Editor’s note:This article has been updated to include MPP-Dairy margin calculations for December. Dairy producers insured at the $8 per hundredweight (cwt) margin level will see a payment of about 15 cents per cwt. USDA staff members continue to catch up on reports that were delayed during the partial government shutdown, and Feb. 20 brought to light milk production, price and income margin data from December 2018.
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Dave Natzke
Editor / Progressive Dairy

Milk production growth slows

December 2018 U.S. milk production continued a three-month streak in which year-over-year growth was less than 1 percent. Cow numbers declined for a fourth consecutive month.

With preliminary estimates, total U.S. milk production grew to 217.5 billion pounds, just 0.9 percent compared to 2017. Production in the 23 major dairy states was estimated at 204.8 billion pounds, up 1.2 percent.

Nationally, cow numbers averaged 9.385 million during the year, down 7,000 from 2017. In the 23 major dairy states, the average numbers of cows increased by 9,000 to 8.734 million.

U.S. milk production per cow averaged 23,173 pounds in 2018, up 232 pounds from 2017. In the 23 major dairy states, 2018 production averaged 23,451 pounds per cow, up 247 pounds.

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December 2017-18 recap at a glance

Reviewing the USDA estimates for December 2018 compared to December 2017:

  • U.S. milk production: 18.16 billion pounds, up 0.5 percent
  • U.S. cow numbers: 9.351 million, down 49,000 head
  • U.S. average milk per cow per month: 1,942 pounds, up 21 pounds
  • 23-state milk production: 17.13 billion pounds, up 0.9 percent
  • 23-state cow numbers: 8.715 million, down 21,000 head
  • 23-state average milk per cow per month: 1,966 pounds, up 23 pounds

Source: USDA Milk Production report, Feb. 20, 2019

Nine states increased cow numbers compared to December 2017, led by Texas (+27,000 head), Idaho (+14,000) and Colorado (+12,000 head). Compared to a year earlier, Pennsylvania was down 20,000 cows, and California and Ohio were each down 11,000 head. Cow numbers were down a combined 17,000 head in Michigan, Minnesota and Wisconsin.

Milk prices ended year weaker

The December U.S. average milk price fell another 60 cents per cwt from November to $16.40 per cwt, the lowest since August. With December’s estimate, the 2018 milk price averaged $16.18 per cwt, $1.47 less than 2017 and the lowest annual average since 2009.

Compared to a month earlier, December milk prices among the 23 major dairy states were all lower, led by a decline of 90 cents per cwt in Wisconsin.

Compared to a year earlier, December 2018 milk prices were down at least $1.50 per cwt or more in Florida, Illinois, Kansas, New Mexico, Texas and Wisconsin.

Florida’s average of $20.10 per cwt remained the nation’s high. The lows were in New Mexico and Kansas at $14.70 and $15.30 per cwt, respectively.

MPP-Dairy margin dips below $8 per cwt

Overall December 2018 U.S. average feed costs increased about 22 cents from November to $8.55 per cwt of milk sold. The U.S. average price for corn rose 13 cents to $3.54 per bushel, the highest since June. The average price for alfalfa hay jumped $5 to $180 per ton. The soybean meal price increased about $1.08 from November to $311.70 per ton.

The higher overall feed cost combined with the lower average milk price resulted in a national average milk income over feed cost margin of about $7.85 per cwt in December, the smallest margin since August. 

That means MPP-Dairy participants insured at the $8 margin level will see an indemnity payment of about 15 cents per cwt on their milk marketings.  end mark

Dave Natzke