In a proverbial good news/bad news sense, the dairy market received updates from USDA on both stocks of dairy products in cold storage as well as an update on the total herd across the country this past week. Last Tuesday, USDA’s cold storage report showed a 22 million lbs rise in butter inventories, up 11 percent in January. Although renewed growth in stocks, expected to trend higher over the first half of 2022, is good news, it is important to highlight that butter in cold storage is still down 33 percent from January 2021 and that we are starting the year with relatively low stocks.
Feb. 23 saw the other shoe fall with the release of the February milk production report and updated statistics on the national milking herd. The market had been expecting, “hoping for” may be a better descriptor, a stable dairy herd figure, and perhaps some expansion. However, if the numbers are accurate, total milk production across the U.S. fell 1.4 percent and the total dairy herd fell a further 5,000 animals from December 2021. This, of course, assumes that USDA does not make a future adjustment or corrections, which history has shown they are prone to do.
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