The USDA releases an estimate of milk production for the United States every month, at least during months when the government is operating. Whatever number the USDA releases gets picked up in headlines and plugged into econometric models. Market participants then debate the impact on dairy prices. But does this headline number accurately reflect the production of milk?
What really matters is the production of milk components: protein, fat and other solids. Milk at the farm level in the United States is roughly 87% water, 4% fat, 3.2% protein and 5.8% other solids (mostly lactose). The components, or the solid parts of milk, are what go into various dairy products such as cheese, butter and powders.