Dairy exports have added strength to butter, cheese, nonfat dry milk and dry whey prices. But, world prices have weakened some and U.S. exports appear to be slowing down. Yet, for June total export value was a record high $423 million, up 24% from June 2010. On volume basis compared to a year ago June exports of nonfat dry milk were still 6% higher, total cheese 19% higher, butterfat 2% higher, lactose 23% higher, but total whey proteins 14% lower. As a percent of production June exports accounted for 47% of the nonfat dry milk, 4.3% of cheese, 10.7% of butterfat, 71% of dry whey and 62% of lactose. On a total milk solids basis June exports were equivalent to 14.2% of U.S. milk production. While imports were also higher than a year ago, the increase was much less than U.S. exports resulting in a trade surplus of $1.16 billion for the first half of the year compared to a surplus of $732, 2 million during the first half of 2010. Milk production is anticipated to recover in 2011/12 for both New Zealand and Australia, which account for about 40% of world dairy trade. This likely will lower U.S. exports this fall and into 2012, but yet remain relatively high historically.
The level of milk production for the remainder of the year of course will be a major factor where milk prices will end up. USDA's estimated milk production for the month of July shows milk production continues above year ago levels, but the increase continues to slow. For the U.S. as a whole USDA estimated July milk production just 0.7% higher than a year ago compared to a 1.0% increase in June and increases of 2% plus during January through March. The nation's cow herd continues to get larger from one month to the next which began with October of last year. This has occurred despite more dairy cows going to slaughter. But, as of July 1st the number of dairy replacements stood at 4% higher than a year ago. July cow numbers stood at 0.8% higher than a year ago. But for the first time this year milk per cow was lower than a year ago being 0.2% lower in July. Contributing to this lower milk per cow was high grain and concentrate prices reducing the amount fed to dairy cows and extreme heat in the Northeast and Upper Midwest which depressed milk per cow.
The affect of extreme heat in the Northeast and Upper Midwest is very evident by what happened to milk production in these states. In the Northeast, July milk production from a year ago was down 0.2% in New York, 3.2% in Pennsylvania and 1.5% in Michigan. In the Upper Midwest, July production was down 6.6% in Minnesota, 3.5% in Wisconsin, 7.1% in Iowa and 5.0% in Illinois. While cow numbers were a little lower for some of these states the extreme heat depressing milk per cow was the primary factor. In comparison states with much more favorable weather located in the West had relatively strong increases in July milk production. July production was up 4.8% in Arizona, 4.4% in California, 5.7% in Colorado, 4.8% in Idaho, 6.6% in Washington, 2.4% in New Mexico and 8.3% in Texas. Of these states only Colorado had a little less milk per cow and all of the states had added cows.