Dairy Processing - May/June 2024 - 75

and fat, but they produce less milk overall than an average
Holstein, which is likely slowing the growth in milk PPC at the
national level.
A second potential issue for PPC is avian influenza
showing up in dairy cows. There were rumors about sick
cows in Texas in early March and no one could figure out
what was wrong with them. Then in late March the US
Department of Agriculture (USDA) confirmed that these
cows had contracted Highly Pathogenic Avian Influenza
(HPAI), which was the first time this disease was found
in cows.
As of May 7, the USDA had found 36 infected herds across
nine states, but the true number of cases is likely much higher.
About 10-15% of the cows on infected farms show significant
symptoms, which include reduced feed intake and a dramatic
drop in milk production for seven to 10 days; and then most
of the cows bounce back. There also seems to be some
subclinical cases in the herds, as well, which is likely reducing
milk production a little, but the cows aren't showing significant
symptoms.
From what we have heard, production for an affected farm
drops by about 20% for a few weeks before mostly recovering.
There is a lot we don't know about HPAI in the dairy herd,
such as how widespread it has been or currently is, how it
is being spread, and what the long-term impacts are to the
cows and production. For now, it doesn't seem to be having
a dramatic impact on national level milk production, but it
needs to be watched carefully.
CURRENT OUTLOOK
The dairy herd is down from last year and will probably
struggle to rebuild. Milk PPC is weak due to the shift in
the types of cows we're milking, as well as some
negative impact from HPAI. It is easy to see why
milk production has been struggling and why
it will take a while for it to recover.
It's important to note that milk
production can actually be broken down
into three parts, cows, PPC, and the
amount of fat and protein in the milk.
Unfortunately, the amount of fat and
protein in the milk is not reported as part
of the Milk Production report from the
USDA; you have to go looking for that
data from other sources. And what the
data shows is that the fat and protein in
the milk has consistently been growing
over the past 10 years. Those Jersey and
Holstein-Jersey cross-bred cows produce
fewer pounds of milk than Holsteins, but
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 cross-bred cows. "
the concentration of fat and protein in the milk is higher.
At the end of the day, the fat and protein (and lactose)
are the important parts of milk, not the pounds of water that
come out of the cow.
If you look at the production of milk fat and protein
coming from US dairy farms, the volume has continued to
grow and has been running above year ago levels for the
past 46 months, although the growth has been weaker than
average. We've had a lot of headwinds to milk production and
we are probably looking at below average production growth
for the remainder of 2024. But if you adjust the data to reflect
the amount of fat and protein in the milk, things don't look
quite as bad.
Editor's note: The trading of derivatives such as
futures, options, and over-the-counter (OTC) products or
" swaps " may not be suitable for all investors. Derivatives
trading involves substantial risk of loss. Past results are not
necessarily indicative of future results.
Nate Donnay is the Director of Dairy Market Insight at
StoneX Financial Inc. and has been applying his expertise
in large complicated systems and statistical analysis to the
international and US dairy markets since 2005.
DAIRYPROCESSING.COM | MAY-JUN 2024 75
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