Dairy Market R
Dairy Management Inc.
Vol u m e 2 5 | N o. 3
Overview
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March 2022
D MI | NMP F
U.S. milk production fell below year-ago levels by increasing amounts during the period from November 2021 through January 2022, following a period of flat
growth last fall. January production was 1.6 percent below a year ago. Meanwhile, domestic commercial dairy use during the same period was strong for yogurt, butter, and all major types of cheese. That combination of lower supply and increased demand generated a spectacular $2.40/cwt monthly jump in the U.S. average all-milk price in January, to $24.20/cwt, the sixth highest monthly U.S. milk price ever. The Dairy Margin Coverage (DMC) feed cost formula cost rose by only $0.39/cwt from a month earlier in January, catapulting the DMC well above the maximum $9.50/cwt coverage level to $11.54/cwt.
Commercial Use of Dairy Products Nationwide fluid milk sales showed the smallest consecutive three-month loss in almost a year during November–January. During the intervening period, rolling quarterly losses averaged 461 million pounds and 4 percent. These rates were unusually large since they were in comparison to the first year of the pandemic, when fluid milk sales mostly rose year-over-year. Domestic commercial use during these three months was particularly robust for yogurt, butter and all major types of cheese, which was reflected in equally solid growth in milkfat-based total milk equivalent use.
U.S. Dairy Trade U.S. dairy exports pulled back in December and January from the record pace they had set for much of the previous
year. While monthly exports ranged from about 17 to 19 percent of U.S. milk solids production from February through November, averaging about 18 percent, that level dropped to 14 percent in December and 13.6 percent in January. Reductions in skim milk powder, dry whey and whey protein concentrate exports largely drove the decline. Lower milk production in Europe and New Zealand, coupled with continued strong overall demand from dairy importing countries, would indicate that 2022 could also be a good export year for the U.S. dairy industry, despite its slow start. U.S. cheese imports had grown annually for more than a year but then flattened out in December and January. Imports of casein and protein concentrated whey products have also been growing.
Domestic Commercial Use
Nov 2021–Jan 2022
Total Fluid Milk Products Yogurt Butter American–type Cheese All Other Cheese Total Cheese Dry Skim Milk All Products (milk equiv., milkfat basis) All Products (milk equiv., skim solids basis) All Products (milk equiv., total solids basis)
11,514 1,106 591 1,348 1,967 3,314 168 56,178 45,435 48,815
Nov 2020–Jan 2021
2021–2022 Change
Percent Change
-203 33 39 28 48 76 -71 1,586 70 567
-1.7% 3.1% 7.1% 2.1% 2.5% 2.4% -29.7% 2.9% 0.2% 1.2%
(million pounds)
11,717 1,073 552 1,320 1,919 3,238 239 54,591 45,365 48,248
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Milk Production After flattening out in the early fall last year, U.S. milk production has been dropping again, shedding about half a percent year-over-year each month during November through January. For the period, production was more than one percent below a year ago. The question becomes when, and where, production will stabilize again, and when will production eventually begin to grow once more? This will depend to a great extent on a small number of the largest milk-producing states. The top half of the 24 largest such states for which USDA reports monthly milk production is split half and half between those continuing to lose growth and those whose production has stabilized, either at a positive or a negative growth level, during the past few months. But nine states in the bottom half of the top 24 have so stabilized, while only two of these smaller states are still losing and one is growing. Total milk production in the top 12 states was down by 1.6 percent over a year earlier in
January, but by only 0.6 percent in the bottom 12 of the top 24 states. A return to growth in just a few of the largest milk producing states would be sufficient to reverse recent production trends for the U.S. as a whole.
Dairy Products The pattern of dairy product production during November through January is similar to that for the previous rolling three month period, only a bit more so. Specifically, butter and dry skim milk product production fell by double-digit percentages, while cheese and whey increased modestly, with cheese growth driven by Italian types. Whey product growth was driven by the higher protein products.
Dairy Product Inventories Stocks for the basic dairy commodity products, including butter and both American-type and other cheese, are mostly tracking close to trends in terms of both volumes and days continued on page 3
U.S. Dairy Exports
Nov 2021–Jan 2022
Nov 2020–Jan 2021
2021–2022 Change
Percent Change
(metric tons)
Butter Anhydrous Milk Fat / Butteroil Cheddar Cheese American–type Cheese All Other Cheese Total Cheese Dry Skim Milk Whole Milk Powder Dry Whey Whey Protein Concentrate / Isolate Lactose Percent of U.S. Milk Solids Exported
10,307 4,104 15,459 15,756 78,218 93,974 193,428 8,350 44,520 41,024 94,763 15.1%
7,097 1,434 8,037 8,125 66,893 75,018 183,882 9,157 52,255 53,076 80,430 14.5%
3,210 2,671 7,421 7,631 11,326 18,956 9,547 -807 -7,735 -12,052 14,333 0.5%
45% 186% 92% 94% 17% 25% 5% -9% -15% -23% 18% 4%
U.S. Dairy Imports
Nov 2021–Jan 2022
Nov 2020–Jan 2021
2021–2022 Change
Percent Change
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
11,363 46,721 124 12,311 18,654 3.3%
6,443 196 106 376 2,339 0.4%
131% 0% 587% 3% 14% 13%
(metric tons)
2 – Dairy Market Report | March 2022
4,920 46,525 18 11,934 16,315 2.9%
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Dairy Product Inventories from page 2
of commercial use in stock. Whey protein concentrate has risen noticeably above trend on a volume basis but not in days of use.
