September milk production was down 0.2% from a year ago and September’s Dairy Products report shows that milk was directed to the churn. StoneX says there was more fat and protein in the milk, along with declining fluid milk sales, so the amount of solids available to turn into dairy products was up about 1.1%.

Cheese production totaled 1.152 billion pounds, down 0.3% from August but 0.1% above September 2022, first month to top a year ago since June. Output in the first nine months totaled 10.55 billion pounds, up just 0.2% from 2022.

Italian cheese totaled 479.5 million pounds, down 0.9% from August and 3.4% below a year ago. American output, at 465.8 million pounds, was up 1.6% from August and 4.2% above a year ago. Mozzarella totaled 380.5 million pounds, down 1.3% from a year ago.

Cheddar, the cheese traded at the CME, totaled 314.6 million pounds, up 1.4 million pounds or 0.4% from August, and 9.4 million pounds or 3.1% above a year ago. Year to date output hit 3.0 billion pounds, up 1.8% from 2022.

Butter production climbed to 144.6 million pounds, up 4.6 million pounds or 3.3% August, and up 4 million pounds or 2.9% from a year ago. Year to date butter stood at 1.6 billion pounds, up 3.5% from a year ago.

Yogurt production totaled 416.3 million pounds, up 4.6% from a year ago, and hard ice cream output, at 61.9 million pounds, was down 1.9% from 2022.

Dry whey production totaled 76.2 million pounds, down 6.6 million pounds or 7.9% from August, but 400,000 pounds or 0.5% above year ago. Stocks fell to 83.4 million pounds, down 5.1 million or 5.8% from August but 16.6 million pounds or 24.8% above those a year ago.

Nonfat dry milk output fell to 101.1 million pounds, down 9.8 million or 8.8% from August, and down 21.8 million or 17.7% from a year ago. Stocks fell to 243.6 million pounds, down 25.8 million pounds or 9.6% from August, and down 29.6 million pounds or 10.8% from a year ago.

Skim milk powder production slipped to 55.7 million pounds, down 3.9 million pounds or 6.6% from August, and 12.7 million or 18.7% below a year ago.

The Agriculture Department lowered its milk production forecasts for 2023 and 2024 in the latest World Agriculture Supply and Demand Estimates report. The 2023 forecast was reduced from last month as milk cow numbers were revised lower in the latest Milk Production report, and the lower estimated numbers were carried into the fourth quarter forecast. Growth in milk per cow was also slowed in the fourth quarter with slower-than-expected growth for third quarter. The 2024 milk forecast was reduced as the lower forecasts of milk cows and milk per cow for late 2023 are carried into 2024, according to the USDA.

2023 production and marketings were estimated at 227.1 and 226.1 billion pounds respectively, down 500 million pounds on both from a month ago. If realized, both would be up 600 million pounds or 0.3% from 2022.

2024 production and marketings were projected at 230.0 and 229.1 billion pounds respectively, down 400 million pounds on production and 300 million on marketings. If realized, 2024 production would be up 2.9 billion pounds or 1.3% from 2023.

The 2023 Class III milk price forecast was raised on a higher expected whey price, but the Class IV price was lowered as a weaker butter price more than offsetting slightly higher NDM. The Class III is projected to average $17.10 per hundredweight, up a nickel from last month’s estimate, and compares to $21.96 in 2022 and $17.08 in 2021. The 2024 average was estimated at $17.70, up 50 cents from last month’s estimate.

The 2023 Class IV price was projected to average $19.20, down a nickel from a month ago, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 average, at $18.85, was raised a nickel from last month’s projection.

The U.S. corn outlook is for larger production, domestic use, exports and ending stocks. Corn production was forecast at a record 15.2 billion bushels, up 170 million or 1% from last month, and up 11% from 2022, on a 1.9-bushel increase in yield to 174.9 bushels per acre. Feed and residual use was raised 50 million bushels to 5.7 billion and corn for ethanol was raised 25 million bushels to 5.3 billion. Exports were raised 50 million bushels to 2.1 billion. Corn ending stocks were up 45 million bushels to 2.2 billion. The season average corn price was lowered a dime to $4.85 per bushel.

