September 19, 2018

Higher Herd Numbers, Higher Prices

 |  By: Taylor Leach

The USDA released their August milk production report on Wednesday. Few surprises were found inside the numbers. 


Cow numbers which were a big discussion in last month's report were further reduced in July as an amendment was made to the previous reporting. In total, July cow numbers dropped 9,000 from June. However, the August report revealed another increase. In total, 5,000 cows came back into the herd in August, taking the total herd back to 9.4 million head.


The U.S. production rose 1.4% to return to a rate of increase that's been more normal in recent years. Looking around the U.S., the biggest growth came from the center of the country led by Texas which was up 9.5% followed by Kansas which rose 8.6% and Colorado which rose the same 8.6%. 


A quick glance at the CME spot trade revealed very similar results to Tuesday. Butter rose another 3 cents to move to $2.30 in the half cents a pound. Grade A nonfat dry milk rose a penny and a half to finish at 88 and a quarter. Barrel cheddar dropped a penny and three quarters to finish at $1.39 while blocks remained unchanged at $1.61 and a half. Dry whey remained unchanged as well and finishes once more at 52 and a half cents. 


While the CME spot trade experienced similar results to yesterday, Class III markets did not. Prices rose across the board with the average from now through the end of the year, rising a nickel to $16.13. Class IV markets saw trading in nearby contracts elevating the average price from now through the end of the year to $15.10, up 13 cents from Tuesday's finish.


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