Milk production growth in the U.S. sputtered at the end of 2023, leaving the full year result nearly unchanged from the previous year. After expanding during the first half of the year, volumes contracted between July and December as milk prices remained under pressure. December milk production totaled 18.843 billion pounds, a decrease of 0.3% compared to the same month last year, with notable declines seen in the western states. A shrinking national dairy herd has driven the production drop, as December’s herd size rang in at 9.357 million cows, 39,000 head less than at the same time last year and representing the smallest herd size since June 2020.
European production has been trending downward, with volumes in the European Union and United Kingdom falling by an estimated 2.5% year over year in November. Many of the bloc’s largest milk producers, including Germany, France, and the Netherlands, saw pronounced declines in November output. Strict environmental regulations in many European countries are likely to interfere with milk production recovery and have sparked high profile protests in the region. In South America, volumes in Argentina recoiled by 7.7% in December as producers confront deep economic and political uncertainty. Oceania, however, is expanding with Australia and New Zealand both posting gains in the most recent month for which data is available.
International demand is also limping along, with China’s December import statistics finalizing a disappointing year for the world’s largest dairy importer. Whole milk powder, China’s most important import in volume terms, had an incredibly weak year with cumulative shipments for 2023 down 38.4% to the lowest volume since 2016. UHT milk, butter, and whey imports were also down on an annual basis while skim milk powder eked out an annual gain despite falling 36.9% year over year in December. Cheese had a standout year as a record 392.8 million pounds were imported, 22.5% more than in 2022.
The CME spot market boasted a week of gains, but prices for most dairy commodities remain weak. Lower prices in the U.S. should help to encourage additional export sales that will help to clear domestic volumes, though his dynamic has been slow to materialize.
Original Report At: https://www.jacoby.com/market-report/u-s-milk-production-growth-sputters-at-the-end-of-2023/
