Dairy market update: 2014-15 milk price slide slows

Dairy market update: 2014-15 milk price slide slows

U.S. dairy exports expected to remain below year-ago levels until second half of 2015

The Dairy Management Inc. and National Milk Producers Federation April Dairy Market Report, released this week, has some good news for dairy producers looking for an end to the steep slide in milk prices that's been evident since late last year.

According to the report, Federal order Class III and Class IV prices were changed very little in March when compared to February, suggesting more stability in milk prices.

Fluid milk sales dropped 2.7% during November 2014-January 2015 compared with the same months a year earlier. However, there has been a marked shift in consumption among fluid product categories, the report said.

U.S. dairy exports expected to remain below year-ago levels until second half of 2015

Related: Dairy Industry Encouraged by Trade Talks with China on Cheese Names

Between November and January, conventional whole milk sales were flat and organic whole milk sales rose 16%, while conventional and organic fat-free skim milk sales were each down between 11 and 12%.

Total milkfat consumption in all fluid milk products dropped by an estimated 1.3%, just half the rate by which total fluid milk volume declined over the same period.

Commercial disappearance of the other major dairy product categories, including American-type cheese, was up by significant amounts during these three months. The same was true for milkfat and skim milk solids in all products, which both rose faster than milk production during the period.

Dairy trade
U.S. dairy exports again fell below year-ago levels for all major products during December 2014 – February 2015, particularly for milkfat products and cheese. Exports of nonfat dry milk, skim milk powder and dry whey are also down significantly on a volume basis but less so on a percentage basis, the report said.

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Import demand remains well below the high levels of 2013 – early 2014, and world prices are falling again after a tentative recovery earlier this year. Total dairy exports were equivalent to 12.5% of U.S. milk solids production during the period, down from 15% a year earlier. The report notes that this pattern will likely continue until the second half of the year.

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U.S. dairy imports increased during the period, from the equivalent of 3.1% of total milk solids production a year earlier, to 3.5% during December 2014 – February 2015. Imports were up for milkfat products and cheese and flat or down for the major skim solids products.

Milk production
USDA data continues to show a slowdown in the growth of U.S. milk production. Total production was 2.4% above a year earlier during December 2014 – February 2015.

Preliminary numbers for February show production up 1.7% over February 2014, the fifth consecutive monthly drop in the rate of growth over a year ago. Average cow numbers were 1.1% higher than a year ago, for both the three-month period and for February. This is normally an indication of growing milk production.

Cow numbers have grown at this rate or higher only about 10% of the time since 2000, and when they have increased at that rate, total milk production has increased at an average rate of 1.6% during those months. That’s just about February’s rate of growth. USDA is continuing to reduce its forecast of milk production growth for 2015. The department’s April forecast projects a 1.9% increase in milk production for 2015 compared with last year. But the USDA forecast of growth for this year has dropped steadily each month from October’s forecast of 3.3%.

Read the full Dairy Market Report, and past Dairy Market Reports, on the NMPF website.

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