Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Vitaliano: Dairy market trajectories seeking direction

Domestic dairy product prices have softened in the past few months but remain at historically high levels. High dairy product wholesale prices continue to drive rapid retail price inflation, which is taking a toll on domestic consumption at both retail and food service, notes National Milk Producers Federation’s (NMPF) Peter Vitaliano, summarizing markets in the August 2022 Dairy Management Inc./National Milk Producers Federation Dairy Market Report.

Even as higher prices domestically are taking a toll on consumption closer to home, overseas demand for U.S. dairy products continues at a blistering pace. The U.S. dairy industry achieved another record export volume in June, shipping 19.6%, or almost one-fifth, of its total milk solids production to foreign countries.

For more information on commercial use, dairy trade, milk production, product inventories, prices and margins, click here.

Dairy cull cow marketing slower in July

Marketing of U.S. dairy cull cows through U.S. slaughter plants continued behind last year’s pace in July. At 230,100 head, it was the second-lowest monthly total in the past year.

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The July 2022 total was down 2,900 head from June and 17,800 head less than July 2021. July 2022 had had one less non-holiday weekday/Saturday than the year before.

At 1.75 million head, year-to-date (January-July 2022) cull dairy cow slaughter was about 66,500 less than the same period a year earlier. Factoring in the slowdown, the USDA’s Milk Production report estimated there were 9.416 million cows in U.S. herds in July 2022, down about 67,000 head from the same month a year earlier.

In contrast to dairy cow culling, drought is pushing beef cattle producers to reduce cow herds. Year-to-date beef cow slaughter is up more than 280,000 compared to the same period in 2021, topping 2.29 million head.

Heaviest dairy culling during July 2022 occurred in the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 60,300 head. That was followed in the Southwest (Arizona, California, Hawaii and Nevada), where 49,900 dairy cows were marketed for beef. 

Other regional totals were estimated at 35,800 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 30,700 head in Alaska, Idaho, Oregon and Washington; and 26,200 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

Primary data for the USDA’s Livestock Slaughter report are obtained from reports completed by inspectors from the USDA Food Safety and Inspection Service (FSIS). These counts are combined with data from state-administered non-federally inspected (NFI) slaughter plants to derive total commercial slaughter estimates. The USDA estimates there are approximately 900 livestock slaughter plants in the U.S. operating under federal inspection and nearly 1,900 state-inspected or custom-exempt slaughter plants.

Canadian cow, heifer numbers down slightly

As of July 1, 2022, there were 972,300 dairy cows in Canada, down about 8,000 head from the year before, according to data compiled by the USDA and Statistics Canada. 

The report also estimated there were 419,600 dairy heifers aged 1 year or older, down about 10,400 from a year earlier.

Records indicate Canada’s dairy herd fell below 1 million cows in about 2006. The 2022 Canadian total would be equal to the combined dairy herds of New York, South Dakota and Kansas in the U.S.

Previously, the USDA National Ag Statistics Service estimated the number of dairy cows calving in the past year in the U.S. at 9.45 million head, down about 50,000 from July 1, 2021. Dairy replacement heifers weighing more than 500 pounds were estimated at 3.75 million, also down 50,000 head from a year earlier. 

June fluid sales lower

Here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for June 2022. 

  • Total sales: Sales of packaged fluid milk products totaled about 3.33 billion pounds, down about 1.7% from the same month a year earlier. At 21.62 billion pounds, year-to-date (January-June 2022) sales of all fluid products were down 2.3%.
  • Conventional products: Monthly sales totaled 3.1 billion pounds, down 1.8% from the same month a year earlier. Year-to-date sales totaled 20.2 billion pounds, down 2.3% from the first half of 2021.
  • Organic products: Monthly sales totaled 234 million pounds, down 0.5% from a year earlier. At 1.44 billion pounds, year-to-date sales of all fluid products were down 2.3%. Organic represented about 7% total fluid product sales in June and 6.7% year to date.

The U.S. figures are based on consumption of fluid milk products in Federal Milk Marketing Order (FMMO) areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

FarmFirst hosts ‘FMMO modernization’ webinar

FarmFirst Dairy Cooperative provided members a virtual presentation on FMMO modernization in August. FarmFirst General Manager Jeff Lyon serves on the NMPF Federal Order Task Force.

During the one-hour Zoom presentation, Peter Vitaliano, NMPF vice president of economic policy and market research, provided insight on the latest task force discussions, covering make allowances, the Class I mover, milk composition and dairy products/product specifications (price discovery, block-barrel cheese price spread) among other considerations. You can watch the full webinar here. 

AFBF sets FMMO Forum in Kansas City, Oct. 14-16

The American Farm Bureau Federation (AFBF) will host a FMMO Forum, Oct. 14-16, in Kansas City, Missouri.

The forum will consist of four half-day segments, featuring expert panels and roundtable discussions covering: (1) Class I pricing issues; (2) origins and purposes of FMMOs; (3) Class III-IV milk pricing issues; and (4) simplifying FMMOs. Discussion topics will include the Class I mover, make allowances, price reporting, milk check standardization and more.

The forum is open to all dairy industry participants. Registration is open until Sept. 22. For more information, visit the forum website.