Milk and component production must stay within the bounds of enough milk so there are not shortages and too much milk that results in dumping and overproduction of dairy products. This post will analyze the most recently available data on milk and component production. There are concerns that the U.S. may be moving into a period of overproduction which will create high inventories and lower milk prices.
The growth products, primarily cheese, are dependent on components. The growth of components in the milk will be reviewed in the later sections of this post.
Chart I plots the production of milk. Because it is based on 12-month averages, it lags the actual monthly impact. Even so, the growth toward the end of 2020 shows significant growth in milk production. Chart II expresses the same 12-month moving averages as a percentage increase from the prior year. In early 2018, milk production increases were at 1.6 percent annually over the prior year. In 2019, milk production increases dropped to a growth rate of just .2 percent and with the lower production growth, inventories decreased, and producer milk prices increased. The year of 2020 was extremely volatile, and the U.S. dealt with the many food consumption changes caused by COVID and the lockdowns implemented to help prevent the spread of COVID. With that, milk production began to grow. In November 2020, the milk supply was growing at a rate of 2.1 percent annually based on the most recent 12-month moving averages (Chart II).
|Chart I – U.S. Milk Production – 12 Month Moving Average|
|Chart II – Percent Growth in Milk Production|
|Chart III – Milk per Cow per Day – 12 Month Moving Average|
|Chart IV – Percent Growth Milk per Cow per Day|
|Chart V – U.S. Dairy Cows|
|Chart VI – U.S. Dairy Cows – 12 Month Moving Average|
The growth rate for dairy cows based on 12-month moving averages is .5 percent for 2020 (Chart VII). Chart VII is concerning in that the decrease in dairy cows that occurred in 2019 has now turned around with significant increases in 2020. In addition to the increasing number of cows, these cows are increasingly productive in both milk per day and components per hundred weight of milk.
|Chart VII – Percent Growth – U.S. Dairy Cows –|
As mentioned above, the dairy growth products require components, not milk volume. Chart VIII below shows the growth in butterfat per hundred weight of milk. The growth rate grew by one percent over the prior year in 2019. However, the growth in butterfat has increased by only .3 percent in 2020. The lower growth rate in 2020 may have to do with actions taken during the volatile market caused by COVID.
|Chart VIII – Butterfat Pounds per cwt.|
The final chart, Chart IX in this post, shows the production of milk protein based on pounds of protein per hundred weight of milk. As has been pointed out in prior posts, the growth of milk protein has been very mixed. Milk protein is the highest paid component in milk and the amount of milk protein is manageable, which make it difficult to understand why milk protein is not growing steadily.
|Chart IX – Milk Protein Pounds per cwt.|