Dairy Product and Federal Order Class Prices Of the four key NDPSR survey products, the two dry products continued the relatively vigorous rates of monthly price increases in February they have shown in recent prior months. Butter prices, by contrast, slowed considerably
from their recent scorching rise while monthly cheese prices continue to alternate between higher and stagnant, depending on what’s happened between block and barrel cheese prices. Class IV and Class II prices gained almost a dollar a hundredweight from January to February, but Class III gained just over half that amount. Dairy product retail price inflation is catching up to the rising rate of overall inflation, driven by an 11.2 percent annual jump in the retail prices of fluid milk in February. Overall dairy price inflation in February was up over a year ago by 5.2 percent, compared with 7.9 percent and 7.6 percent, continued on page 4
Milk and Dairy Products Production
Nov 2021–Jan 2022
Nov 2020–Jan 2021
2021–2022 Change
Percent Change
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,374 5,959 55,855 7,424
9,445 5,977 56,450 7,423
-71 -18 -595 0
-0.7% -0.3% -1.1% 0.0%
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
(million pounds)
1,387 979 1,452 1,125 3,437
1,399 1,018 1,427 1,117 3,392
-12 -39 26 8 44
-0.9% -3.8% 1.8% 0.7% 1.3%
Butter
531
590
-59
-10.0%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
494 131 233 141
562 152 234 126
-67 -21 -1 14
-12.0% -13.8% -0.4% 11.3%
Dairy Product Inventories
Jan 2022
Dec 2021
221 839 607 266 56
199 843 599 258 57
Jan 2021
2021– 2022 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
332 809 599 314 67
-33% 4% 1% -15% -16%
Dairy Market Report | March 2022 – 3
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Dairy Product and Federal Order Class Prices from page 3
respectively, for overall and for food and beverage price inflation. Retail prices for cheese and related products, by contrast, were just 1.9 percent higher than a year earlier in February.
Milk and Feed Prices The January margin under the Dairy Margin Coverage (DMC) program rose just over $2/cwt from a month earlier to $11.54/
Dairy Product and Federal Order Prices NDPSR Dairy Product Prices Butter Cheddar Cheese 40-Pound Blocks 500-Pound Barrels Nonfat Dry Milk Dry Whey
cwt, fueled by the third-highest ever single-month jump in the U.S. average all-milk price. A spectacular $2.40 per hundredweight one-month jump in the U.S. average all-milk price in January greatly overtook a DMC feed-cost calculation rise of only 39 cents at the same time. The monthly milk price gain has only been surpassed in April 2004, when it rose by $2.60/cwt, and June 2020, when it leaped by $4.50/cwt as part of a quick price recovery from an initial plunge during the onset of the COVID-19 pandemic. continued on page 5
Feb 2022
Jan 2022
$2.667 $1.907 $1.909 $1.875 $1.728 $0.780
$2.613 $1.898 $1.979 $1.795 $1.649 $0.709
Feb 2021
2021–2022 Change
(per pound)
$1.359 $1.595 $1.687 $1.484 $1.116 $0.506
$1.308 $0.311 $0.222 $0.391 $0.612 $0.274
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$21.64 $23.79 $20.91 $24.00
$19.71 $22.83 $20.38 $23.09
$15.54 $14.00 $15.75 $13.19
$6.10 $9.79 $5.16 $10.81
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$3.875 $3.514 $5.447 $3.774
$3.787 $3.393 $5.315 $3.672
$3.368 $3.008 $5.600 $3.661
$0.507 $0.506 -$0.153 $0.113
Jan 2022
Dec 2021
Jan 2021
2021–2022 Change
Producer Prices All Milk (per cwt.)
$24.20
$21.80
$17.50
$6.70
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost* (per cwt.)
$5.57 $421 $262 $12.66
$5.47 $400 $253 $12.27
$4.24 $439 $206 $10.60
$1.33 -$18 $56 $2.06
DMC Margin* (per cwt.)
$11.54
$9.53
$6.90
$4.64
Milk and Feed Prices
*Prices not revised for DMC calculations
4 – Dairy Market Report | March 2022
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Milk and Feed Prices from page 4
The jump in 2020 returned the price to barely higher than it had been just three months earlier; by contrast, the recent spike capped a series of gains that have pushed the price up by $6.50/cwt over five months. January’s all-milk price itself has only been surpassed during five previous months, all in 2014. As of March 14, the 2021 DMC program has seen record payments of nearly $1.2 billion to 19,002 enrolled operations, an average of $62,672 per enrolled operation. The deadline to sign up for the 2022 DMC program has been extended to March 25.
Looking Ahead Late February dairy and grain futures indicate that feed costs will tend to track milk prices over the next several months to keep the DMC margin from rising much above its January level. The current outlook also indicates that
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
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the February margin will drop considerably from a month before, as the milk price takes a pause before rising again and feed prices show the full force of the grain markets’ reactions to the potential drop in Ukrainian production. High feed prices, scarcities in obtaining replacement cows, labor, machinery and construction materials will likely keep milk production very constrained well into the year. In March, USDA reduced its forecast of 2022 total milk production below reported 2021 production for the first time. At the same time, the Department raised its 2022 price forecast by $1.50/cwt from a month before to $25.05/cwt, still about $1.00/cwt below where the dairy futures prices at that time were indicating the 2022 U.S. average all-milk price would come in. The previous record high milk price for an entire calendar year was $24/cwt in 2014, which itself was almost $4/cwt higher than average prices in any other calendar year to date. Milk prices are clearly entering completely uncharted territory; unfortunately, the cost of producing milk is as well.
Dairy Management Inc.™ and state, regional, and international organizations work together to drive demand for dairy products on behalf of America's dairy farmers, through the programs of the American Dairy Association ®, the National Dairy Council ®, and the U.S. Dairy Export Council ®. The National Milk Producers Federation (NMPF) is a farm commodity organization representing most of the dairy marketing cooperatives serving the U.S.
Dairy Market Report | March 2022 – 5