The latest USDA’s July Milk Production report highlights an impressive jump in milk output, reaching a 3.4% year-over-year increase. This surge marks the largest growth we’ve seen since 2021.
A significant factor contributing to this climb is the substantial 3.8% increase in California’s milk production. According to Kathleen Noble Wolfley, the market intelligence director at Ever.Ag, California’s mild summer was a key driver in boosting productivity. Interestingly, the highly pathogenic avian influenza (HPAI) didn’t impact California until September, which suggests the results from this summer are quite standalone. With these influences and circumstances at play, further substantial gains seem likely for the state.
Expanding Herds and New Capacity Areas
Cow numbers are also on the rise, with an increase of 10,000 head from June, raising the total cow count by 159,000 compared to last year. The growth isn’t evenly distributed, with Kansas, Texas and South Dakota witnessing substantial increases. These states have added a combined total of 92,000 head year-over-year, supported by the construction of new plant capacities. This regional growth is contributing to production increases of 18.6%, 8.4% and 10.6%, respectively.
Tom Peterson, executive director of South Dakota Dairy Producers, expressed his excitement over the rapid expansion of the state’s dairy industry.
“In the early 2000s, cow numbers in this state were fewer than 80,000 head,” he says. “Much of that growth has taken place in the last five years, all with 150 permitted class A farms.”
Phil Plourd, president of Ever.Ag Insights shared with Dairy Herd Management last month “at the same time, generally speaking, producers have been seeing decent margins and new capacity means plenty of interest in additional milk supply,”
Although Noble Wolfley notes that milk prices have pulled back in recent weeks, but weaker feed costs and elevated beef incomes should continue to support farm margins.
“That combined with an aim to fill new capacity and weaker year-to-year comparisons in California should keep milk output expanding through yearend,” she says.
Milk production in the 24 major states during July reached 18.8 billion pounds, marking a 3.5% hike from July 2024. This comes after June’s revised production of 18.5 billion pounds, up 3.4% from the previous year. Though seemingly small, the June revision adds up to an increase of 5 million pounds or less than 0.1% over the initial estimates. When you look at production per cow, the average in the major states was 2,081 lb. for July, a 36-lb. improvement over last year.
Future Outlook
Nationally, the U.S. reported a total milk production of 19.6 billion pounds in July, reflecting the consistent 3.4% increase from July 2024. Cows in the U.S. averaged 2,063 lb. each for the month, up by 34 lb. compared to last year. The U.S. cow herd expanded by 159,000 head year-over-year, supporting this increase.
Plourd says the scenario spells a lot of cow power and decent milk production growth over the next several months is likely to unfold.
This snapshot from USDA underscores the dynamic nature of the dairy industry and the factors driving growth in different regions. Stakeholders in the dairy industry share the enthusiasm for the growing cow numbers and milk production capacity. This robust trend of growth in the dairy sector is driving economic benefits across multiple states, with continuous improvements in cow management and production strategies as key drivers. The influx of processor investments (some 8 billion plus dollars) across the U.S. countryside underscores the high demand for this increased milk supply.
Surge in Exports
The dairy sector is not only thriving domestically but also on the international front. June dairy exports also witnessed a big surge with year-over-year milk solids equivalent volume up by 15%, elevating total U.S. dairy exports by 1.2% on a year-to-date basis. The surge in exports has also been mirrored in export value, which increased by 15% to reach $4.72 billion, underscoring the strong international demand for U.S. dairy products.
Monica Ganley, senior director of global trade analysis with the U.S. Dairy Export Council, attributes the uptick to improved U.S. milk production alongside tepid domestic demand, which has kept U.S. product prices affordable for global buyers. In particular, cheese has stood out, with international markets showing a voracious appetite for U.S. offerings.
“This combination has resulted in plentiful supply as well as very competitive prices for U.S. products compared to other international suppliers. In some cases, especially cheese, international demand has also been robust, which has further helped to drive export sales to a record high in June in the case of cheese,” she says.
The USDA’s report paints a positive picture of the dairy industry’s growth trajectory, highlighting the factors fueling its expansion. From increasing herd sizes to robust export growth, the industry is poised for continued success, backed by effective production strategies and substantial investments across the U.S. countryside.
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