March 2018-19 recap at a glance
Reviewing the USDA estimates for March 2019 compared to March 2018:
- U.S. milk production: 18.9 billion pounds, down 0.4 percent
- U.S. cow numbers: 9.344 million, down 86,000 head
- U.S. average milk per cow per month: 2,024 pounds, up 10 pounds
- 23-state milk production: 17.8 billion pounds, down 0.1 percent
- 23-state cow numbers: 8.714 million, down 50,000 head
- 23-state average milk per cow per month: 2,044 pounds, up 10 pounds
Source: USDA Milk Production report April 22, 2019
Eight states increased cow numbers compared to March 2018 (Table 1), with the largest jump in Texas (+27,000 head). Colorado and Idaho (each +9,000) and Kansas (+7,000) also posted strong gains. In contrast, Pennsylvania (-29,000) and New Mexico (-12,000) led decliners, with Arizona, California, Illinois, Ohio and Virginia each down 9,000 to 10,000 head. Iowa, Minnesota and Wisconsin were down a combined 11,000 head.
Weather issues impacted output per cow in several states, with cows in nine states yielding less milk in March than the same month a year earlier (Table 2).
Among all major states, Texas led in terms of both volume and percentage of milk production increase, up 65 million pounds (5.8 percent) compared to March 2018. Pennsylvania milk production was down 66 million pounds, a 6.9 percent decline.
U.S. milk production in the first quarter of 2019 totaled 54.5 billion pounds, up 0.2 percent from the same quarter last year. The average number of milk cows in the U.S. during the quarter was 9.35 million head, 84,000 head less than the same period last year and 8,000 head less than the October-December 2018.
Dairy cow slaughter levels high
U.S. dairy farmers continue to move dairy cull cows to slaughter at a high rate. Federally inspected milk cow slaughter was estimated at 886,000 through March 30, 2019, about 48,200 head more than a similar date a year earlier, according to the USDA.
May Class I base price improves
The May 2019 Federal Milk Marketing Order (FMMO) Class I base price is $16.42 per hundredweight (cwt), moving above $16 for only the second month since December 2017. It is up 66 cents from April 2019 and $1.98 more than May 2018. Through the first five months of 2019, the Class I base price is $15.72 per cwt, up about $1.40 compared to the same period a year ago.
Product inventories build
The USDA’s monthly Cold Storage report was released April 22, reflecting volumes of dairy product inventories as of March 31, 2019.
• Butter stocks were estimated at 270.2 million pounds, up 11 percent from Feb. 28, but 1 percent less than March 2018.
• Total natural cheese stocks were estimated at 1.38 billion pounds, up 1 percent from February and up 4 percent from March 2018. American cheese stocks, at 784.6 million pounds, were up slightly from February, but up 2 percent from March a year ago.
Cropp and Stephenson see recovery ahead
The drop in cow numbers and small gain in milk production per cow spells good news for the rest of the year, according to Mark Stephenson, director of dairy policy analysis, and Bob Cropp, dairy economics professor emeritus.
“Production has really slowed, which ought to help straighten things out and get milk prices moving in the right direction,” Cropp said.
With a continued slide in cow numbers, 2019 U.S. milk production could come in less than 1 percent higher than 2018. Adding to the bullish outlook, the USDA’s March Cold Storage report showed butter and cheese stocks were building seasonally, but slowing, and cheese exports have strengthened.
The improving price outlook is raising projected income margins, which could impact indemnity payments under the new Dairy Margin Coverage program.
Cropp remains more optimistic than the current futures would project. April Class III prices will approach $16 per cwt and could reach into the $17s per cwt in the fourth quarter of 2019. 
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Dave Natzke
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