The shortened Thanksgiving holiday week brought mostly good news for buyers of dairy products. USDA’s November milk production report showed total heifers in the U.S. rising to a 12-month high of 9418 million head. As we had forecast, herd levels are now up from Q4 2021. In October, total milk output also matched year-ago levels.

With herd up YOY and record yields, the country ought to see impressive gains in Q4. Yield was reported at strong 64.55 lbs of milk per cow per day, yet another record. We will also start calendar 2023 at very healthy levels, likely above expectations.

Last month, USDA reported a drop in the herd, but this latest report seems to be bucking the trend. We had expected a revision, and USDA did adjust cow numbers higher, suggesting that the current expansion might not be complete.

Cold storage showed a drop in most dairy product categories, typical for this time of the year. Total natural cheese stocks fell by some 25 million lbs, and butter stocks fell to 240 million lbs, down 10 percent from the prior month and 14 percent from October 2021.

However, the silver lining may be that butter stocks fell by less than expected, rising above October carryout in two out of the past five years. In a year that has seen tight stocks, challenging supply chains, and record prices, supplies look poised to start 2023 in much better shape.

Once past peak seasonal demand for butter, pressure should mount on prices at the start of the year. Already prices are higher here in the U.S. for butterfat-containing products, likely encouraging imports in place of traditional channels.

Total U.S. butter ending stocks

Source: USDA
Posted by: Information Services
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