Falling milk prices threaten dairy operations

December at $17.44, with further advances into 2024.

e June Class IV price is $18.26, up 16 cents from May and $7.57 below a year ago.

e 2023 average is at $18.59, down from $24.67 a year ago, and compares to $14.84 in 2021.

Lee Mielke Farm milk prices have not yet hit bottom for the year. e Agriculture Department announced the June Federal order Class III benchmark milk price at $14.91 per hundredweight, down $1.20 from May, after plunging $2.41 last month, and is $9.42 below June 2022. It is the lowest it has been since May 2020 when it was at $12.14. e 2023 average stands at $17.48, down from $22.95 a year ago and compares to $16.96 in 2021.

Unfortunately, Friday’s Class III futures settlements portended a very painful July price at $13.90; August, $14.52; September, $15.62; October, $16.68; November, $17.31; and e April 50-State and top 24-State totals were revised up 22 and 23 million pounds respectively, up 0.4%, instead of the 0.3% originally reported for the 50 states, and up 0.6% in the top 24 states, instead of the originally reported 0.5%. May cow numbers totaled 9.43 million head unchanged from the April count which was not revised. e herd was up 23,000 head from January and up 13,000 from a year ago. e 24-State count was also unchanged from April and was 24,000 head above a year ago.

U.S. milk output is simmering, not cooling yet, and certainly not boiling over, but May output was nudged higher by stronger output per cow, especially in the Midwest. e Agriculture Department’s preliminary data has production at 19.875 billion pounds, up 120 million pounds or 0.6% above May 2022. e 24-State total, at 19.0 billion pounds, was up 146 million or 0.8% above a year ago.

Output per cow averaged 2,108 pounds, up 10 pounds or 0.5% from May 2022 in the 50 states and up 11 pounds to 2,126 pounds or 0.5%, in the top 24 states. California was still below a year ago, at 3.64 billion pounds, down 24 million or 0.7%. Output per cow was down 10 pounds and cow numbers were down 3,000.

Wisconsin put 2.79 billion pounds in the tank, up 35 million pounds or 1.3% from a year ago, thanks to a 35 pound gain per cow o setting the loss of 4,000 cows.

Idaho edged out Texas for third place, with 1.48 billion pounds, up 44 million or 3.1% from a year ago, thanks to 17,000 more cows and a 10 pound gain per cow Texas output, at 1.44 billion pounds, was up 0.8%, thanks to a 15 pound gain per cow. Cow numbers were only up 1,000, re ecting results of that devastating re.

Michigan was up 2.1%, Minnesota was up 2.5%, New Mexico was down 3.8%, and New York was up 2.1%. Oregon was down 2.1%, on a loss of 3,000 cows, though output per cow was up 5 pounds. Pennsylvania was o 0.6%, South Dakota was up 6.2%, and Washington State was up 0.6%, thanks to a 20 pound gain per cow o setting the loss of 1,000 cows.

HighGround Dairy said the “slowing of the milking herd foreshadows what is likely to come in the second half of the year: declining cow numbers on a monthly basis and potentially versus prior year, causing output to come close to parity.”

Robo Bank senior dairy analyst Lucas Fuess said in the June 26 ‘Dairy Radio Now’ broadcast that farm margins are a real concern, considering the July Class III futures is below $15 per hundredweight while cost of production nears $20. He expects that will pull milk output lower, possibly below year ago levels.

“Hopefully, some pull- backs in U.S. milk production by the end of the year will cause a little price recovery,” he concluded, however with drought threatening the corn and soybean crops, relief from high feed prices may be in question.

USDA released o cial solicitation awards for phase 2 of the American Agriculture to Feed Kids and Families program. Deliveries are to be made October 1 through June 30, 2024, according to HGD.

“ e initial solicitation was for 47.7 million pounds of cheese, of which 80% has been awarded to six dairy companies that presented bids.” HGD called it “sizable but slightly less than the solicitation and over a nine-month period, which will limit how this impacts U.S. cheese prices.” e latest Livestock Slaughter report shows an estimated 249,100 head sent to slaughter under federal inspection in May, up 5,500 head from April, and 23,900 or 10.6% above May 2022. e week ending June 24 saw 56,500 dairy cows go to slaughter, down 1,200 head from the previous week but 5,600 or 11.0% more than a year ago. Year to date, 1,561,400 have been culled, up 81,200 head or 5.5% from a year ago.

