In the October Dairy Market Report, milk prices continued to strengthen in August, but production is showing signs of acceleration. This year’s slow decline in the rate of U.S. milk production growth was interrupted in July and August, bouncing back to a 2 percent year-over-year increase. Lower feed costs in August helped further improve the month financially for the nation’s dairy farmers, as did a drop in the recent rates of American-type cheese production growth. But dairy markets remain mired in a rather ho-hum mode, with low prices for nonfat dry milk, further weakness in dry whey prices, middling cheese prices that are struggling to find a sense of direction, and even some softness in typically strong butter prices as the industry heads into the holiday season.
Commercial Use of Dairy Products
Total fluid milk consumption in the United States was 0.7 percent below a year ago during the May–July period. This was the first time since the beginning of 2017 when the moving three-month fluid milk consumption level declined by less than 1 percent below a year earlier. Total consumption of milkfat in all U.S. fluid milk sales was up by more than 1 percent over a year ago during the period. Domestic consumption of American-type cheese grew strongly during May–July, but domestic consumption of all other types of cheese has been lackluster for over half a year. The growth of all dairy products continued to exceed 1 percent in terms of milk fat. Domestic consumption of all dairy products was still declining when measured on a skim-solids basis. The resumption of growth in U.S. dairy ingredient exports indicates that external markets still represent more attractive sales opportunities for U.S. skim solids.
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