Interpreting the Feb. Milk Production Report
US milk production has grown for the second straight month versus the prior year, and the rate of growth is increasing, but not enough for those wishing for more reasonable dairy commodity prices to get excited in the near future, according to High Ground Dairy’s Eric Meyer.
With the All Milk Price tracking over $20.00/cwt. for seven straight months (including March, which will likely break the record of $24.70/cwt set last month), there has not been enough traction to grow milk production at an above average rate to meet burgeoning international demand. Meyer views this report as neutral versus expectations.
There are some glimmers of bearish hope out there, Meyer says, as January revisions showed increases in milk cows and milk per cow to the tune of an additional 25 million pounds (+0.1%) of total US milk. But the 104 million pound increase to January’s 23 State volume was explained by USDA - South Dakota was added to the rolls while Missouri was excluded beginning this month. This accounted for more than two-thirds of January’s 23 State revision, though it was promising to see states like Idaho and Wisconsin post upward revisions of 25 and 13 million pounds, respectively.
What is NOT promising in this report, says Meyer, is the lack of herd growth on the back of very strong on-farm margins. Milk cows in the 23 States are 13,000 head above last February but LOST 1,000 head versus the prior month. In the entire US, the milking herd still trails last year by 12,000 head and failed to add ANY cows between Jan and Feb. And while 2013 year-to-date weekly dairy cow slaughter rates are 8.5% BELOW last year accounting for 49,300 less animals culled (thru March 1) overall, the milking herd is just 9,000 head more than it was at the end of 2013.
Meyer adds that regional differences continue to play out as major factors in commodity pricing. California has averaged 5% YOY growth since the beginning of the year while Minnesota and Wisconsin have both seen setbacks for four straight months. Extremely challenging weather conditions and poor feed quality have been to blame for their woes, home to major cheese producers. And though Idaho has come back from its struggles earlier this year it did endure six straight months (July-Dec) of YOY declines.