July’s 3% increase in U.S. milk production over year-ago levels surpassed the expectations of many market watchers, although others said, given this year’s improved milk prices, they weren’t surprised at the greater output.
“It’s a continuation of a pattern we’ve been seeing since May,” said Andrew Novakovic, professor of agricultural economics at Cornell University in Ithaca, N.Y.
Wisconsin-based commodity broker Robin Schmahl said the industry only expected an increase of about 2%, especially since hot weather in many areas during July curtailed milk output. But he also said that higher prices were motivating dairy producers to “push production to make up for lost income.”
July’s jump in milk production reflected the momentum that’s been building this year as prices improve and cow numbers increase, said Brian Gould, associate professor of agriculture and applied economics at the University of Wisconsin-Madison. Good weather across the Upper Midwest for much of the summer has also helped boost mik output, he said.
At 8.37 million head, the number of milk cows during July was 26,000 head less than July 2009 but 19,000 more than in June 2010, USDA-NASS said. July marked the seventh consecutive monthly increase in the nation’s dairy cow numbers, said Gould.
USDA-NASS also reported that per-cow production rose 59 lb. over July 2009, averaging 1,830 lb. last month.
Milk production rose markedly in the West over year-ago levels, with California increasing 4.7% to 335 billion pounds for July 2010. That came despite 41,000 fewer cows from year-earlier numbers. California’s per-cow output jumped 130 lb. over July 2009.
“That’s huge,” Schmahl said. “One of my California customers last week said that his cows were milking the best he’s ever seen.”
Annie AcMoody, director of economic analysis for Western United Dairymen, attributes California’s increased per-cow output to a moderate summer in the Central Valley, the state’s major milk shed.
California is catching up from historically low milk production, AcMoody said, but even so, producers she had spoken with earlier today said they were surprised at the state’s large percentage increase in today’s USDA report. Feed costs have risen in the last month, she added.
Other large production increases were seen in Arizona, up 8.8%; Idaho, up 5.2%; Oregon, up 8.3%; and Washington, up 6.2%.
Most predicted the report would impact dairy prices with a bearish to neutral influence. “We are seeing a recovery in production, but by no means are happy days here again,” Novakovic added.
“I think we’ll see more pressure on 2011 futures contracts,” said Schmahl.
June revised milk production, at 15.2 billion pounds, rose 2.9% from June 2009. The June revision represented an increase of 23 million pounds or 0.2% from last month's preliminary production estimate.