DAIRY OUTLOOK June 21, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- DAIRY OUTLOOK, a supplement to the Livestock, Dairy, and Poultry Monthly report, is published five times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. LDP-D-11. Subscriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #LDP-D, $22/year. A consolidated subscription to all of the livestock, dairy, and poultry reports (34 issues/year) is also available as stock #LDP-A, $66/year. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Strong cheese demand, good domestic use of butter and nonfat dry milk, and butter export agreements made last winter resulted in sharply higher milk and dairy product prices this spring, as milk production dipped below a year earlier. Prices probably will be fairly strong during the rest of 1996, even though a downward adjustment is expected this summer. Wholesale prices may be very unsettled in coming months, particularly for butter. Farm milk prices are projected to rise about $1.50 per cwt in 1996. Autumn increases from a year earlier are not expected to match the $2 of spring and summer but will be substantial. The recent elimination of the producer assessment for deficit reduction will further raise the effective price to producers. Higher milk prices are projected to easily outpace the 1996 increase in costs of grain and other concentrates. Higher returns are expected to hold year-to-year declines in milk cow numbers to about 1 percent, even though high alfalfa hay prices in the West have slowed expansion there. High grain prices and availability concerns probably will have a greater effect on milk per cow. Producers will continue to be conservative about concentrate feeding and cautious in their use of bovine somatotropin (bST). Milk per cow in 1996 is expected to rise only slightly more than 1 percent on a daily average basis, even though second-half 1995 was weakened by weather. Tight domestic markets and weakening international markets will result in smaller 1996 exports. New agreements for commercial butter exports are highly unlikely until near yearend. Subsidized exports of dry milks and cheese will continue during the rest of 1996, but volumes may be modest. Milk Production Holds Higher effective milk prices are expected to boost 1996 returns to dairy farms, particularly for producers who produce their own feed grains or who priced their feed ahead. However, concerns about concentrate feed prices and availability, conservative concentrate feeding, unsettled prospects for use of bST, and continued high prices for western alfalfa are expected to limit expansion in milk production. For 1996, milk output is projected to be near a year earlier. Large exports and strong feed demand will lead to very low corn stocks by the start of harvest. This prospect has led to dramatic increases in corn prices since last winter. Protein prices also have risen substantially. Larger 1996 crops are expected to ease prices somewhat by late in the year. However, ingredient prices are likely to stay relatively high through 1997. Average dairy concentrate ration values have risen considerably less than the corn-soybean meal equivalent, as now-cheaper ingredients have been substituted and possibly as margins have diminished. Ration values are expected to average $1.50-2.00 per cwt higher in 1996, with the largest year-to-year increases during spring and summer. Higher concentrate feed prices are projected to add about 60-85 cents per cwt to the 1996 cost of producing milk, substantially less than the projected $1.50-1.80 rise in milk prices (net of assessments). Milk cow numbers in recent months have been about 1 percent below a year earlier. High alfalfa hay prices have slowed western expansion, but new operations have significantly slowed cow number declines in many northern States. Large heifer supplies and low cull cow prices also are helping to support milk cow numbers. Milk cow numbers are projected to stay about 1 percent below last year during the rest of 1996. The milk-feed price ratio probably fell below 1.5 this spring, where it is likely to stay through most of 1997. These ratios probably will not eliminate all increases in concentrate feeding, but increases will be quite small. In addition, milk per cow may be more sensitive to forage quality problems because of the larger expense of adjusting concentrate feeding to correct forage deficiencies. The National Animal Health Monitoring Systems survey by USDA showed that only 10 percent of milk cows were on a bST regimen in early 1996, considerably fewer than the number thought to be using bST in early 1995. Although all bST data must be used with caution, high feed prices and feed availability concerns probably have affected bST use. A sizable share of producers apparently are unsure whether bST use is profitable on their operations under normal feed conditions and may be particularly unwilling to take the risk under current conditions. Use of bST may recover some this autumn when conditions stabilize somewhat. Gains in milk per cow during the second half of 1996 are projected to be somewhat larger than during the first half. In 1995, second-half milk per cow was lowered by carryover effects from spring and summer weather. Even so, the 1996 increase is expected to be just more than 1 percent (on a daily average basis), the least since 1993. In 1997, the higher