Despite rising milk prices, lower feed costs and strong international demand for milk and dairy products, U.S. milk cow numbers declined for the fourth straight month in November, down 5,000 head from October.
Cow numbers declined 2,000 head in October, 27,000 head in September and 10,000 head in August from the previous month.
Milk per cow also declined nationwide in November, down 46 pounds from October and up 1 pound from November. Total milk production at just over 16 billion pounds was down about 2.6 percent from October and only 0.1 percent higher than November 2012.
Rapidly rising milk prices are sending a clear signal to the U.S. dairy industry that the world needs more milk, however, U.S. dairy producers have yet to react to this “call to action,” HighGround Dairy analysts commented in their report today.
Analysts have been forecasting an increase in cow numbers for the last two months, since USDA-NASS resumed its reporting of those numbers, but it has yet to happen. U.S. cow numbers have declined 44,000 head since July, and November’s cow count is 3,000 head less than November 2012.
Cow numbers were down year-over-year in eight of the 23 reported milk-producing states in November, milk per cow was down in 11 states and milk production was down in 10 states.
The West saw year-over-year declines in milk production in Idaho, down 1.8 percent, and New Mexico, down 0.8 percent. Those declines were due to fewer cows and less milk per cow. Both states are down 7 percent in milk production year to date.
The Upper Midwest also saw declines in its big cheese states of Wisconsin, down 0.6 percent, and Minnesota, down 1.9 percent.
That decline in milk production was due to less milk per cow. Those states were hit with substantial winterkill of alfalfa and a wet, early summer followed by summer drought that first curtailed alfalfa harvest and later reduced hay yields, said Bob Cropp, professor emeritus, University of Wisconsin, in his Dairy Situation and Outlook report released this morning.
“So there are dairy farmers in Wisconsin and Minnesota with lower forage quality as well as quantity,” he said.
The relatively small year-over-year increase in milk production in November, the seasonal good demand for cheese and butter and very strong dairy exports are resulting in higher prices for dairy products and farmers, he said
Spot butter prices on the CME are at $1.56 per pound, cheddar blocks are hovering close to $1.99 a pound, and cheddar barrels are at $1.93. Nonfat dry milk has been trading around the $2 a pound range, he said.
High product prices will result in a December Class III milk price near $19 per hundredweight and a Class IV price near $21.50. For 2013, the Class III price could average 55 cent higher than 2012, Class IV could average $3 higher and the all-milk price could average $1.45 higher, he said.
For the first quarter of 2014, the Class III price could average near $18.25 and Class IV could average about $21.35. For the second quarter, those prices could average in the high $17s and the low $20s, respectively, he said.
Even with an expected increase in cow numbers, milk per cow and milk production due to higher milk prices and lower feed costs, the average all-milk price for 2014 should drop no more than 50 cents from the 2013 expected average of $19.95, he said.