August Skim regarding the Milk Production Report, we fully anticipated the USDA to do yet another revision here, especially as they revised the herd size down 32,000 cows. Alright, be on the lookout for our full comprehensive analysis soon. Thanks for tuning in, cheers.