So far, it has not had an impact on milk futures or the underlying cash prices. Since it was discovered and diagnosed, cheese prices on the spot market have declined, which has put pressure on Class III milk futures sending nearby months to new contract lows. Spring flush is taking place with milk production improving weekly. Demand remains steady leaving sufficient supply for demand. Spot milk in the country varies in price with some noted as much as $6.00 below class. Most of the available spot milk ranged from $3.50 under to even with the class price. This is a good indicator to use for seeing whether supply is tightening.

The milk production report for February showed a decrease in milk production as anticipated, but the increase in cow numbers from January was a surprise.  Cow numbers increased by 8,000 head from January for the top 24 states totaling 8.878 million head, down 61,000 head from February 2023. U. S. Cow numbers totaled 9.330 million head, down 89,000 head from a year ago, but up 10,000 head from January. It was anticipated cow numbers would fall as low milk prices continued. It would initially seem that there had been a substantial miscalculation of cow numbers in January. However, USDA revised cow numbers 3,000 head lower in to top 24 states and 5,000 head lower in the U.S. from what was initially recorded last month. Cow numbers in the top 24 states in January declined by 24,000 head from December with U. S. cow numbers 28,000 head from December after the revisions were made to the report. That makes the increase in cow numbers even more impressive for February. Nevertheless, the chart puts the trend of declining cow numbers in perspective and continued low milk prices may keep this trend intact. The continued tightening of replacement heifers will also have an impact on cow numbers and the ability of farms to keep stalls full or to expand the operation.