Milk flow on U.S farms is stubbornly remaining below that of a year ago, especially in the West and Southwest. The Agriculture Department’s preliminary data shows November output was down for the fifth month in a row, estimated at 18.1 billion pounds, down 0.6% from November 2022. The top 24-state total, at 17.3 billion pounds, was down 0.5%.

The October 50-state total was revised down 35 million pounds from last month’s estimate, which put output down 0.7% from 2022 instead of the 0.1% reported. The 24-state revision was down 37 million pounds, down 0.6%, instead of the 0.04% loss originally reported.

Cow numbers totaled 9.36 million, down 10,000 from the October count which was unchanged from a month ago, but is down 44,000 head or 0.5% from a year ago and the smallest herd since June 2020. The 24-state count was down 9,000 from October, which was revised down 5,000 head, 26,000 below a year ago.

The cow loss was more than expected, says StoneX, given how weak dairy cow slaughter has been, and the decline in milk output was more than expected, however fat and protein content was up strongly, “so component adjusted production was  up 0.8%, which is an acceleration from plus 0.3% in October.”

The December 18 Daily Dairy report stated, “Today’s Milk Production report makes clear that producers have no appetite for expansion. There simply are not enough heifers available to keep head counts steady at historical slaughter rates”

Output per cow in the 50 states averaged 1,932 pounds, 2 pounds or 0.1% below November 2022. The 24-state output averaged 1,948 pounds, 3 pounds or 0.15% below a year ago. Revisions lowered October output by 4 pounds in the 50 states and 3 pounds in the 24-state data.

California milk totaled 3.27 billion pounds, down 55 million or 1.7% from a year ago. Cow numbers were down 11,000 and output per cow was down 20 pounds.

The last time the Golden State topped year ago output was August 2022.

Wisconsin cows put 2.6 billion pounds in the tank, up just 4 million or 0.2% from a year ago, thanks to a 5-pound gain per cow offsetting the loss of 1,000 cows.

Idaho was up 0.3%, thanks to an additional 2,000 cows. Output per cow was unchanged. Michigan was up 1.9%, on 8,000 more cows. Output per cow was unchanged. Minnesota was off 0.7% on 3,000 fewer cows, with output per cow unchanged.

New Mexico again posted the biggest loss, down 10.1%, on 27,000 fewer cows and 10 pounds less per cow. New York was up 0.5% on 2,000 more cows and 5 pounds more per cow. Pennsylvania was down 1.4% on 1,000 fewer cows and a 20 pound drop per cow. South Dakota had the biggest gain, up 7.0%, thanks to 13,000 more cows. Output per cow was unchanged.

Texas output was down 2.2% despite a 10-pound gain per cow but the state’s herd has not recovered from the fire earlier this year, down 18,000 head from a year ago. Vermont was down 3.4%, on 2,000 fewer cows and a 30 pound drop per cow. Washington State was off 0.8%, on a 20-pound drop per cow. Cow numbers were down 1,000 from a year ago.

The latest Livestock Slaughter report showed an estimated 229,700 head were sent to slaughter under federal inspection in November, down 13,200 head from the October count, which was revised down 100 head, and was 21,200 or 8.4% below November 2022.

The week ending December 9 saw 57,700 cows go to slaughter, up 2,500 head from the previous week but 6,900 or 10.7% below a year ago, the largest year over year decline since December 2021. Year to date, 2,920,800 head have been retired from the dairy business, up 47,100 or 1.6% from a year ago.

Cash block cheddar closed the second to the last Friday of 2023 at $1.39 per pound, down 13 cents on the week, lowest since July 6, as traders anticipated the afternoon’s November Cold Storage report. The blocks are 73.25 cents below a year ago when they jumped 14.50 cents and were trading at $2.1225.

The barrels finished at $1.3925, down 5.75 cents on the week, 40.25 cents below a year ago, and a quarter-cent above the blocks. 30 cars of block were sold on the week at the CME and 62 of barrel, biggest weekly total since early July.

