As printed in our February 10, 2014 issue...

U.S. MILK OUTPUT ROSE 0.4 PERCENT to reach 201.2 billion pounds in 2013 compared to the previous year, according to initial USDA estimates.

COW NUMBERS WERE DOWN 7,000 HEAD when comparing averages for the past two years. However, when looking at monthly averages, the national herd actually has 67,000 fewer head when comparing the April 2012 peak of 9.273 million to December's total of 9.206 million head.

STEPPED-UP CULLING during the past year contributed to a reduction in milk cows. In 2013, 3.125 million head were sent to packing plants; that was up 24,000 from the previous year's 3.1 million cows.

DECEMBER MILK OUTPUT WAS FLAT across all 50 states. Among the top 10 dairy states, only four expanded milk flow. California and New York were up 1.6 percent; Washington grew 1 percent and Michigan, 0.8.

A SMALLER HERD IN IDAHO reduced milk flow. The reduction not only allowed New York to retake third among all states, but Glanbia Foods laid off 5 percent of its cheese-making workforce due to short milk supplies.

STRONG DEMAND AND TIGHT SUPPLIES fueled dairy markets to new highs. Spot Cheddar prices set new records at $2.29 for blocks and $2.25-3/4 for barrels in late January trading at the CME.

PRODUCT PRICES AT THE GLOBAL DAIRY TRADE based in New Zealand mirrored U.S. activity. Cheddar moved to $2.33 per pound, and the nine-product mix averaged $2.28 in late January trading.

CLASS III FUTURES JUMPED $3 per hundredweight since early November to reach a $19.83 average for February to July contracts.

SPRINGING HEIFER PRICES CLIMBED nearly $300 per head in just one month at California's Tulare Livestock Auction as producers look to capitalize on strong prices. Similar trends have occurred across the country.

CLASS I USE FELL 2.3 PERCENTAGE POINTS in the population-dense Northeast Federal Order. At 37.4 percent, fluid milk fell to its lowest point since that federal milk order was created in 2000. Class II milk destined for yogurt remained unchanged at 25.9 percent.

BRIEFLY: Butterfat levels reach 3.77 percent which also set a new watermark in the Northeast Order. Protein averaged 3.08 percent which tied the high point. California is experiencing the driest year on record in the past 130 years. The outlook doesn't appear good as the state's snowpack, which replenishes water reserves, was at 17 percent of its normal level. The average charge to haul milk was 17.43 cents per hundredweight in the Upper Midwest order, reported administrators. A record 47.6 million Americans received $79.3 billion in food stamps last year.

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