Coming off of the three-day weekend at the Chicago Board of Trade, the Class III milk contracts moved up on Tuesday and Wednesday. Thursday morning, July and August milk softened. Ever.Ag Principal Mike North says the rally could continue if cow numbers and milk production fall.
However, the latest production report from USDA’s National Agricultural Statistics Report has milk production sitting flat in Wisconsin and across the national average compared to May 2022. North says that will likely change as this drought continues, pushing feed costs up.
“As much as we thought that we could start seeing the herd reduced, we just haven’t seen that yet. I do believe that as we walk forward, that tune is going to start to change,” he says. “We just watched the corn price move up $1.30 from where it was just a few weeks ago. We watched soybean meal prices go up about $50 a ton from where they just were a few weeks ago. The feed picture that was starting to look more friendly is now moving in the other direction.”
Milk production did fall in top producing Western states, such as California (down 0.7 percent from 2022) and New Mexico (down 3.8 percent from 2022). The number of milk cows on farms in the 24 major states was 8.95 million head, 24,000 head more than May 2022, but unchanged from April 2023.
Milk production in Wisconsin during May 2023 totaled 2.79 billion pounds, up 1 percent from the previous May. The average number of milk cows during May, at 1.27 million head, was 1,000 above April but down 4,000 from May 2022. Monthly production per cow averaged 2,195 pounds, up 35 pounds from last May.
Less milk would be price supportive for the U.S. dairy market, North says. He notes the price of beef may help reduce cow numbers.
“With beef prices where they’re at, this is ultimately a very inviting thing for those who are looking to thin the herd, make an exit… and that will certainly invite a little bit more optimism around the available milk pool,” he says. “Right now, we do have a little bit more milk than what processors can manage given the tight labor market and the ability to maintain plant capacities. If we can remove some of the cows, that would be very, very helpful.”
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