The soybean outlook called for increased production and ending stocks. Soybean production was forecast at 4.13 billion bushels, up 25 million or 1% from last month’s estimate, but down 3% from a year ago. Yields are expected to average 49.9 bushels per acre, up 0.3 bushel from both the previous forecast and 2022. Soybean ending stocks were raised to 245 million bushels. The season average soybean price was forecast at $12.90 per bushel, unchanged from last month. Soybean oil was reduced two cents to 61 cents per pound and soybean meal was unchanged at $380.00 per short ton.

Meanwhile, the latest Crop Progress report shows the U.S. corn harvest was 81% complete, as of the week ending November 5, up from 71% the previous week, 4% behind a year ago, though 4% ahead of the five-year average.

Soybeans were 91% harvested, up from 85% the previous week, 2% behind a year ago, but 5% ahead of the five-year average.

The week ending Oct. 28 saw 55,500 dairy cows go to slaughter, up 800 from the previous week, but 3,900 or 6.6% below a year ago. Year to date 2,601,000 head have been retired from the dairy business, up 80,000 or 3.2% from a year ago.

CME block cheddar saw a third consecutive week of decline, closing the second Friday of November at $1.60 per pound, down 6.50 cents on the week, lowest since July 19, and 60 cents below a year ago when it jumped 19 cents hitting $2.20.

The barrels fell to $1.5450 Tuesday, lowest since October 4, but closed Friday at $1.65, up a penny on the week, 41.25 cents below a year ago, and an inverted 5 cents above the blocks. 15 cars of block and 20 of barrel were sold.

The Midwest spot milk price was mostly steady this week despite an increase in milk offers, according to Dairy Market News (DMN). The $2 over Class III prices are not being reported but cheesemakers opting for spot milk say $1 over is the going rate in the area. Others say offers have remained quiet, but they are not looking for outside sources at this time. Cheese inventories are moving in a steady fashion with similar numbers to previous years, according to DMN.

Cheese manufacturers and distributors indicate retail and food service demand is steady to moderate in the West while restaurants have shown less activity. Cheese inventories are “comfortable” and decreasing slightly. Export demand is moderate to light. Sentiment is that domestic prices, when compared to European Union and Oceania prices, are not creating strong export opportunities. Class III milk demand remains strong to steady, according to DMN.

Butter fell below $3 per pound Tuesday, first time since September 21 and closed Friday at $2.60, down 50.75 cents on the week, lowest since July 21 and 30.50 cents below a year ago when it jumped 13.25 cents. Sales totaled 31.

Cream is widely available, says DMN, and multiples have moved below the 1.20 mark. Some plants continue to micro-fix in order to avoid building inventory in view of prices. This added to the increase in cream availability. Butter demand has slowed, particularly in food service, but retail interest remains.

Western handlers note fat component levels in milk have improved and so has cream availability, though it’s tighter in the Northwestern part of the region. Retail butter demand is strong to steady domestically. Cream multiples and butter prices are subsiding, but butter makers are hesitant to purchase much additional cream beyond contracted volumes and are using available inventories to fill current needs. Others say they will wait until Thanksgiving before starting to churn again and let markets settle before rebuilding inventories. Export demand remains steady from Canadian purchasers, but light elsewhere, according to DMN.

Grade A nonfat dry milk saw its Friday closing at $1.20 per pound, up 1.50 cents on the week but 23 cents below a year ago, with 5 sales reported on the week.

Dry whey finished Friday at 39.75 cents per pound, up a penny on the week but 4.25 cents below a year ago, with 12 sales put on the board at the CME.

U.S. dairy exports were hurting again in September, registering the smallest total since February and the smallest September value since 2020, according to HighGround Dairy (HGD) economist Betty Berning in the November 13 “Dairy Radio Now” broadcast. The U.S. exported 16.4% of its total milk solids, down 12% from September 2022, according to HGD, and year-to-date, has shipped 3.7 billion pounds of solids abroad, down 7% from last year.