Stressed nances are keeping dairy culling rates high.

StoneX says “Total cattle slaughter continues to be weak so dairy cows are holding a larger share of the beef market than it did a week ago.”

Falling uid milk sales isn’t helping matters. April sales took a beating. e USDA’s latest data shows packaged uid totaled 3.4 billion pounds, down 6.7% from April 2022, biggest drop since March 2021, and followed a 0.7% slippage in March.

Conventional product sales totaled 3.2 billion pounds, down 6.5% from a year ago. Organic products, at 219 million pounds, were down 8.8%, and represented 6.4% of total sales for the month. Whole milk sales totaled 1.2 billion pounds, down 2.7% from a year ago, but up 0.2% year to date, and represented 34.3% of total milk sales for the four months. Skim milk sales, at 173 million pounds, were down 11.3% from a year ago and down 7.9% year to date. e gures represent consumption in Federal milk marketing order areas, which account for about 92% of total uid sales in the U.S. Competition from a variety of newly introduced beverages, including the plant-based varieties, lifestyle changes in general, plus the spring ush and school closings all result in more milk going to the vat, churn or dryer, adding to the income woes of dairy farmers. e barrels nished at $1.38, up 3.50 cents on the week, 80.25 cents below a year ago, and 1.25 cents below the blocks. ere were 12 loads of block traded on the week and they rolled out a whopping 93 loads of barrel, highest weekly total since Dec. 16, 2017, with 97 loads. ursday saw 35 cars sell, equaling the highest single day total of Dec. 11, 2017, and the fourth highest barrel volume trading day on record. e CME is basically the market of last resort for product not sold privately in the week.

Total packaged uid sales for the four months amounted to 14.3 billion pounds, down 2.7% from 2022. Conventional product sales totaled 13.4 billion pounds, down 2.8%. Organic products, at 951 million, were down 1.4%, and represented 6.6% of total milk sales for the period.

Chicago Mercantile Exchange dairy product prices were mixed in the shortened 4th of July holiday week. e Cheddar blocks closed the rst Friday of July at $1.3925 per pound, up 5.75 cents on the week but 71.75 cents below a year ago.

Last year’s July 4 holiday week prices were above $2 for both varieties, says Dairy Market News, and while there’s plenty of milk right now, cheesemakers note that heat is be-

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ginning to a ect component levels. Processors in the south and southwestern states say heat has crimped milk output, which could result in movement of milk from the Central and Midwestern states southbound.

Cheese demand from food service remains steady in the West while retail demand is steady to lighter. Exports are steady to lighter with quieter activity from Asian purchasers. Current prices do not appear to be translating into greater competitiveness amongst international markets, according to DMN.

CME butter closed Friday at $2.48 per pound, up 4 cents on the week, highest since Dec. 20, 2022, but 49 cents below a year ago, with 21 sales on the board.

Butter plants report that cream was available in the holiday week but not over owing and cream multiples were at levels of previous weeks. Tankers are expected to start moving into the south/southwestern areas as milk handlers say there is a notable tightness in that area where temperatures are reaching 100 plus degrees. at could continue to seasonally tighten supplies in a very short timeframe. Butter demand is moderate but meeting seasonal expectations.

Cream is available in the West however, tighter in some southern areas with sustained hotter temperatures making farm level milk output less productive. Churns are busy.

Retail and food service demand is steady, says DMN.

Grade A nonfat dry milk fell to a Friday nish at $1.0875 per pound, down 3 cents on the week and the lowest CME price since Nov. 23, 2020. It is 66 cents below a year ago. 5 sales were made on the week.

Dry whey closed at a new record low 22.75 cents per pound, down 1.25 cents on the week, the lowest since it started trading at the CME on Mar. 12, 2018, and 26.25 cents below a year ago. Sales totaled 42 for the week at the CME.

-- Lee Mielke of Lynden is editor of the Mielke Market Weekly.

Pacific Northwest natives are well aware that they need to make the most of sunny weather while it’s here; according to City-data.com, Bellingham is the #1 city with the lowest average of sunshine. In addition to getting some much-needed Vitamin D, summers offer great opportunities to be more environmentally friendly and sustainable.

• More daylight = more natural light to let into your home, saving electricity and lengthening the life of your lightbulbs.

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• The usually bonechilling cold of Whatcom’s lakes and bays is now a welcome escape from the heat and an all-natural way to cool off.