US July 2013 Milk Production Comments

As expected year-over-year growth, monthly declines and a petite 1 million pound upward June revision makes July’s Milk Production report fairly static. We are looking forward to October 21 – that’s the release date of the September Milk Production report where USDA will bring back milk cow data that will allow for much more analysis. In the latest Livestock, Dairy, Poultry report, USDA forecasted 2.3% production growth in Q3 2013 versus 2012. We view July’s report as neutral to the current supply/demand picture and should not have a significant impact on the US dairy market. Extreme temperatures had an impact during the first week of July in the Western states and we believe production loss appeared in the data for states like California, Arizona, Oregon and Idaho. Production in all four of these states declined versus last July. California continues to drag down the national average. As CA dairymen continue to struggle with margins due to expensive feed, July marks the 13th straight month of year-over-year production declines. However, last summer’s drought had a significant impact on production there starting in August so the negative trend should turn in next month’s report. Idaho’s decline is its first since February though they have barely been above the previous year throughout 2013. The stint of heat and humidity in the Upper Midwest during the middle of the month does not seem to have caused any issues with July production. Growth figures continue to  impress in the Upper Midwest. Texas posted significant gains in July versus the previous year after a 12 month slide between June ’12 and May ’13. With annual production declines at their worst between Sep and Nov, Texas should continue to post strong gains through the end of the year. June ’13 state-