StoneX stated in its December 19 Early Morning Update, “We seem to be dealing with the commercial realities of fresh cheese looking for a home following somewhat subdued holiday demand this year.”

Cheesemakers tell Dairy Market News (DMN) that milk is available, but a number say it’s not at typical holiday amounts. There have been some below Class spot prices reported but some have been some slightly above. Cheese demand is meeting seasonal expectations. Holiday orders have been fulfilled but there are expectations that mozzarella and pizza cheese orders will hold steady and or increase as the collegiate and professional football seasons culminate. Midwest cheese stocks are generally balanced, says DMN. Some contacts say extra loads are available here and there, but typically do not last long.

Retail cheese demand remains steady in the West with food service steady to moderate. Export demand is steady to moderate though U.S. prices are more competitive, says DMN. Cheesemakers report “comfortable inventories.”

Spot butter climbed to $2.6050 per pound Tuesday but saw its Friday close at $2.54, 5 cents higher on the week and 14.50 cents above a year ago when it plunged 46 cents to $2.3950. There were 13 sales reported on the week.

Butter plants are working on butter and cream contracts for 2024, says DMN. Midwest cream availability this week was wide open, with spots reported at flat market multiples. As Class II demand continues its seasonal decline, cream handlers say butter manufacturers are taking lots of cream.

Western cream is also plentiful. Butter makers anticipated more milk clearing to Class IV with the upcoming holiday weekend. Butter makers note strong to steady retail production. Retail butter demand is mixed with some reporting that ordering is largely fulfilled. Demand from food service and industrial bakers is strong, with mixed interest for first quarter bookings, according to DMN.

Grade A nonfat dry milk closed Friday at $1.16 per pound, unchanged on the week but 17 cents below a year ago, with 10 sales reported on the week.

Dry whey closed at 38 cents per pound, 1.50 cents lower and a half-cent below a year ago when it fell 7 cents. There were 11 sales reported for the week.

The Global Dairy Trade Auction ended 2023 on an up note. Tuesday’s weighted average was up 2.3%, following a 1.6% gain on December 5. The Event saw 60.4 million pounds of product brought to market, down from 65.2 million on December 5, and the lowest since July 18. The average metric ton price climbed to $3,388 U.S., up from $3,323 on December 5, and the highest since June 20.

Butter led the gains, up 9.9% after inching 0.7% higher December 5. Anhydrous milkfat was up 0.2% after being unchanged last time. Cheddar was up 6.9%, after jumping 9.7%, although GDT mozzarella was down 1.1%. Whole milk powder was up 2.9%, following a 2.1% rise. Skim milk powder was down 1.3%, following a 1.2% uptick, and lactose was unchanged, after jumping 5.3%.

StoneX says the GDT 80% butterfat butter price equates to $2.4153 per pound U.S., up 23.1 cents from December 5, and compares to CME butter which closed Friday at $2.54. GDT Cheddar, at $1.9345, was up 12.7 cents, and compares to Friday’s CME block cheddar, a steal at $1.39. GDT skim milk powder averaged $1.1885 per pound, down from $1.2115 (2.3 cents), and whole milk powder averaged $1.4549 per pound, up from $1.4080 (4.7 cents). CME Grade A nonfat dry milk closed Friday at $1.16 per pound.

North Asia purchases, which includes China, were weaker than year-ago levels again, says StoneX, but were stronger than the last event. Southeast Asian demand fell from last event, and continues to fall short of year ago levels.

Speaking of China, the November import data showed a lot of negatives. Whole milk powder imports dropped 35.7% from November 2022. Skim milk powder imports were down 6.6%.

But, after four months of year on year losses, whey imports were up 4.0%, with more product coming from Belarus and Poland, according to HighGround Dairy (HGD). Belarus has become the second largest trading partner with China for whey, says HGD, right behind the U.S., while Poland has risen to third overall.

