U.S. October milk production remained below that of a year ago, the fourth month in a row. The Agriculture Department’s latest preliminary data put output at 18.71 billion pounds, down 99 million pounds or 0.5 percent from October 2022. The top 24-state total, at 17.94 billion, was down 0.04 percent.

The September 50-state total was revised up 17 million pounds from last month’s estimate, which put output down 0.1 percent from 2022 instead of the 0.2 percent originally reported. The 24-state revision was up 17 million pounds, up 0.1 percent, instead of the 0.03 percent loss originally reported.

Cow numbers totaled 9.370 million head, down 6,000 from the September count which was revised down 6,000 head. The herd was 42,000 below a year ago and the smallest since January 2022. The 24-state count was down 5,000 from September, which was revised up 6,000 head, but 19,000 below a year ago.

Output per cow in the 50 states averaged 1,997 pounds, up 53 pounds from September, but 1 pound or 0.05 percent below Octorber 2022. The 24-state output averaged 2,013 pounds, up 52 pounds from September but 3 pounds or 0.15 percent below a year ago. Revisions raised September output by 1 pound in both the 50-state and 24-state data.

Fat content is still running strong, according to StoneX, Dairy Group, but protein was only slightly above last year in October. Cow numbers have roughly flattened out since July and given the continued weak dairy cow slaughter, there’s an argument that the big drops in cow numbers are likely done. With all the new productive plant capacity slated over the next 18 months, we’re likely going to need to see cow numbers start to turn around here to stave off heated competition for milk in the second half of the year. Production per cow remains weaker relative to trend and could make things interesting into next year. Feed is getting cheaper and looking at long term trends, we will likely see better production per cow, according to StoneX.

While the decrease in milk output was bigger than expected, there’s no worry that we’re going to run out of milk, but we will need that extra milk, says broker Dave Kutzawski in the November 27 “Dairy Radio Now” broadcast.

He cited the increased processing capacity coming online and said, “We thought cow numbers would be up 1,000 head but they were down 6,000. Slaughter numbers have slowed but remain above a year ago, and we have to start rebuilding the herd.”

Kurzawski blamed low milk prices and high feed costs for the weaker milk output but included the increased fixed costs: labor, fuel, and the cost of money itself, which is the big one right now. “All these things put a wet blanket on the optimistic views of otherwise fairly bullish dairy farmers,” he said. “The cost of doing business has become prohibitive. We needed the increased capacity and we need increased milk output especially as we export more,” he concluded.

China’s dairy imports don’t offer much hope. October whole milk powder, at 40.8 million pounds, was down 31.7 percent from October 2022, lowest figure for October since 2016, according to HighGround Dairy, with New Zealand losing market share.

Skim milk powder imports inched up to 49.5 million pounds, up 0.8 percent, and whey product imports, at 118.9 million pounds, were down 3.6 percent. Butter, at 12.1 million pounds, was down 11.5 percent.

Cheese imports hit 24.8 million pounds, up 15.0 percent, with U.S. cheese marking a huge gain in market share, according to HGD, up to 18 percent from 5.3 percent last year, on 4.5 million pounds for the month, largest volume of U.S. cheese ever imported. Price was the key differentiator, says HGD, with U.S. cheese arriving to China 23 percent cheaper than last year, and slightly cheaper than New Zealand cheese.

HGD adds, “The worrisome levels of milk powder stockpiles in China appear to be diminishing. This indicates a growing preference for domestically produced dairy over imports, a trend that could help stabilize the market in the forthcoming months. The anticipated removal of the free trade agreement may provide additional impetus as we enter the New Year.”

Fluid milk sales looked a little more encouraging in September but were still below those a year ago. The Agriculture Department’s latest data shows packaged sales at 3.5 billion pounds, down 0.9 percent from September 2022.

Conventional product sales totaled 3.3 billion pounds, down 0.7 percent from a year ago. Organic products, at 228 million pounds, were down 4.0 percent, but still represented a pretty typical 6.4 percent of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, up 1.8 percent from a year ago, up 1.3 percent year to date, and represented 35.2 percent of total sales in the nine-month period. Skim milk sales, at 167 million pounds, were down 8.7 percent from a year ago and down 7.9 percent year to date.

Packaged fluid sales January to September totaled 31.5 billion pounds, down 1.8 percent from 2022. Conventional product sales totaled 29.4 billion pounds, down 1.9 percent. Organic products, at 2.1 billion pounds, were down 1.5 percent, and represented 6.7 percent of total milk sales for the period.

The figures represent consumption in Federal market order, which account for about 92 percent of total fluid sales in the U.S. A return to the “Leave it to Beaver Days” of milk consumption would surely strengthen Class I milk prices, pull milk away from cheese, powder, and butter production, and strengthen those prices as well.

The Agriculture Department announced the final Class I base milk price of 2023 at $19.76 per hundredweight, up a penny from November, highest Class I since February, but is $2.82 below December 2022. It equates to $1.70 per gallon, down from $1.94 a year ago. The 2023 Class I average is $19.20, down from $23.66 in 2022, and compares to $16.83 in 2021.

Dairy prices were mostly lower in the holiday-shortened Week. Block Cheddar closed Wednesday at $1.59 per pound, down a penny on the week, lowest since July 19, and 56 cents below a year ago.

The barrels finished at $1.44, 12 cents lower, lowest since July 17, 37.75 cents below a year ago, and 15 cents below the blocks. There was only one sale of block in the three days and 18 of barrel.

Midwest cheese makers tell Dairy Market News that demand is steady to hearty. Bearish prices have customers less hesitant to purchase beyond hand-to-mouth. Spot milk prices were reported below Class for the first time in months and as low as $2.50 below Class III on Tuesday, with some still 25 cents over.

Cheese manufacturers and distributors report mostly steady retail cheese demand in the West, with food service demand steady to moderate. Restaurant traffic remains below a year ago due to rising menu costs.

Cash butter finished Wednesday at $2.50 per pound, up a penny on the week but 44.75 cents below a year ago when it appeared to be making another run to $3 but didn’t.

Thanksgiving week continued to, as expected, open up cream supplies for butter production. Reported multiples are holding in the mid/upper 1.10s for Class IV production.