Four months into this contraction phase for output, the U.S. dairy herd has fallen by nearly 30,000 head, with the bulk of the reductions seen for the largest 24 producing states. The falling herd left August milk output up a somewhat disappointing 1.1 percent and dragged down the YTD cumulative gains to 2.2 percent. Yield for the most recent month was a respectable 64.1 lbs of milk output per cow per day during the month, effectively flat against August 2020.
August marked the first time in over a year that monthly output was not significantly higher than a year prior. The total U.S. herd is still up a fraction of a percent, but if the downtrend continues, we could see the herd dip below last year’s levels. The decline in herd has been mitigated somewhat by higher dairy product stock levels across the country.
This past week’s cold storage report showed stocks of AA salted butter fell by nearly 30 million pounds, down 7 percent, more than the market had anticipated. Despite this, inventories of butter are still more than ample, down 1 percent YOY.
Adding to the recent supportive news, Fonterra’s Global Dairy Trade auction saw prices up by a modest 1.0 percent.