RaboResearch announces the release of the North American Agribusiness Review, an assessment of market conditions and developments in North American agribusiness. The report’s main highlights are summarized here. Click here to see the whole report.
December milk production declined 0.3%, marking the sixth straight month of lower year-over-year output.
The decrease was caused by fewer cows and a modest yield gain of 0.1%.
consistent with current trends. Less milk was projected in recent months, since on-farm margins remained low until the end of the year. Total 2023 output increased little from the previous year and remained constant on a percentage basis.
Cow numbers fell by 1,000 this month, as herd size continued to shrink. However, November’s head count was reduced down by 2,000, resulting in a 3,000-cow reduction from report to report. It dipped to 9.357 million head, its lowest level since December 2019. The herd is 39,000 head less than a year earlier, and it is down 87,000 head from its latest high in March.
Milk per cow increased by 0.1% in December, after two consecutive months of decline. Yield increased by just 0.1% each year, far lower than the long-term average of 1% growth.
Total cheese output increased by 0.9% in December, the third straight year-on-year increase and the biggest since January 2023. Output in 2023 increased by 0.3% compared to 2022. While the last three months of the year were strong, cheese output decreased in five separate months last year. Total cheese stockpiles increased slightly in December, up 6 million pounds, or 0.4%, from November, marking the first monthly gain since August.
Butter output increased by 4.4% in December, the most since July and a reversal of November’s 3.3% decline. Output is increasing seasonally as milk output and cream availability rises during the spring flush. All areas rose year on year, although the west had the greatest growth, rising 7.7%.
However, December butter stockpiles declined by 13.1 million pounds, or 6.2%, reaching their lowest level since December 2021. It was the highest December inventory decline in 20 years, another optimistic data point that should keep the butter price sustained this year as supply stays limited.
Combined nonfat dry milk/skim milk powder production declined 15.9% year on year in December, marking the sixth consecutive month of declining output. Stocks fell for the ninth straight month. At 203.3 million pounds, stockpiles were at their lowest level since November 2015.
Total exports ended 2023 in a similar pattern to the previous year, with volumes falling short of the record levels reached in 2022. Total dairy exports fell 5% year on year in December, while exports for the calendar year 2023 fell 7%. Only WPC80 and lactose shipments increased in 2023, with all other dairy products losing ground compared to 2022. Cheese exports ended the year on a high note, rising 4% in November and 1% in December, although the increases were mostly driven by sustained strong shipments to Mexico.
The year-on-year dairy consumer price index decreased for the fourth consecutive month in December, with dairy product price deflation looming as milk prices fall into 2023.