Cheese imports, at 37 million pounds, climbed to the highest November volume on record, according to HGD, up 64.1%, with New Zealand remaining the top supplier. The U.S. has climbed to the second highest in cheese market share. Butter imports totaled 11.8 million pounds, down 21.3% from a year ago.

HGD says “Chinese demand for cheese will continue expanding, with domestic brands increasingly emphasizing its high protein and calcium content as a key marketing strategy. However, as dietary preferences evolve in China, we anticipate a shift in demand patterns. China’s reliance on ingredients like lactose and skim milk powder, alongside finished dairy products, is expected to grow into the second half of 2024, while whole milk powder is likely to face challenges.”

The USDA’s World Markets and Trade report stated that “U.S. dairy exporters were impacted by sluggish economic growth among importers and increased competition from New Zealand and the EU in 2023, but a slightly weaker U.S. dollar helped cushion losses in price competitiveness. Throughout the year, export values of nonfat dry milk, cheese, and whey remained lackluster, primarily due to weakening demand in China and Southeast Asia. Globally, higher interest rates impacted discretionary spending, particularly affecting dairy consumption, which is not a traditional staple of Asian diets, the most significant growth region for major exporters,” the report stated.

It warned that “U.S. exports are expected to face similar headwinds for much of 2024 as a combination of factors has impacted demand in key markets in Asia in 2023 and expected to continue into 2024.”

Meanwhile here at home, U.S. dairy margins continued to erode in the first half of December on further weakness in Class III Milk futures as projected feed costs were steady to lower, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

The MW detailed the November Milk Production and Dairy Products reports, which I have previously reported. It stated “The total volume of October dairy export shipments declined 7.4% from last year while the value of dairy exports at $615.86 million was the lowest since January 2022 after adjusting for the number of days in the month.” The MW also cited the U.S. loss in the trade dispute with Canada over dairy tariff quota allocations following a dispute panel’s ruling.

The Agriculture Department announced the first Federal order milk price of 2024. The January Class I base price is $18.48 per hundredweight, down $1.28 from December, $3.93 below January 2023, and the lowest Class I since August 2023. It equates to $1.59 per gallon, down from $1.93 a year ago.

Fluid milk sales saw a slight increase in October, according to the Agriculture Department’s latest data, the first one since May. Packaged fluid sales totaled 3.7 billion pounds, up 1.0% from October 2022.

Conventional product sales totaled 3.5 billion pounds, up 0.9% from a year ago. Organic products, at 242 million pounds, were up 2.1%, and represented a typical 6.5% of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, off 0.3% from a year ago, but up 1.1% year to date, and represented 35.1% of total sales in the ten month period.  Skim milk sales, at 171 million pounds, were down 9.2% from a year ago, and down 8.0% year to date.

Packaged fluid sales January to October totaled 35.3 billion pounds, down 1.5% from 2022. Conventional product sales totaled 32.9 billion pounds, down 1.6%.

Organic products, at 2.4 billion pounds, were down 1.1%, and represented 6.7% of total milk sales for the period.

Cooperatives Working Together (CWT) member cooperatives accepted 34 offers of export assistance this week that helped capture sales contracts for 6.0 million pounds of American type cheese and 20,000 pounds of anhydrous milkfat. The product is going to customers in Asia, Middle East-North Africa and South America from January through April 2024.

CWT assisted exports for 2023 total 53.2 million pounds of American type cheeses, 1.1 million pounds of butter, 46,000 pounds of anhydrous milkfat, 39 million pounds of whole milk powder and 8.8 million pounds of cream cheese.

Last but certainly not least, as I sat to write this week’s column, Christmas Day was just three days away. I was reminded of the privilege I have in reporting on this wonderful industry, something I have done for over 40 years. I also considered the significance that Christmas Day represents and realized I would be remiss if I did not report the most significant news of all, namely that God became a baby in a “barn,” the Savior of those who believe in Him Who died on a cross, and then rose again. I hope you know that good news and rejoice in it this year and next.

Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.