The spring flush is upon us but farm milk tanks are not exactly bulging. The Agriculture Department’s preliminary data shows March output at 19.8 billion pounds, up 2.1 billion from February, but only 90 million pounds or 0.5% above March 2022, and less than the 1.1% increase in February. 

The 24-State March total, at 18.9 billion pounds, was up 1.9 billion pounds from February and up 0.6% from a year ago. The February 50-State total was revised up 51 million pounds, while the 24 State total was revised up 48 million pounds.

Milk output in first quarter 2023 totaled 56.8 million pounds, up 1% from 2022, with cow numbers at 9.42 million, up 20,000 from fourth quarter 2022 and 40,000 more than first quarter 2022.

Farmers have added cows however, despite the high feed prices and falling milk income. Cow numbers totaled 9.435 million, up 6,000 head from the February count which was revised up 12,000 head, 28,000 more than in January, and up 31,000 from a year ago. This makes for the largest dairy herd since August 2021. The 24-State count was also up 6,000 from February and 44,000 above a year ago, largest since July 2021.

Output per cow averaged 2,099 pounds, up 3 pounds or 0.1% from March 2022. 

StoneX reported that milk components improved in March after being weak in January and February. Combined fat and protein was up 0.7% from last year after being up just 0.3% in February.

HighGround Dairy observed; “With heavy livestock slaughter through the first three months of 2023, it is surprising that the US milking herd continues to grow.”

Dairy culling continues to outpace that of a year ago. The latest Livestock Slaughter report shows an estimated 306,100 head were sent to slaughter under federal inspection in March, up 39,600 from February, and 8,900 or 2.3% above March 2022. 

“Beef supplies in the US are tight,” says HighGround, “and after spring flush, when production drops, farmers may be even more motivated to send lower-producing cows to processing plants to manage expenses against lower milk prices and higher feed costs.”

The Agriculture Department’s monthly Livestock, Dairy, and Poultry Outlook projects US milk cows will average 9.400 million head, 10,000 higher than last month’s forecast. The annual milk-per-cow projection was lowered 10 pounds from last month to an average 24,335 pounds per head.

The International dairy market looked a little more promising Tuesday as the Global Dairy Trade auction weighted average surprised the trade and reversed four successive declines, jumping 3.2% and the first GDT gain since February 7.

Traders brought 50.1 million pounds of product to market, down from 52.5 million on April 4, and the average metric ton price advanced to $3,362 US, up from $3,227.00 on April 4.

All products offered moved higher led by skim milk powder, up 7.0%, after falling 2.5% on April 4. Whole milk powder was up 1%, following a 5.2% downfall. GDT Cheddar was up 5.7%, after jumping 3.8%. Butter was up 4.9%, after falling 3.3%, and anhydrous milkfat was up 4.7%, following a 7.2% plunge on April 4.

StoneX says the GDT 80% butterfat butter price equates to $2.1332 per pound US, up 10 cents after losing 6.8 cents on April 4, and compares to CME butter which closed Friday at a pricy $2.40. GDT Cheddar, at $2.0006, was up 11 cents, and compares to Friday’s CME block Cheddar at a bargain $1.75. GDT skim milk powder averaged $1.2590 per pound, up from $1.1699, and whole milk powder averaged $1.4012 per pound, up from $1.3846. CME Grade A nonfat dry milk closed Friday at $1.1650 per pound.

Analyst Dustin Winston reports that “North Asian purchases, which includes China, Middle East, European, and North American purchases exceeded year-ago levels. The Middle East was the only region to increase purchase volume from both the last event and last year. Southeast Asia purchases faded in this event,” he said, “falling from both last year and last event levels.” 

HighGround Dairy cautioned that “The auction was not direction setting, with likely short term demand arriving from Middle Eastern buyers driving this upside surprise. This result will also add more confusion to the already volatile skim milk powder market, which HG expects to correct at the following auction.”

CME block Cheddar fell to $1.7450 per pound Thursday, lowest since Sept. 1, 2022, but closed Friday at $1.75, 2.50 cents lower on the week, fourth week of decline, and 64.25 cents below a year ago when it peaked at $2.3925. 

 The barrels reversed three weeks of loss, and finished at $1.5525, up 4 cents on the week, 81.75 cents below a year ago, and 19.75 cents below the blocks. 

Sales totaled 29 cars of block, highest weekly sum since the week of May 31, 2021, plus a whopping 85 loads of barrel, highest since Dec. 16, 2017. There were 26 traded Wednesday alone, highest one day total since Jun. 21, 2018. The previous week saw 47 sales and Friday was the fifth time this year that over 20 loads were traded in a single session.

 The cheese market was encouraged this week by an announcement that McDonalds will enhance its burger lineup by adding more cheese. The trial will begin on the West Coast, meanwhile Midwest cheesemakers continue to report widely available milk, according to Dairy Market News. Mid-week spot milk prices remained from $11 to $4 under Class. Cheese demand is “steady to strong,” says DMN, but there is some near term concern regarding inventory levels.

Varietal cheeses have strong to steady demand from western retail and food service purchasers. Inventories through April remain sold out for some. Asian demand is reported as strong by some while others say Asian purchasers are buying from other sources. Milk volumes are plentiful, enabling maximum to strong production schedules.

Cash butter climbed to $2.4025 per pound Wednesday, the highest in four weeks, but closed Friday at $2.40, up 7.25 cents on the week but 26.75 cents below a year ago, with 16 sales reported for the week.

Central butter demand has softened seasonally the past few weeks, says DMN. Churning is still very busy though cream was less available this week. Multiples ticked up and some expect further cream price increases near term, says DMN.

Cream is plentiful in the West, with strong to steady cream demand continuing as cream multiples moved higher this week. Strong to steady butter production continues. Butter is moving well, with a steady pull on inventories. Export demand is steady to lighter due competitive prices from European and Asian markets, however, Canadian purchases increased this week.

After falling to $1.1225 per pound Monday, CME Grade A nonfat dry milk found itself at its lowest price since Feb. 24, 2021. Tuesday’s GDT reversed that and the powder closed Friday at $1.1650, up 3.50 cents on the week but 59 cents below a year ago, with 7 sales put on the board for the week.

Dry whey slipped to 35 cents per pound Monday, lowest since Jan. 31, 2023, then headed back up to 38.25 cents Wednesday, but closed Friday at 36.25 cents, unchanged on the week but 27.25 cents below a year ago. There were 35 sales on the week, down from 47 the week before.

The May Federal order Class I base milk price was announced at $19.57 per hundredweight, up 72 cents from April but $5.88 below May 2022. It equates to $1.68 per gallon, down from $2.19 a year ago. The five month Class I average stands at $20.12, down from $22.81 a year ago and compares to $15.70 in 2021.

Fluid milk sales were back to their old ways in February. The Agriculture Department’s latest data shows packaged sales totaled 3.4 billion pounds, down 3.2% from February 2022, following a 0.6% slippage in January. A general rule of thumb says a 4% decline in fluid milk sales means about 1% of milk nationally will end up in manufacturing instead of in the jug. 

One more positive note; the Mar. 16 Daily Dairy Report says “Sales of lactose-free and low-lactose milks are growing even more rapidly than plant-based alternatives. These milks include longstanding brands like Lactaid, as well as the newer ultra-filtered, nutrient-dense, high protein milks such as Fairlife and to a lesser degree the much newer A2 milks. While technically not low-lactose, A2 milk, which contains only the A2 protein, have been shown to prevent some symptoms for those who suffer from lactose malabsorption,” the DDR stated.

Dairy margins were mixed over the first half of April, weakening in nearby periods while holding steady further out on the curve, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.