Market Reports

According to USDA’s Milk Production report, U.S. milk production dropped to 18.5 billion pounds in October, down 0.5% from October 2020. That’s the steepest year-over-year decline in milk output since March 2019.

Higher operating expenses and feed bills have significantly raised the cost of production for dairy producers, eating deep into milk checks. Like every industry, dairy producers must also absorb the intangible expense of increased inefficiencies caused by product shortages and logistics headaches.

U.S. cheese production topped 1.14 billion pounds in September, scoring an all-time high in daily average output. There is clearly plenty of fresh Cheddar available, and cheesemakers are unloading some at the market of last resort in Chicago.

The U.S. dairy herd is much smaller than once thought, and milk production barely grew at all in September. Early indications suggest milk output is once again below year-ago levels in Europe.

USDA’s Milk Production report, released Wednesday, suggested that national milk supplies are growing at a slower rate than many analysts previously believed. Lighter milk supplies have likely helped to keep upward pressure on the markets this week.

Despite some moderation during Friday’s spot session, gains earlier in the week left prices higher than last Friday for both butter and nonfat dry milk (NDM), pushing Class IV milk values upward.