Downward Revisions in June Contribute to Weaker than Expected July Growth
Downward Revisions in June Contribute to Weaker than Expected July Growth
US milk production was higher versus prior year, as expected, but the year-on-year gain was lower than anticipated. Weaker milking herd growth, coupled with several June revisions, meant that July milk output eked out just a slight gain versus one year ago. Critically, June output was revised DOWN by 45 million pounds, making what was initially announced as a 0.2% gain a 0.1% decline after the revision. Given this adjustment, the US actually saw eight consecutive months of weaker milk production, with July marking the first time since October that milk was higher than the previous year.
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The June revision was driven by 8,000 head being removed from the initial June estimate. With the updated data, the June herd dropped 4,000 head from May, a questionable occurrence when anecdotal evidence showed farmers adding cows to the herd, and when weekly slaughter data suggested less cows leaving the herd. USDA then reported that the July herd grew just 1,000 head from June, another suspect datapoint and a loss of 7,000 cows on a report-toreport basis. HighGround had expected July milk production growth in excess of 1%; these changes are disruptive to the forecast model and make predictive analytics more difficult when data accuracy cannot be trusted. To continue reading, click Here to request a free trial and read HighGround Dairy's complete analysis
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