February’s milk production took another dip, dropping 1.3% on a leap-year-adjusted basis. This is the eighth consecutive month marking a decline in year-over-year output. The decrease in production remains consistent, with the January volume being revised down to a 1.2% decline, compared to the initially reported 1.1% drop. Citing the root causes – fewer cows and poorer yield – the industry is grappling with the continuous downtrend in overall milk production. At present, there appears to be limited signs of an imminent recovery, as farm-level profitability remains elusive.
It’s interesting to note that despite the spread of HPAI throughout a small number of herds, so far there hasn’t been any negative impact on milk output. Speaking of the herd, it grew by 10,000 head in February, in stark contrast to the steep 28,000 head drop reported in January. However, don’t be misled by these figures – cow numbers still hover near the 2019 low, showing a reduction of 89,000 head year-over-year. Intriguingly, the rise in February’s figures is largely attributed to a surge in Texas, where the count increased by 10,000 head within the month.
Yield Statistics
Milk per cow was down a leap-year adjusted 0.4%, following January’s 0.3% drop. Yeild has been lower year-over-year in six of the past eight months, revealing an uncommon weakness that opposes the long-term average of 1% year-over-year growth.
In other dairy news, February Cheese production suffered a 0.6% decline on a leap-year-adjusted basis, marking the third consecutive year-on-year drop. Although this decline was prominent in both the central and western regions (down by 0.8%), it’s noteworthy that it saw a 1.4% upswing in the Atlantic region. Less American-style volume driven this weakness, which is a trend we’ve already noticed in the January Cheese production report. Cheddar output resulted in the lower American production in February, with its volume down by 7.2% year-over-year. Despite the decline in American-style, Italian-style cheese saw an upswing, recording a 0.8% increase year-over-year, despite a 0.3% drop in Mozzarella output.
On a brighter note, butter production grew by 1.9% year-over-year in February, marking a third monthly increase. When adjusted to a daily average basis to account for the leap day, this marked the highest February butter output in record, suggesting positive trends despite strong volume and climbing stock bearish leanings.
The ongoing decline is also evident in the production of combined Nonfat Dry Milk/Skim Milk Powder. With a 19.3% year-over-year dip on a leap-year-adjusted basis, February signified the ninth consecutive month of lower output. Stocks saw a reduction of 2.6 million pounds in February, amounting to a total of 209.6 million pounds but are down by 106.2 million pounds year-over-year.
Nonetheless, despite these challenges, exports in February charted a comeback, assisting in driving the first year-over-year gain since January 2023. This win is largely credited to the strength in cheese, nonfat dry milk, and whey powder exports. Cheese shipments, in particular, achieved record-high monthly volumes when measured on a daily average basis; a feat aided by competitive US cheese pricing in the first quarter.
February certainly brought some positive news for nonfat dry milk, with exports improving versus their performance last year, following a 14% decline in January. This increase is largely attributed to the elevated demand from Southeast Asia, offsetting the weakness to Mexico. Meanwhile Dairy Consumer Price Index ticked downward for the seventh straight month in March, indicating relentless dairy product price deflation.
As we dig deeper into these shifts and trends, it’s clear that the dairy industry is facing a unique combination of challenges and opportunities. We’ll continue monitoring these on-the-ground realities and bring you further updates and insights.
