Reasons Behind Surprising Milk Production Report
November 19, 2021
Feed costs, labor costs and material increases all have impacted dairy producers’ bottom lines, significantly increased the cost of production and has resulted in a steep year-over-year decline of 0.5% in milk production that was illustrated in the recent USDA Milk Production Report. Following suit, production per cow was 6 lb. less than last year, the third consecutive month with lower milk per cow.
According to Matt Tranel with ever.ag, the October Milk production report showcased a few surprises compared to analyst guesses going into it. “The year-over-year 0.5% decline in milk production for October 2021 was more aggressive than expected as many pegged that figure at slight growth yet,” he says.
Erick Metzger, general manager of National All-Jersey states the last time this happened was two decades ago in the spring of 2001. “I think feed prices are influencing production per cow,” he says. “Producers may be retooling their rations.”
Also, following suit are cow numbers, down 14,000 from October 2020 and 22,000 fewer head versus a month ago when taking into account the revision USDA made to last month's September report. “Cow numbers within the herd were slashed once again as rising feed cost is a very real situation felt throughout the countryside and globally too really,” Tranel notes.
Some of the changes among the top six dairy producing states are:
1. California – 3.3 billion pounds, -1.3%, cow numbers unchanged.
2. Wisconsin – 2.6 billion pounds, +2.7%, up 21,000 cows from last year.
3. Idaho – 1.36 billion pounds, +0.9%, up 6,000 cows.
4. Texas – 1.3 billion pounds, +3.9%, up 22,000 cows.
5. New York – 1.28 billion pounds, +1.0%, up 2,000 cows.
6. Michigan – 974 million pounds, -0.4%, up 4,000 cows.
Beef Semen Impact
Dairies are shipping lower producing cows to beef which has led to year-over-year slaughter rates increasing over the last few months. The states leading in slaughter on a percentage basis are New Mexico and Washington, although as Class III and IV prices elevate in nature, this current slaughter pace could slow down a touch. Tranel points out that this milk production report is “most certainly bullish and supportive to dairy prices moving forward.”
South Dakota is another state of interest where cow numbers are up 21,000, a 15.3% increase from October 2020.
Metzger notes that since June, dairy cow slaughter is up 75,000 versus last year, but the milk production report shows a drop in more than 100,000 cows from May. “I think part of the reasons may be an increase in the use of beef semen on dairy cows,” he says. “We may not have as many heifers entering the milking herd as we usually would.”
When looking at National Association of Animal Breeders (NAAB) domestic beef semen sales from 2015 through 2020, a spike occurs in 2018 from the previous three years. “Semen sales in 2018 would have resulted in calves being born in 2019, that would be entering the milking herd in 2021,” Metzger notes.
Going forward, keeping an eye of the amount of beef semen sold in 2019 and 2020 will be vital, as it will impact replacement heifers for the next couple of years.