The October Dairy Report is out, and it shows reduced milk production and strong domestic consumption are showing up in dairy product production and inventory levels. It offsets weaker exports and sets the stage for a milk price rebound that has been foreseen in dairy futures markets and is starting to show up in dairy statistics.
U.S. consumers continued their strong uptake of dairy products during the summer, as domestic use of milk in all products rose by 3.3 percent during the June through August period. Weakness in world dairy demand, meanwhile, has dropped the share of its milk solids production the U.S. exported this year by about a full percentage point below the record levels of the previous two years.
The reports notes that milk production was down year over year during the June through August period as the industry experienced its second year in a row with an episode of annually lower output. Milk solids production growth continues to outpace milk production growth by nearly a full percentage point, as high butter prices this year strongly encourage dairy farmers to continue boosting their butterfat and protein test levels.
The August dairy margin coverage (DMC) rose by $2.94 per hundredweight from July to reach $6.46. This is the second highest margin after the one set back in January of this year, as the milk price was the main driver of this change.
And on the dairy trade front, the report notes double-digit percentage drops from a year ago are still being posted for most U.S. dairy product exports, as the retrenchment of international dairy demand continues.
To see the numbers from this month’s report, go to the National Milk Producers Federation website.