Milk production in May remained lower than the previous year. There had been some anticipation that production would be closer to the level of a year ago. The reason for this was the potential for higher milk prices based on what milk futures indicated. Higher milk prices generally result in stronger milk production as farmers do what they can to improve output. Higher milk prices make purchasing replacements at the current high prices less painful. It also decreases the desire to cull cows heavily.
More income is being generated from beef-on-dairy reducing the need to cull cows for more income. Many farms have been able to boost farm income substantially through the sale of beef-on-dairy calves.
Dairy cattle slaughter in May totaled 216,100 head, down 22,100 head from April and 33,000 lower than May 2023. This is the lowest monthly dairy cattle slaughter since July 2016 and the lowest amount for May since 2016.
May Dairy Cattle Slaughter (813x416, AR: 1.95)
That may be the reason cow numbers increased by 5,000 head totaling 9.35 million head in May according to the milk production report. This was also the highest number of milk cows since October 2023. However, milk production remains below a year ago due to 68,000 fewer cows than a year ago.
Of the top 24 states, there were just 6 states that showed an increase in cow numbers from a year earlier. South Dakota increased by 23,000 head. Florida increased by 10,000 head. Iowa and Wisconsin gained by 4,000 head each. Ohio increased its dairy herd by 3,000 head and Michigan gained 2,000 head. The largest decline in cow numbers took place in New Mexico with a decline of 47,000 head from a year ago.
Class IV futures remain higher than Class III futures and are expected to remain that way. The butter price should be supported through the summer and fall as demand improves seasonally and the price outpaces cheese prices. Butter supply is tightening in Oceania with prices rising. The latest Global Dairy Trade auction showed the butter price at $3.33 per pound making the U.S. butter price competitive on the world market. This may improve exports as the year progresses.
For more on markets, read:
Milk Futures Indicate Prices May Be Much Better Than Last Year
Springers, Calves and Beef-Cross Animals all Bring Big Money
Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com.
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