U.S.milk production during the first quarter of 2017 was 2.1 percent higher than during 2016’s first quarter, on a leap year-adjusted basis.On a monthly basis, production was up by 2.6 percent in January,the highest since December 2014.Year-over-year growth dropped to a leap year-adjusted 2.2 percent in February, and then to 1.7 percent in March. This marked slowing of milk production growth in the United States is caused by changes in state milk production.
Based on USDA revisions in data for the past several years,the rate of production growth is increasing in several of the smaller milk producing states but only in very few of the larger ones.Growth in milk production per cow is also dropping. Partly but not fully offsetting this is a very gradual increase in dairy cow numbers at the national level.These are all indicators that financial conditions on dairy farms over the past several years,from the standpoint of margins, are not at a level that will stimulate sustained expansion of milk production at the national level.
Additional milk production continued to move mostly into production of American-type cheese, particularly Cheddar, which increased by almost 8 percent in the first quarter of 2017 from a year ago.Butter production increased from a year ago during the quarter, after being down on a rolling three-month basis since late last summer.Increased production of nonfat dry milk and skim milk powder matches closely the difference between increased exports and reduced domestic use of these two products.