Dairy Market Update: November 2005

U.S. milk production has continued to surge, as have sales of fluid milk products. The U.S. Department of Agriculture (USDA) recently reported that farm milk production in October increased 4.1% above the same month last year. This was the sixth straight month where the year-over-year increase in milk production averaged at least 3.8% or greater. This has been mainly due to 58,000 more milk cows than the national herd had in October 2004, an increase of 0.7%; and the average increase of 53 more pounds of milk produced per cow, a 3.3% rise over last year.

States with the largest increases in milk production in October were Idaho (+13.2%), Texas (+9.4%), Indiana (+8.3%), New Mexico (+8.1%) and Colorado (+7.6%); except for Indiana, all of these states are in the southwest or mountain west region of the nation. Only five states decreased in milk production last month: Missouri (-7.4%), Kentucky (-6.2%), Iowa (-1.9%), Arizona (-0.7%) and Florida (-0.6%).

Meanwhile, regarding consumption, USDA reported that sales of fluid milk products in August and September (the latest available data) surged ahead of last year. Through January to September 2005, milk production is up 127 million pounds, which is an increase of 0.3% over the same time in 2004. For the first seven months of 2005 (January through July), fluid milk sales for the entire U.S. were estimated to be down 0.3% (106 million pounds) over the same period last year, after accounting for the extra leap day in 2004. However, in August and September alone, fluid milk sales have increased 233 million pounds, or 2.6% above last year.

Among the types of fluid milk sold in August and September, all of the categories except whole white milk saw sales increases over the previous year. In white milk, reduced-fat (2%) was up 4.5%, lowfat (1%) was up 5%, and fat-free (skim) sales increased 5.3%. All flavored fluid milk products increased by 0.8%. Whole white milk sales declined by 1.1%.

Posted November 21, 2005