returns of 1996 and 1997 are expected to trigger renewed expansion in milk production. Milk cow numbers are projected to decline about 1 percent, with late-1997 decreases probably smaller than those of early 1997. Milk per cow is expected to grow about 2 percent, as slightly expanded bST use augments what would otherwise be a below-trend increase. Wholesale Prices Unsettled Wholesale prices of manufactured dairy products soared this spring, as lagging milk production failed to satisfy strong cheese demand and fairly good domestic movement of butter and nonfat dry milk. However, price increases have not been well synchronized with each other or with seasonal factors. Wholesale dairy prices probably will be unsettled this summer. During most of winter, cheese prices were fairly strong at levels that gave cheesemakers a substantial advantage over butter-powder operations. Large quantities of nonfat dry milk probably were used to stretch supplies of milk for cheese. In mid-April, a counterseasonal dime increase in cheese prices widened the advantage further, despite a simultaneous jump in butter prices. Cheese prices have been steady since then, although the relatively heavy trading volume on the National Cheese Exchange indicated that major differences of opinion existed among traders. In May, nonfat dry milk markets had tightened enough to start powder prices rising. Recent large increases, along with jumps in butter prices, left cheese plants at a substantial disadvantage to butter-powder operations and generally made the use of nonfat dry milk in cheese unprofitable. Winter butter prices were essentially aligned with international butteroil prices, the cheapest butterfat on international markets. These low prices may have led to over-selling butter for export. In addition to exports, domestic movement apparently was fairly brisk, while strong cream use reduced the fat going to churns. Butter prices almost doubled between mid-April and mid-June. Butter prices rose so rapidly and continuously that they essentially are untested. Exports probably were significant, and fresh cream markets should be tight through summer. On the other hand, pipeline holdings of milkfat may be heavy and such large price increases should start to trim milkfat use. Butter prices are expected to be high during the second half and may continue to be volatile. The current relationship between cheese and nonfat dry milk prices probably is not sustainable. Powder markets are not likely to stay tight unless substantial quantities are used in cheese. Meanwhile, cheese supplies may not be able to keep pace with demand without the use of nonfat dry milk. Nonfat dry milk prices probably will be lower relative to cheese prices. Cheese and nonfat dry milk prices are expected to decline this summer if milk production starts to expand. Products may start to back up as consumer response to price increases is more fully felt. Even so, autumn prices are projected to be at least as strong as a year earlier. Farm and Retail Prices Rising The Basic Formula Price (BFP) is poised to reach $14 per cwt, a level exceeded only by November-December 1989. However, early summer may be the years peak in the BFP if wholesale prices decline as expected. The BFP is projected to be fairly flat from late summer through yearend. The earlier prices decline, the likelier a significant second peak is. Average farm milk prices this summer are expected to be more than $2 above a year earlier, following an average first-half rise of about $1.50. Late 1996 prices will stay significantly above a year earlier, even if wholesale cheese prices decline as expected. For all of 1996, farm milk prices are projected to increase about $1.50 from 1995. Milk prices in 1997 are projected to decline 3 to 6 percent. Domestic demand is not expected to quite keep pace with supply, and lower international butter prices may reduce domestic milkfat values. Even so, 1997 prices are projected to stay well above the 1990-95 average. Retail dairy prices are expected to rise 5 to 7 percent in 1996, the most since 1990. Some squeezing of the farm-retail price spread is likely as increases in retail prices trail the sharp wholesale and farm price increases. The rise in dairy prices may be twice as large as the increase in prices of all food or in the Consumer Price Index. Retail dairy prices in 1997 are projected to be only slightly higher than in 1996. Widening of the farm-to-retail spread is expected to outweigh the moderate decline in farm milk prices. Manufactured Product Supplies To Be Tight Supplies of milk for manufacturing are projected to remain tight until at least autumn. The expected sluggish milk production and steady fluid milk sales will not allow manufactured product output much room for expansion. Limited milk supplies and rapidly changing wholesale prices may produce erratic patterns in production of individual dairy products. Through April, cheese production grew substantially, while butter and nonfat dry milk production fell. Cheesemakers could easily outbid butter-powder plants and also could profitably use western nonfat dry milk and local cream to produce cheese. Jumps in butter and nonfat dry milk prices since early May dramatically altered the position of cheese plants. In mid-June, cheese plants were at a disadvantage to butter-powder operations. In coming months, expanded cheese output probably will be needed to meet market demand, while nonfat dry milk markets are not expected to stay tight unless substantial amounts of powder are being used in cheese production. Prices are expected to be realigned so as to elicit the increased cheese output. However, volatile butter prices and potential disruptions caused by DEIP sales of nonfat dry milk may mean that cheese production will grow by fits and starts. Strong markets for the major manufactured products will reduce milk used in minor products such as canned milk and dry whole milk. More whey products but less dry buttermilk probably will be produced, reflecting changes in cheese and butter production. Rampant substitution by users of dairy product ingredients will contribute to production uncertainty. With both milkfat and skim solids markets tight, users will readily shift among milk and cream, condensed products, and dry products based on price and availability--largely discarding normal preferences. These substitutions can significantly affect production of many manufactured products. Tight markets will stimulate demand for both milkfat and skim solids stocks in coming months. However, stock levels are likely to remain moderate unless demand weakens--which would greatly lessen the desire for stocks. Milkfat holdings probably will be tighter than skim solids stocks, unless large DEIP sales put substantial pressure on nonfat dry milk inventories. Government stocks will remain virtually nonexistent, since price support purchases are not anticipated. April 1 commercial stocks were moderate. Butter and cheese holdings were slightly larger than a year earlier, while manufacturers stocks of nonfat dry milk were somewhat lower. Stocks of milkfat and of skim solids probably will run slightly above a year earlier during most of the rest of 1996. Prices To Trim Use Expansion Demand for dairy products was strong in early 1996, as sales of most major dairy products grew despite higher prices. Economic expansion generated higher consumer incomes, and consumers were more willing to spend on dairy products than they were during much of 1995. January-April commercial use of cheese rose, continuing the relatively strong sales of late 1995. Butter sales were moderately above a year earlier, as available supplies were readily absorbed by domestic users and exports. Commercial use of nonfat dry milk jumped. However, most of the strength in powder sales probably resulted from larger use of nonfat dry milk in cheese production. Fluid milk sales were up about 1 percent from January-April 1995. However, continued expansion is far from certain. In recent years, fluid sales have been erratic and tending to weakness. Although declines in whole milk sales have been relatively small, gains in sales of 1-percent and skim milk have not consistently offset the whole milk decrease and the sometimes large decline in 2-percent sales. Commercial use is projected to rise about 1 percent in 1996, on either a milkfat or skim solids basis. Despite some possibly slower growth, general economic conditions are expected to provide strength. Spring dairy product disappearance probably had particularly large gains as good underlying movement was boosted by pipeline swelling. Second-half increases will be tempered by reduction of pipeline holdings and response to recent price jumps. Commercial use in 1997 is projected to grow 1-2 percent, aided by moderating prices. U.S. Dairy Trade Shrinks Exports and imports of dairy products in 1996 probably will be smaller than in 1995. Business under the DEIP has been slow in recent months and will not reach the GATT limits during the current restriction year (July 1995-June 1996). Although business should pick up during the second half of 1996, buyers show little sign of aggressively seeking DEIP contracts, and supply commitments may be difficult to find in light of tight domestic markets. New deals for commercial exports of butter to be shipped during 1996 are unlikely. Current domestic prices probably would have to fall by almost half before U.S. butter would again be competitive in international markets. Some butter may still be shipped under earlier agreements, but current prices provide large incentives to sell that butter on the U.S. market and fill the international commitment from other countries. Commercial butter exports are not expected to reach the 30,000 tons estimated to have been exported without subsidy in 1995. Contracts already accepted for 1996 exports of nonfat dry milk under DEIP equal only one-third of 1995 DEIP exports. Activity has been particularly slow since April. Eroding international prices have sharply reduced buyer interest. Buyer interest will pick up this summer, but domestic supply commitments will be difficult to obtain as long as internal markets are tight. Small sales will continue and probably will pick up with the approach of autumn. However, large sales for delivery before winter may be limited. Contracts for DEIP export of dry whole milk may be down even more because of the very tight domestic milkfat markets. January-April imports were substantially below a year earlier, but tight U.S. markets may quickly change the import pattern. Early 1996 cheese imports were down because U.S. prices were not particularly attractive for GATT-limited international cheese supplies. Meanwhile, imports of most other products were near the moderate 1995 levels. U.S. milkfat markets were unattractive and returns on imports of skim solids were relatively modest. Imports this summer probably will move ahead of a year earlier. Sharply higher domestic prices should attract more imports, particularly with international markets weakening. In addition, importers probably will fill their licenses earlier in the year than normally to take advantage of tight summer markets. International Markets Softer Increased export supplies and a stronger U.S. dollar continue to erode international butter and nonfat dry milk prices. Strong late-season milk production brought New Zealand to a 7-percent increase and Australia to a 6-percent rise during the production year just ended. Products from that milk are moving into new export sales now. Such products generally are not committed in advance because of the highly variable nature of tailend production. European export supplies also are increasing. Domestic use of both products has weakened in the European Union (EU) and intervention buying has occurred, particularly for powder. Meanwhile, EU milk production continues to run fairly strong. Poland expects larger exports in 1996, the result of slightly larger milk production and slipping consumption. Most importing countries have been waiting for prices to hit bottom before buying any more than they must. Russia has been rather inactive on butter since early in the year. For nonfat dry milk, Algeria remains sluggish and concerns have been raised about whether Mexico will actually take all the contracted powder. However, demand is considered fairly good, and activity may be fairly brisk once prices start to firm. Prices are expected to stabilize this summer, once Oceanic products have largely cleared the market and Northern Hemisphere supplies start to decline seasonally. The expected lesser presence of the United States should temporarily buttress prices. Some seasonal price strengthening is possible, particularly if some of the large buyers purchase substantial amounts. However, seasonal rises probably will be fairly limited. International markets are not expected to be nearly as tight as a year earlier. Basic Formula Price Replaces M-W Price The Minnesota-Wisconsin (M-W) milk price, until recently, was the bellwether milk price for most of the United States. The M-W milk price was a survey estimate of the current price received by farmers marketing manufacturing grade milk, Grade B milk, in Minnesota and Wisconsin. On June 1, 1995, a new basic formula price (BFP) replaced the M-W price. The replacement basic formula price uses survey information updated by a product price formula. On average, the M-W price and the BFP are very close -- although monthly differences can be significant. Since the 1960s, the M-W price has been used as the basic formula price. The M-W price was a competitive market price for manufacturing grade milk and has generally reflected supply and demand conditions for milk in the United States. Federal milk marketing orders use the BFP as the mover for the price structure of regulated milk. Federal milk marketing orders regulate fluid grade milk, Grade A milk, by establishing minimum prices according to its use (classified prices). The price of Grade A milk used in beverage milk (Class I) is the BFP plus a fixed differential. This differential varies across regions of the United States but averaged about $2.57 per hundredweight for April 1996. The price of Grade A milk used in cottage cheese, ice cream mixes, sour cream, yogurt, etc., (Class II) is the BFP plus a $0.30 differential. The price of Grade A milk used to produce cheese, butter, and condensed and evaporated milk (Class III) is equal to the BFP. The price of Grade A milk used to produce nonfat dry milk (NFDM) in 22 Federal orders (Class III-A) is based on a formula using wholesale prices of nonfat dry milk. The M-W price for any given month was formed by sending out two surveys to milk processors located in the Minnesota and Wisconsin area. The processors surveyed are those that use Grade B milk to produce butter, NFDM, and cheese. The first survey asked processing plant managers for the previous months dollars paid for raw milk, volume purchased, and butterfat percent. The price calculated from the first survey is called the base month price. A second survey, to a smaller sample of processors, was sent out to obtain information on prices processors paid during the first 2 weeks of the current month and any expected change in the pay prices for the last 2 weeks of the month. The information from the second survey was used to update the base month price to the current month. The M-W for the current month was formed using the base month price, the information from the second survey, and additional information such as historical price information and manufactured dairy product prices. Once calculated, it is announced by the fifth day of the next month. The M-W price was replaced because of concerns about whether reliable estimates could still be made on a timely basis. The price for manufacturing grade milk is considered to be a competitive price for milk because manufacturing grade milk is not regulated by Federal or State milk regulatory programs. The Department recognizes that adoption of the BFP is only a short-run solution since Grade B milk production is expected to continue to decline. The new BFP is calculated in much the same way. It takes the base month price for manufacturing grade milk in Minnesota and Wisconsin and adjusts that price by a product price formula instead of the second survey. The product price formula uses changes in the value of milk used to produce cheese, butter, and NFDM, to adjust the base month price. These values are calculated by using available product price information on cheese, butter, and NFDM together with average yield factors. The difference between the M-W price and the new BFP is the method used for adjusting the base month price -- the M-W used survey information; the new BFP uses current product prices and yield factors to calculate changes in milk values to update the base month price. The essence of the product price formula in the new BFP is to convert product prices to an average gross milk price based on the value of each of the products and their product yields. The manufactured products and the prices used in the adjustment formula are 40-pound block Cheddar cheese traded on the National Cheese Exchange, low to medium heat NFDM Western States, buttermilk powder in Western States, and Grade AA and Grade A butter traded on the Chicago Mercantile Exchange. These prices are reported in the Dairy Market News, published weekly by USDAs Agricultural Marketing Service. Using the final two-state estimate as the base month price, the new BFP was calculated for 1976-1994. During this period, the average monthly BFP was below the M-W price by 1.1 cents. This correspondence arises from the primary role of wholesale cheese prices in both series. While the difference between the average BFP and the average M-W is slight, the monthly differences can be significant. The average monthly gap between the 2 series was 10 cents, ranging as high as 7-8 cents. Month- to-month changes in the M-W prices were affected by factors other than just wholesale product prices. Changes in solids content or other factors relating to cheese yields were particularly important because cheese plants tended to dominate the series. Regional competitive conditions also could have an influence. These factors generally were reflected very quickly in the M-W price. Factors other than wholesale prices are also important in the BFP, but their effects generally are delayed one month. For example, a sharp decline in solids content between April and May will not be reflected in the May BFP, as it would have in the May M-W price. However, the solids drop will affect the May base-month price and, therefore, the June BFP. Because of the seasonality of cheese yields, seasonal declines in the BFP will tend to be slower than those of the M-W price. However, the BFPs seasonal increase will also tend to be slower. Unlike the influences of factors other than product prices, the impact of product price changes may be more timely in the BFP. Because the M-W price was based partially on expected prices for the second half of the month, the M-W price could lead or lag changes in wholesale product prices. The BFP eliminates this anticipation of price changes, because it is based only on observed prices. An example of the new BFP calculation: April 96 May 96 40-lb. block cheddar cheese, National Cheese Exchange $/lb. 1.4325 1.4925 Grade AA butter, Chicago Mercantile Exchange $/lb. 0.7620 0.9490 Grade A butter, Chicago Mercantile Exchange $/lb. 0.6957 0.8916 Nonfat dry milk, Western States $/lb. 1.0794 1.1360 Buttermilk powder, Western States $/lb. 0.9148 1.0099 Base month, Grade B milk at 3.5% $/cwt. 13.09 Total American cheese production in Minnesota and Wisconsin Mil. lbs. 134.26 Total NFDM production in Minnesota and Wisconsin Mil. lbs. 6.942 Milk equivalent cheese production Mil. lbs. 13.603 Milk equivalent NFDM production Mil. lbs. 0.860 Total milk equivalent Mil. lbs. 14.463 Proportion of milk equivalent cheese 0.9405 Proportion of milk equivalent NFDM 0.0595 Yield Factors Lbs. per cwt. of 3.5% milk Cheddar Cheese 9.87 Whey cream butter 0.238 Butter 4.27 NFDM 8.07 Dry buttermilk 0.42 April calculation Cheese value: (9.87 x 1.4325) + (0.238 x 0.6957) $/cwt. 14.3044 Butter/NFDM value: (4.27 x 0.7620) + (8.07 x 1.0794) + (0.42 x 0.9148) $/cwt. 12.3487 May calculation: Cheese value: (9.87 x 1.4925) + (0.238 x 0.8916) $/cwt. 14.9432 Butter/NFDM value: (4.27 x 0.9490) + (8.07 x 1.1360) + (0.42 x 1.0099) $/cwt. 13.6439 The Difference: May cheese value - April cheese value $/cwt. 0.6388 May butter/NFDM value - April butter/NFDM value $/cwt. 1.2952 Adjustment to the base month price using the proportions of milk equivalent cheese and NFDM production rounded to the nearest cent: Difference in cheese value x 0.9405 + Difference in butter/NFDM value x 0.0595 $/cwt. 0.68 Basic formula price for May: Base month price + Adjustment: 13.09 + 0.68 $/cwt. 13.77 Principal Contributors (202) 219-0770 Jim Miller (Dairy, Dairy Trade), LaVerne Williams (Statistics) U.S. dairy situation at a glance Unit 1992 1993 1994 1995 Milk production: Production (22 States) Mil. lb. 129,613 129,577 132,273 134,247 Milk cow (22 States) Thou. 8,222 8,153 8,070 8,054 Milk per cow (22 States) Lb. 15,764 15,893 16,391 16,668 Production (U.S. est.) Mil. lb. 150,847 150,582 153,664 155,644 Milk prices: All milk Dol./cwt 13.09 12.80 12.97 12.74 Milk eligible for fluid use Dol./cwt 13.16 12.86 13.03 12.78 Manufacturing grade milk Dol./cwt 11.87 11.76 11.83 11.78 Minnesota-Wisconsin (3.5% fat) Dol./cwt 11.88 11.80 12.00 11.83 Slaughter Cow, Wisc: Dol./cwt 49.69 50.14 44.92 38.11 Wholesale prices: Grade A butter Ct/lb 82.54 74.36 67.37 75.59 American cheese, WI assembly pt. 40-pound blocks Ct/lb 131.91 131.52 131.45 132.77 Barrels Ct/lb 125.12 126.12 NA NA Nonfat dry milk, Central States Ct/lb 107.13 112.03 107.93 108.58 Retail prices (BLS): Consumer Price Index 1982-84=100 140.3 144.5 148.2 152.4 All food 1982-84=100 137.9 140.9 144.3 148.4 Dairy products 1982-84=100 128.5 129.4 131.7 132.8 Fluid milk and cream 1982-84=100 127.1 128.7 132.2 132.3 Manufactured products 1982-84=100 130.5 130.6 131.9 134.0 Dairy product output: Butter Mil. lb 1,365.2 1,315.2 1,295.9 1,260.7 American cheese Mil. lb 2,936.6 2,957.3 2,974.4 3,128.6 Other-than-American cheese Mil. lb 3,551.7 3,570.9 3,760.3 3,811.7 Frozen products 1/ Mil. gal. 1,195.8 1,198.3 1,242.7 1,217.0 All products (milkfat basis 2/) Mil. lb 94,037 93,508 95,049 95,581 Nonfat dry milk Mil. lb 872.1 954.5 1,230.9 1,233.8 Beginning stocks: Commercial butter Mil. lb 39.0 24.5 14.6 12.2 Commercial American cheese Mil. lb 295.6 333.1 356.6 309.5 Other cheese Mil. lb 97.5 120.9 107.0 126.8 Manufacturers' nonfat dry milk Mil. lb 60.9 77.4 79.9 103.5 All commercial (milkfat basis) Mil. lb 4,460 4,687 4,549 4,262.5 All commercial (skim solids basis Mil. lb 4,760 5,573 5,656 5,712.1 All Government (milkfat basis) Mil. lb 11,379 9,526 5,020 1,497.1 All Government (skim solids basis Mil. lb 2,081 265 161 341.2 Commercial disappearance: Butter Mil. lb 944 1,041 1,097 1,181 American cheese Mil. lb 2,903 2,945 3,031 3,146 Other-than-American cheese Mil. lb 3,795 3,884 4,055 4,152 Nonfat dry milk Mil. lb 721 649 918 922 All products (milkfat basis 2/) Mil. lb 141,315 145,041 150,328 155,011 USDA net removals: Butter Mil. lb 439.5 288.8 204.3 80.1 Cheese Mil. lb 14.4 8.3 6.9 6.1 Nonfat dry milk Mil. lb 136.7 304.3 290.0 346.5 All products (milkfat basis 2/) Mil. lb 9,933 6,650 4,804 2,150 All products (skim solids basis 2 Mil. lb 2,071 3,900 3,724 4,416 Imports (milkfat basis 2/) Mil. lb 2,520 2,806 2,880 2,934 International market prices: Butter $/metric to 1,498 1,343 1,404 2,251 Nonfat dry milk $/metric to 1,685 1,545 1,660 2,143 1/ Hard ice cream, ice milk, and sherbert. 2/ Milk equivalent. NA = Not Available. U.S. dairy situation at a glance Feb-95 Mar-95 Apr-95 May-95 Jun-95 Milk production: Production (22 States) 10,423 11,709 11,501 11,959 11,465 Milk cow (22 States) 8,050 8,061 8,058 8,056 8,066 Milk per cow (22 States) 1,295 1,453 1,427 1,484 1,421 Production (U.S. est.) 12,142 13,640 13,343 13,875 13,302 Milk prices: All milk 12.50 12.60 12.30 12.30 12.10 Milk eligible for fluid use 12.60 12.60 12.30 12.30 12.20 Manufacturing grade milk 11.70 11.70 11.20 11.00 11.10 Minnesota-Wisconsin (3.5% fat) 11.79 11.89 11.16 11.12 11.42 Slaughter Cow, Wisc: 44.17 41.25 40.25 38.56 42.00 Wholesale prices: Grade A butter 65.5 66.5 66.5 66.5 69.9 American cheese, WI assembly pt. 40-pound blocks 130.4 131.1 122.8 122.1 126.9 Barrels 126.9 127.5 NA 118.4 119.1 Nonfat dry milk, Central States 107.1 107.8 107.6 106.8 106.8 Retail prices (BLS): Consumer Price Index 150.9 151.4 151.9 152.2 152.5 All food 147.4 147.4 148.4 148.3 147.9 Dairy products 132.1 132.2 132.1 132.8 132.2 Fluid milk and cream 131.9 131.8 131.9 132.5 132.1 Manufactured products 132.9 133.1 132.8 133.8 132.9 Dairy product output: Butter 121.7 127.3 120.6 119.4 98.4 American cheese 243.2 269.5 264.9 278.3 264.5 Other-than-American cheese 284.1 331.7 298.7 321.4 320.2 Frozen products 1/ 86.3 109.5 106.5 115.2 128.6 All products (milkfat basis 2/) 7,671 8,657 8,356 8,727 8,372 Nonfat dry milk 98.3 118.7 125.0 137.1 128.1 Beginning stocks: Commercial butter 25.4 25.7 23.4 33.4 43.3 Commercial American cheese 317.7 321.2 323.1 334.7 343.9 Other cheese 131.5 127.0 135.3 131.0 121.6 Manufacturers' nonfat dry milk 114.8 94.0 97.5 127.1 129.0 All commercial (milkfat basis) 4,708 4,733 4,787 5,120 5,367 All commercial (skim solids basis 6,021 5,795 5,964 6,416 6,450 All Government (milkfat basis) 1,458 1,405 1,166 1,031 851 All Government (skim solids basis 321 343 341 332 312 Commercial disappearance: Butter 118.2 117.3 99.2 98.2 89.4 American cheese 241.0 268.7 253.8 272.2 261.8 Other-than-American cheese 309.9 348.3 324.9 354.9 341.6 Nonfat dry milk 73.3 68.7 50.3 90.5 92.3 All products (milkfat basis 2/) 12,076 13,353 12,776 13,434 13,095 USDA net removals: Butter 3.3 12.7 11.6 11.7 6.2 Cheese 0.4 0.6 0.6 0.4 0.4 Nonfat dry milk 45.8 46.6 45.3 44.8 22.9 All products (milkfat basis 2/) 126 330 296 293 160 All products (skim solids basis 2 585 592 567 556 289 Imports (milkfat basis 2/) 204 231 190 232 208 International market prices: Butter 1,850 2,033 2,000 2,175 2,232 Nonfat dry milk 1,957 2,139 2,129 2,135 2,150 1/ Hard ice cream, ice milk, and sh 2/ Milk equivalent. NA = Not Available. U.S. dairy situation at a glance Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Milk production: Production (22 States) 11,397 11,086 10,729 10,978 10,616 Milk cow (22 States) 8,062 8,062 8,061 8,050 8,043 Milk per cow (22 States) 1,414 1,375 1,331 1,364 1,320 Production (U.S. est.) 13,152 12,793 12,381 12,716 12,297 Milk prices: All milk 12.00 12.40 12.80 13.40 14.00 Milk eligible for fluid use 12.10 12.50 12.80 13.40 14.00 Manufacturing grade milk 11.00 11.30 12.10 12.80 13.10 Minnesota-Wisconsin (3.5% fat) 11.23 11.55 12.08 12.61 12.87 Slaughter Cow, Wisc: 37.88 38.15 36.00 34.75 31.45 Wholesale prices: Grade A butter 74.5 79.5 80.9 95.4 103.5 American cheese, WI assembly pt. 40-pound blocks 126.7 132.2 141.3 145.0 145.8 Barrels 122.8 125.3 135.1 138.7 138.8 Nonfat dry milk, Central States 106.7 106.7 107.2 108.6 113.4 Retail prices (BLS): Consumer Price Index 152.5 152.9 153.2 153.7 153.6 All food 148.1 148.4 148.9 149.4 149.4 Dairy products 132.9 132.8 132.3 133.2 133.7 Fluid milk and cream 131.9 132.1 131.3 132.3 133.1 Manufactured products 134.4 134.2 134.0 134.7 134.9 Dairy product output: Butter 85.0 76.0 80.2 93.5 90.5 American cheese 262.4 245.1 251.4 252.8 252.8 Other-than-American cheese 297.4 311.0 326.3 341.2 337.0 Frozen products 1/ 123.6 125.0 97.7 92.5 79.2 All products (milkfat basis 2/) 7,939 7,694 7,429 7,567 7,185 Nonfat dry milk 107.6 82.4 72.0 75.7 73.1 Beginning stocks: Commercial butter 46.3 47.1 34.3 24.7 18.4 Commercial American cheese 347.5 361.2 339.1 319.8 312.3 Other cheese 126.0 121.0 118.8 108.5 106.3 Manufacturers' nonfat dry milk 141.9 140.2 102.1 78.3 70.1 All commercial (milkfat basis) 5,493 5,601 5,067 4,559 4,292 All commercial (skim solids basis 6,669 6,734 6,021 5,408 5,175 All Government (milkfat basis) 729 477 361 184 122 All Government (skim solids basis 266 260 234 228 242 Commercial disappearance: Butter 80.5 86.6 88.0 98.4 96.7 American cheese 251.9 268.2 271.2 261.0 268.1 Other-than-American cheese 328.5 337.0 362.9 373.8 382.9 Nonfat dry milk 85.2 94.4 78.1 54.0 87.6 All products (milkfat basis 2/) 13,059 13,339 12,938 13,062 12,877 USDA net removals: Butter 3.7 2.5 1.9 1.6 1.0 Cheese 0.4 0.6 0.6 0.7 0.7 Nonfat dry milk 24.1 26.1 18.0 29.9 5.5 All products (milkfat basis 2/) 104 77 64 61 42 All products (skim solids basis 2 301 324 230 370 85 Imports (milkfat basis 2/) 253 222 240 273 317 International market prices: Butter 2,363 2,442 2,500 2,563 2,638 Nonfat dry milk 2,183 2,160 2,215 2,317 2,288 1/ Hard ice cream, ice milk, and sh 2/ Milk equivalent. NA = Not Available. U.S. dairy situation at a glance Dec-95 Jan-96 Feb-96 Milk production: Production (22 States) 11,088 11,285 10,719 Milk cow (22 States) 8,034 8,026 8,010 Milk per cow (22 States) 1,380 1,406 1,338 Production (U.S. est.) 12,844 13,111 12,454 Milk prices: All milk 13.90 14.00 13.80 Milk eligible for fluid use 14.00 14.00 13.90 Manufacturing grade milk 12.90 12.70 12.60 Minnesota-Wisconsin (3.5% fat) 12.91 12.73 12.59 Slaughter Cow, Wisc: 32.31 34.15 35.00 Wholesale prices: Grade A butter 74.4 75.4 66.4 American cheese, WI assembly pt. 40-pound blocks 144.6 139.3 139.3 Barrels 135.4 133.5 134.0 Nonfat dry milk, Central States 117.6 114.9 110.8 Retail prices (BLS): Consumer Price Index 153.5 154.4 154.9 All food 149.9 151.0 150.8 Dairy products 135.0 136.3 137.2 Fluid milk and cream 134.5 136.8 137.3 Manufactured products 136.2 136.5 137.7 Dairy product output: Butter 112.4 125.4 118.1 American cheese 279.9 275.4 270.8 Other-than-American cheese 343.9 312.6 316.6 Frozen products 1/ 69.6 77.7 85.7 All products (milkfat basis 2/) 7,830 7,949 7,918 Nonfat dry milk 101.8 98.9 93.0 Beginning stocks: Commercial butter 11.3 15.8 22.1 Commercial American cheese 297.6 306.6 323.1 Other cheese 95.7 105.3 118.1 Manufacturers' nonfat dry milk 50.3 70.6 71.7 All commercial (milkfat basis) 3,859 4,116 4,493 All commercial (skim solids basis 4,631 5,055 5,351 All Government (milkfat basis) 105 69 80 All Government (skim solids basis 189 172 165 Commercial disappearance: Butter 108.2 120.7 110.2 American cheese 272.1 259.3 251.2 Other-than-American cheese 372.7 312.3 327.9 Nonfat dry milk 73.8 94.2 79.3 All products (milkfat basis 2/) 12,789 12,769 12,075 USDA net removals: Butter 0.0 0.0 0.0 Cheese 0.3 0.2 0.2 Nonfat dry milk 8.0 3.8 5.4 All products (milkfat basis 2/) 8 6 7 All products (skim solids basis 2 100 50 68 Imports (milkfat basis 2/) 343 160 159 International market prices: Butter 2,563 2,404 2,113 Nonfat dry milk 2,238 2,229 2,138 1/ Hard ice cream, ice milk, and sh 2/ Milk equivalent. NA = Not Available. Milk used and marketed by farmers, 1989-95 ----------------------------------------------------------------------- Item 1989 1990 1991 1992 ----------------------------------------------------------------------- Billion Used on farms where produced Fed to calves 1/ 1.5 1.5 1.5 1.4 As fluid milk or cream 2/ 0.6 0.5 0.5 0.5 Total on-farm use 3/ 2.1 2.0 2.0 1.9 Milk marketed by farmers: Sold to plant and dealers: Fluid grade 128.1 133.2 134.6 137.6 Manufacturing grade 12.7 11.6 10.1 10.4 Sold directly to consumers 4/ 1.0 1.0 1.0 1.0 Total milk marketed 3/ 141.8 145.7 145.7 149.0 Total milk production 1/ 3/ 143.9 147.7 147.7 150.9 ----------------------------------------------------------------------- 1/ Excludes milk sucked by calves. 2/ Includes farm-churned butter. to rounding. 4/ By producers who sell only milk from their herds. A produced by institutional herds. 5/ Preliminary. Milk used and marketed by farmers, ----------------------------------------------------------- Item 1993 1994 1995 5/ ----------------------------------------------------------- pounds Used on farms where produced Fed to calves 1/ 1.4 1.3 1.2 As fluid milk or cream 2/ 0.4 0.4 0.3 Total on-farm use 3/ 1.8 1.7 1.6 Milk marketed by farmers: Sold to plant and dealers: Fluid grade 140.4 143.4 145.1 Manufacturing grade 7.3 7.5 7.6 Sold directly to consumers 4/ 1.0 1.1 1.3 Total milk marketed 3/ 148.7 152.0 154.1 Total milk production 1/ 3/ 150.6 153.7 155.6 ---------------------------------------------------------- 1/ Excludes milk sucked by calv 3/ May not add due to rounding. 4/ By producers whlso includes milk produced by institutional herds. 5/Preliminary. U.S. Milk production and related data ------------------------------------------------------------------------------- 1994 ---------------------- Unit 1994 1995 2nd 3rd ------------------------------------------------------------------------------- U.S. Milk production and related data ------------------------------------------------------------------------------- 1994 ---------------------- Unit 1994 1995 2nd 3rd ------------------------------------------------------------------------------- Milk cows Thou. 9,500 9,461 9,510 9,510 Milk per cow Lb. 16,175 16,451 4,196 4,018 Milk production Mil. lb. 153,663 155,644 39,907 38,209 Concentrate ration Dol./cwt. 8.03 7.82 8.16 7.98 Milk-feed price ratio Dol./cwt. 1.62 1.63 1.58 1.56 ------------------------------------------------------------------------------- U.S. Milk production and related ----------------------------------------------------------------------------- 1995 -------------------------------------------- Unit 4th 1st 2nd 3rd ----------------------------------------------------------------------------- Milk cows Thou. 9,484 9,470 9,477 9,465 Milk per cow Lb. 4,000 4,112 4,276 4,049 Milk production Mil. lb. 37,935 38,941 40,520 38,325 Concentrate ration Dol./cwt. 7.76 7.61 7.61 7.81 Milk-feed price ratio Dol./cwt. 1.67 1.65 1.60 1.59 ----------------------------------------------------------------------------- U.S. Milk production and related --------------------------------------------------- 1996 ------------------ Unit 4th 1st --------------------------------------------------- Milk cows Thou. 9,432 9,400 Milk per cow Lb. 4,014 4,162 Milk production Mil. lb. 37,857 39,125 Concentrate ration Dol./cwt. 8.24 8.83 Milk-feed price ratio Dol./cwt. 1.67 1.57 --------------------------------------------------- Dairy products: Per capita consumption, United States, 1975-95 1/ Evaporated and condensed milk Fluid Cheese Bulk Year milk American Other Cottage Canned, Bulk, and and Butter whole whole canned, cream 2/ skim Pounds 1975 261 4.7 8.4 6.1 4.7 3.9 1.4 3.6 1976 260 4.3 9.0 6.7 4.7 3.7 1.3 3.6 1977 258 4.3 9.3 6.8 4.7 3.2 1.1 3.9 1978 254 4.4 9.6 7.4 4.7 3.1 1.0 3.5 1979 251 4.5 9.6 7.6 4.5 3.0 1.1 3.3 1980 246 4.5 9.6 7.9 4.5 2.8 1.0 3.3 1981 242 4.2 10.2 8.0 4.3 2.9 1.2 3.2 1982 236 4.4 11.3 8.6 4.2 2.7 1.3 3.0 1983 236 4.9 11.6 8.9 4.1 2.7 1.1 3.2 1984 238 4.9 11.9 9.6 4.1 2.4 1.3 3.7 1985 241 4.9 12.2 10.4 4.1 2.2 1.4 3.8 1986 240 4.6 12.1 11.0 4.1 2.2 1.4 4.3 1987 239 4.7 12.4 11.7 3.9 2.2 1.5 4.2 1988 235 4.5 11.5 12.2 3.9 2.1 1.4 4.2 1989 236 4.4 11.0 12.8 3.6 2.0 1.1 4.7 1990 234 4.4 11.1 13.5 3.4 2.2 1.0 4.8 1991 233 4.4 11.1 13.9 3.3 2.1 1.1 5.0 1992 231 4.4 11.3 14.7 3.1 2.1 1.1 5.2 1993 227 4.7 11.4 14.8 2.9 1.9 1.1 5.2 1994 226 4.8 11.5 15.3 2.8 1.8 0.8 5.5 1995 5/ 223 4.5 11.8 15.5 2.7 1.5 0.7 4.7 Frozen products Dry products Other frozen Dry Dry Ice Ice Sherbet dairy whole Nonfat butter Dry cream milk products 3/ milk dry milk milk whey 4/ Pounds 1975 18.5 7.7 1.5 1.0 0.1 3.3 0.2 2.2 1976 17.9 7.3 1.5 0.8 0.2 3.5 0.2 2.4 1977 17.5 7.7 1.5 0.7 0.2 3.3 0.3 2.4 1978 17.4 7.7 1.4 0.8 0.3 3.1 0.2 2.4 1979 17.1 7.3 1.3 0.6 0.3 3.3 0.2 2.7 1980 17.5 7.1 1.3 0.3 0.3 3.0 0.2 2.7 1981 17.4 7.0 1.3 0.6 0.4 2.1 0.2 2.7 1982 17.6 6.6 1.3 0.6 0.4 2.1 0.2 2.9 1983 18.1 6.9 1.3 0.6 0.4 2.2 0.2 3.1 1984 18.2 7.0 1.3 0.6 0.4 2.5 0.2 3.2 1985 18.1 6.9 1.3 1.3 0.4 2.3 0.2 3.5 1986 18.4 7.2 1.3 0.9 0.5 2.4 0.2 3.7 1987 18.4 7.4 1.3 1.0 0.5 2.5 0.2 3.6 1988 17.3 8.0 1.3 1.0 0.6 2.6 0.2 3.5 1989 16.1 8.4 1.3 2.8 0.5 2.1 0.2 3.5 1990 15.8 7.7 1.2 3.6 0.6 2.9 0.2 3.7 1991 16.3 7.4 1.1 4.3 0.4 2.6 0.2 3.6 1992 16.3 7.1 1.2 4.4 0.5 2.8 0.2 3.8 1993 16.1 6.9 1.3 5.0 0.5 2.4 0.2 3.8 1994 16.1 7.6 1.3 4.9 0.4 3.5 0.2 3.6 1995 5/ 15.6 7.3 1.3 3.9 0.4 3.5 0.2 3.5 1/ Domestic disappearance divided by total population including military overseas (resident population for fluid products). 2/ Product weight of beverage milks, fluid creams, egg nog, and yogurt sold or consumed on farms. 3/ Includes mellorine. May not be comparable across time. 4/ Includes modified whey products. 5/ Preliminary. Production and commercial use of selected dairy products --------------------------------------------------------------- Change from: ------------------------------- 1995 1994 1985-94 avg. --------------------------------------------------------------- Mil. lb. Percent Production: Butter 1,260.7 -2.7 -0.5 Cheese 6,940.2 +3.1 +18.3 American 3,128.6 +5.2 +10.4 Italian 2,642.0 +0.6 +25.4 Miscellaneous 1,169.6 +3.1 +25.9 Cottage cheese 698.7 -4.4 -18.8 Creamed 380.4 -7.2 -32.6 Lowfat 318.3 -0.9 +7.4 Canned milk 476.7 -11.4 -16.6 Nonfat dry milk 1233.8 +0.2 +18.6 Dry whole milk 171.3 +2.7 +13.7 Ice cream (Mil. gal.) 816.9 -2.2 -2.1 Ice milk (Mil. gal.) 349.9 -2.4 +3.5 Commercial use: Butter 1,180.9 +7.6 +25.2 American cheese 3,145.7 +3.8 +17.5 Other cheese 4,151.8 +2.4 +25.6 Nonfat dry milk 918.7 0.0 +38.5 Canned milk 488.3 -7.7 -13.1 --------------------------------------------------------------- 1/ Hard only. END-END-END