U.S. DAIRY HERD ADDS COWS BEFORE YEAR-END

Source : Livestock Management Information Center

 

The dairy herd has changed direction once again this year, ending the year with 9.339 million head, 14 thousand below the prior year. Dairy cows were sent to slaughter at an alarming rate in the first half of 2019, hitting records or near record highs in weekly slaughter, regularly.  The herd shrank by 35 thousand head from January to August before dairy producers added more cows.  One of the changing fundamentals for dairyman has been the comeback in the all milk price.

The national all milk price averaged $16.45 per cwt in 2018, marking the fourth consecutive year of milk prices below $18 per cwt. In the first half of 2019, milk prices averaged $17.45 per hundredweight. January of 2019, started the year at $16.40 and by June climbed to $18.10, and November showed a high of $21.00 per cwt. November was the highest national milk price since November of 2014.  The last five years have not been kind to the dairy industry and the second half of 2019 seemed to breathe life back into forecasts.  Cheese and butter prices both surpassed $2.00 per pound and domestic demand for value added dairy products was positive all year. The export market was far more mixed. Tariffs on dairy products hurt milk powder exports to China, total milk powder exports through November are down 6%. With U.S. prices above world butter prices, butter exports suffered and are down 47% through November.  Whey and natural products also faltered, down 21%.

Looking ahead, USMCA paved the way for more favorable conditions for the dairy market, particularly in Canada.  Tariffs are still in place against the U.S. in China, but domestic demand for dairy products has been a bright spot in the last year and will hopefully continue. The dairy herd is not expected to rapidly add cows as it has historically. The use of sexed semen and the increase in crossbreeding with beef semen is expected to tighten the dairy replacements available at least in the near term. USDA NASS quarterly replacement cow prices are already showing signs of higher prices.  This should encourage cows to stay in the herd longer, and slow the fairly high cull rate of the last four years.  LMIC is forecasting small herd growth in 2020, with prices averaging higher than 2019 built on more favorable export markets and steady domestic demand until late 2020.

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