The dairy industry remains captivated by the diagnosis of highly pathogenic avian influenza (HPAI), now confirmed by USDA on dairy farms in Kansas, Texas, Michigan, New Mexico, Ohio and Idaho. Analysis is underway for additional presumptive positive tests from herds in Kansas, New Mexico, Ohio and Texas.

One case has been confirmed in Idaho, three in Kansas, one in Michigan, two in New Mexico, one in Ohio, and seven in Texas. Restrictions on dairy cattle movement are in place in Delaware, Idaho, Nebraska, Tennessee and Utah.

The National Milk Producers Federation states, “There continues to be no concern about the safety of the milk supply or that this circumstance poses a risk to consumer health because products are pasteurized before entering the market, per the Food and Drug Administration. Only milk from heathy animals is authorized for distribution into interstate commerce for human consumption. Additionally, pasteurization has continually proven to inactivate bacteria and viruses, including influenza, in milk.”

The U.S. Centers for Disease Control and Prevention (CDC) announced Monday that a person in Texas tested positive for avian influenza after exposure to dairy cattle presumed to be infected with the H5N1 bird flu. “The patient reported eye redness as their only symptom, and is recovering.” The U.S. human risk assessment remains low, however the CDC said, “People with close or prolonged, unprotected exposures to infected birds or other animals (including livestock), or to environments contaminated by infected birds or other animals, are at greater risk of infection.”

HighGround Dairy reports that this is actually the second person to have tested positive for influenza A (H5N1) viruses in the U.S. A previous case occurred in 2022 in Colorado. The CDC notes that human infections of avian influenza are uncommon but have occurred sporadically worldwide.”

Speaking in the April 8 “Dairy Radio Now” broadcast, StoneX broker Dave Kurzawski said no one knows what impact this outbreak will have on the market but says we have some historical reference. He said Christmas Eve 2003, Mad Cow disease, BSE, was first reported in dairy cows in Washington State and, “The cattle markets broke hard over it and the price of cheese went from $1.2975 per pound to $2.20 in April, four months later because other things mattered more.

“When the U.S. consumer hears cattle, they think beef,” he reasoned, “They don’t necessarily think milk on their cereal or cheese on their pizza but it’s early in this ongoing situation.” He does not think it will matter much for dairy demand.

If it spreads, the impact would be more on the supply side, he said, because cows produce less milk as they get sick, some do not bounce back, some even die. The markets may be concerned about it but he doesn’t see it as a long term problem.

“Short of putting a giant net over the dairy to keep birds out,” Kurzawski said, “There’s probably not a lot more that can be done, other than what farmers are already doing, such as washing equipment and trucks more thoroughly.”

The March Federal order Class III milk price was announced at $16.34 per hundredweight, up 26 cents from February but $1.76 below March 2023. The three-month average stands at $15.86, down from $18.44 at this time a year ago, and $21.25 in 2022.

Class III futures remain disturbing. The April contract was trading late Friday morning at $15.55; May, $16.36; June, $16.93; July, $17.42; August, $17.97; September, $18.22; October, $18.30; November, $18.20; and December $17.91.

The March Class IV price is $20.09, up 24 cents from February, $1.71 above a year ago, and the highest since November 2023. Its three-month average is at $19.78, up from $19.08 a year ago, but compares to $23.97 in 2022.

Dairy margins deteriorated further the last half of March as milk prices continued to move lower while feed costs held steady, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

The MW stated, “While USDA’s latest monthly Milk Production report reflected a continued trend of declining output, the Cold Storage report was negative for cheese inventories which has kept pressure on that market and Class 3 milk futures. USDA reported February milk production at 18.1 billion pounds, down 1.3 percent from a year ago after adjusting for this year’s leap day. February marked the eighth consecutive monthly decline from year-ago comparisons, and the largest monthly production decline year-over-year since January 2022. January’s milk output was also further revised down to reflect a 1.2 percent decline from 2023, with February’s dairy cow herd at 9.33 million head, down 89,000 from last year but up 10,000 from January’s revised estimate. February’s monthly increase in the milking cow herd was the largest in nearly a year and may suggest the economics of cow retention have started to shift for some operations.”

The MW also detailed the Avian Influenza outbreak and stated, “Increased biosecurity measures will limit heifer movement and the culling of unproductive animals may further tighten supply.”

Most cash dairy prices start April higher as traders try to anticipate the effects of the influenza outbreak. The CME Cheddar blocks closed Friday at $1.5150 per pound, up 9.75 cents on the week, highest since March 4, but are still 31.50 cents below a year ago, as traders awaited Friday afternoon’s February Dairy Products report.

The Cheddar barrels finished at $1.53, 10.25 cents higher, 19 cents below a year ago, and 1.50 cents above the blocks. There were 42 loads of block traded on the week, highest since the week of June 26, 2023, and 29 of barrel.

Manufacturers report cheese production is strong in the West. Milk volume is plentiful due to the season and spring breaks cycling through the region. Industry participants convey strong to steady cheese demand. Demand from pizza makers has strengthened this year compared to the prior year, says DMN.

Butter closed Friday at $2.94 per pound, highest CME price since Nov. 6, 2023’s $3.01, up 9.75 cents on the week and 62.25 cents above a year ago on 33 sales.

Butter makers in the Upper Midwest say demand has held somewhat steady with recent weeks. Year-over-year sales, both prior to and just following the holiday, were a bit lower than last year’s. Food service demand is following the same pattern. Cream remains widely accessible. That said, some of the sub-1.00 multiples from the previous week were not reported this week. Some Central butter makers have cream deliveries locked in through the rest of April. Butter markets continue to meet or beat expectations, says DMN.

Butter makers convey strong to steady production in the West as they build inventories for fourth quarter ahead of summer churn maintenance. Domestic butter demand is strong to steady following the recent shorter holiday week.

U.S. dairy exports topped those of a year ago for the first time in a year, according to the USDA’s latest data. Sailings totaled 483.8 million pounds, adjusted for Leap Year, up 5.5 percent from Feb. 2023, and set a monthly record. HighGround Dairy credited increased sales to Mexico, up 4.5 percent, and up 20 percent to Southeast Asia, though exports to China were down 24 percent.