The weaker volume was due to losses in skim and nonfat dry milk, butter and whey, says HGD. Exports to Southeast Asia saw the smallest number since December 2018, shipments to Mexico fell for the first time since July 2022 and exports to China were below a year ago for the sixth consecutive month.

HGD warned, “With Mexican buying slowing, there are reasons to believe dairy prices could move lower in the near term. Year to date, the U.S.’ southern neighbor had been the savior of the export market and is on track to set an annual record, but with the peso weakening since the summer, this may no longer be the case.  Without robust demand from Mexico, U.S. exports may fall further in the coming months.”

Dry whey exports were down 31.2%, the sixth consecutive month of year-over-year losses, due to smaller demand from China, Indonesia and Malaysia.

Butter exports were down 57.3% from a year ago. No surprise there for the highest priced product in the world, but that high price also acted as a magnet to imports which were up 5.7 million pounds, says HGD, adding that “Export recovery does not look likely for the foreseeable future.”

“The wind in the sails” may be cheese, Berning said. Exports were up 4.3% and up for the second month in a row, thanks to demand from Mexico, China and Canada. “Perhaps international demand for cheese is improving,” she concluded.

Following weakness in the two previous Global Dairy Trade Pulse auctions, the November 7 GDT suffered a relapse after four consecutive gains. The weighted average was down 0.7%, following the 4.3% rise on October 17 and 4.4% on October 3. Traders brought 76.1 million pounds of product to market, down from 79.3 million on October 17, lowest since August 15. The average metric ton price inched to $3,255 U.S., from $3,202 on October 19, and the highest since July 18.

Whole milk powder dropped 2.7% after gaining 4.2% on October 17. Butter was down 1.6%, after rising 2.9%, but anhydrous milkfat was up 3.1%, after jumping 7.1% last time.

Lactose led the gains, up 19.2%, following a 0.2% rise. Cheddar was up 4.5%, after inching 0.2% higher. Buttermilk powder was up 3.5%, and skim milk powder was up 2.3%, following a 4.3% rise last time.

StoneX says the GDT 80% butterfat butter price equates to $2.1639 per pound U.S., down 2.2 cents from the October 17 event and compares to CME butter which closed Friday at a still pricey $2.60. GDT cheddar, at $1.8335, was up 8.4 cents and compares to Friday’s CME block cheddar at a cheap $1.60. GDT skim milk powder (SMP) averaged $1.2356 per pound, up from $1.2062 (2.9 cents), and whole milk powder averaged $1.3476 per pound, down from $1.3877 (4 cents). CME Grade A nonfat dry milk closed Friday at $1.20 per pound.

“The strength in SMP is in stark contrast to the sharply lower prices at the prior two Pulse auctions,” says analyst Dustin Winston. “Conversations around Chinese demand have been swirling around the market a fair amount recently,” says Winston. “These questions seemed to be answered in part this week as North Asia purchases, which includes China, have increased from both last event and last year. Southeast Asian purchased volume was down from the last event and were flat with year ago levels,” says Winston.

Cooperatives Working Together (CWT) member cooperatives accepted 11 offers of export assistance this week that helped capture sales contracts for 373,000 pounds of American type cheese and 498,000 pounds of cream cheese. The product is going to customers in Asia through February 2024.

In politics, dairy farmers from across the nation will gather in Orlando, Florida Nov. 12 through Nov. 15 for the National Milk Producers Federation (NMPF) annual meeting. NMPF says “America is currently without a farm bill, a circumstance that’s not unheard of given the usual lapses in legislation, but one that inevitably raises uncertainty and questions of strategy.”

One of the topics will be USDA’s Federal Milk Market Order hearing, currently on pause before resuming November 27. Citing “Years of painstaking preparation and an unshakable consensus among our members,” NMPF stated “We feel very good about our hearing proposals. But the hearing’s final major issue, the Class I price surface, is still under consideration. And even after the hearing concludes, several steps remain before a successful producer vote will take place, likely late next year, on a USDA plan we hope will be largely modeled on our own.”

Source : FArmer’s advance Nov 14th 2023 by Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota.