Market Reports

Lower milk production abroad will make more room for U.S. dairy product exports, even if the global appetite for dairy products fades modestly.

From the darkest corners of the Board of Trade building, the bears whispered their concerns about the health of the global economy and accelerating inflation. But their warnings were drowned out by the stamping of hooves as the markets shot enthusiastically upward.

Churns made just 159.4 million pounds of butter in October, down 1.6% from a year ago. Stiff competition for cream and supply chain tangles likely kept a lid on output in November as well.

According to USDA’s Milk Production report, U.S. milk production dropped to 18.5 billion pounds in October, down 0.5% from October 2020. That’s the steepest year-over-year decline in milk output since March 2019.

Higher operating expenses and feed bills have significantly raised the cost of production for dairy producers, eating deep into milk checks. Like every industry, dairy producers must also absorb the intangible expense of increased inefficiencies caused by product shortages and logistics headaches.

U.S. cheese production topped 1.14 billion pounds in September, scoring an all-time high in daily average output. There is clearly plenty of fresh Cheddar available, and cheesemakers are unloading some at the market of last resort in Chicago.