Dairy Skim is a new bite-size episode series where HighGround’s Eric Meyer and Cara Murphy break down the latest USDA Dairy data release. Subscribe so that you never miss an episode!
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[00:05] Happy Wednesday from snowy Chicago and welcome to another episode of the Dairy Skim, our short and sweet reactions to pertinent dairy data impacting the markets. The USDA released two reports today, the December U.S. Milk Production update, as well as the December Cold Storage report. We came into today expecting December milk production to reflect a rise of 1.6% from prior year. Instead, milk increased by just 0.8%. Most notably, the U.S. herd size dropped yet again and was the lowest since the peak in February of 2022, as of the December data. We are now sitting at 9.4 million head, which is 19,000 less cows than the peak reached in February. Even the November herd size was revised lower as well. Despite stronger herd sizes observed in Michigan, South Dakota, Minnesota and Indiana, losses in Wisconsin, Texas and New Mexico offset those gains. Looking at milk per cow figures, Wisconsin actually dropped—a counter-seasonal move likely as a result of frigid temperatures during the month of December. This counter-seasonal move lower on milk per cow output figures were also observed in New York and Texas with milk per cow rates dropping month over month primarily due to weather. That’s a quick recap on the U.S. Milk Production report.
[01:37] Now, on to the December Cold Storage figures. At first glance at this Cold Storage report, it sure looks neutral for both cheese and butter markets. As expected, cheese inventories rose seasonally into December and by 14.1 million pounds, pretty close to the 5-year average of 16.2 million pounds from November to December. Of course, cheese stocks closed out 2022 at record levels for the month of December, though natural American style cheeses remain below prior year levels as other American cheese styles continued to ramp up. Other American private stocks were at the highest on record – there were no real surprises here on cheese, though. Looking toward butter, last year’s November to December inventory levels moved lower by 11 million pounds and there was chatter that could happen again because of strong demand heading into the holiday season. But, instead, butter stocks expanded by 16.5 million pounds—that is slightly above the 5-year average of a 10.8 million pound build during that timeframe. This scenario has already been priced into the market in our opinion and therefore, remains neutral.
Our analysts are digging further into this data and will have our comprehensive reports out to you shortly. Thank you for listening and we look forward to coming back on to chat markets at the end of the week. Cheers.
View The Snapshot Reports: U.S. Milk Production Report Snapshot & U.S. Cold Storage Report Snapshot