Dairy Processing - May/June 2024 - 74

COMMODITIES OUTLOOK
Ongoing
decline
US milk production is facing some headwinds in 2024.
By Nate Donnay | nate.donnay@stonex.com
M
ilk production in the United States is on a losing
streak. After adjusting for leap year, production
has been below the prior year for nine consecutive
months (July 2023 to March 2024) which is the longest streak
since 2001, and odds are we'll stay below year ago for another
four to five months.
The decline is being driven by a mix of short-term and
long-term drivers, including high input costs in 2022 and 2023,
weak milk prices in some regions, a lack of replacement
heifers, a shift in the breed of cows we're milking and now
avian influenza showing up in dairy cows.
You can break milk production down into two basic
components, the number of cows being milked and milk
production per cow (PPC). The biggest drag on milk
production right now is due to a decline in the number of
cows in the dairy herd over the past year. The dairy herd in
March was down 98,000 cows or 1.0% from the prior year.
Higher on-farm costs, especially feed, in 2022 and the first half
of 2023 squeezed margins and limited herd expansion.
Cheese prices have been relatively weak over the past year,
so dairy farmers in regions that produce a lot of cheese have
faced pressure on the revenue side, too. Compared to a year
ago in March, the dairy herd in New Mexico was down 41,000
head, Texas was down 21,000 and Minnesota lost 8,000 head.
REBUILDING HERDS
Rebuilding the herd is going to be a slow process. The number
of heifers expected to calve this year is at the lowest level
74 MAY-JUN 2024 | DAIRYPROCESSING.COM
we have on record (going back to 2003). Thanks to high
beef prices and a shrinking beef herd, dairy farmers have
increasingly been cross breeding their dairy cows with beef
and selling the resulting calves into the beef industry. That
has limited the number of calves being raised to replace the
existing dairy cows (or to grow the dairy herd).
Dairy farmers have recognized the tightness in
replacement heifers and are sending fewer dairy cows to
slaughter this year, which is helping to hold the size of the
herd roughly steady in recent months, but it will be difficult to
grow the herd in the short term.
PRODUCTION PER COW
The second part of milk production is PPC. Historically, PPC
grows about 1% to 1.5% per year as the genetics in the herd
improve, facilities improve and management of the cows and
farms continually improves. However, instead of growing by
1% to 1.5%, PPC was only up 0.6% in 2022 and 0.1% in 2023.
Then it was down 0.1% year-over-year in the first quarter of
2024.
Some of the weak growth can be blamed on high feed
costs in 2022 and early 2023, along with some weather issues
(especially flooding in California), but there is something
deeper happening. Over the past decade, dairy farmers have
been shifting away from Holsteins, the iconic black and white
cows, and moving toward Jersey and Holstein-Jersey crossbred
cows. Jerseys are a little smaller and easier to manage
and a little more efficient at turning feed into milk protein
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Dairy Processing - May/June 2024

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