Dairy Market R
Dairy Management Inc.
Vol u m e 2 6 | No. 9
Overview
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September 2023
DMI | NMP F
Slowing milk production, combined with a robust gain in demand, is supporting a buoyant outlook for U.S. milk prices in commodity markets.
U.S. milk production growth slowed to a crawl in July; meanwhile, total commercial use of milk in all products showed one its strongest gains of recent months. Increased domestic use more than offset a double-digit percentage drop in total export volume in July. This additional demand, combined with flat production, is drawing down stocks of the major dairy products. That may make July the year’s low for milk prices, according to dairy futures, as milk prices add more than four dollars per hundredweight during the following three months. Strong increases in cheese and Class III prices in August signal the start of this milk price recovery.
Commercial Use of Dairy Products Despite unchanged milk production during the May–July period, gains in domestic use have lowered dairy inventories, even as exports also fall. Reduced exports have particularly contributed to increased domestic use of skim solids in all products, since U.S. dairy exports consist mostly of skim solids-containing ingredient products. Increased domestic use of butter and cheese was the main driver of growth in domestic milkfat use. Fluid milk use was down less than one percent from a year earlier during the period, due to a small annual increase in May.
U.S. Dairy Trade
export category of dry skim milk, consisting of nonfat dry milk and protein-standardized skim milk powder, held steady. Production of skim milk powder, which is produced primarily for the export market, dropped during the period, but dry skim milk exports to Mexico, which uses both nonfat dry milk as well as skim milk powder, increased by more than this drop. Low U.S. domestic dairy product prices during recent months, compared with a year earlier, has, as would be expected, resulted in lower U.S. dairy imports.
Milk Production USDA reported that July milk production was almost threequarters of a percent below July production a year earlier. Two-thirds of this drop was due to lower production per cow
Dairy exports continued to drop at mostly double-digit percentage rates during May–July, although the major
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Domestic Commercial Use
May–Jul 2023
May–Jul 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)
10,122 1,212 523 1,419 1,935 3,354 210 55,878 46,721 49,554
10,205 1,176 469 1,340 1,969 3,309 192 54,416 44,228 47,349
2022–2023 Change
Percent Change
-83 36 54 79 -34 45 17 1,462 2,493 2,205
-0.8% 3.0% 11.5% 5.9% -1.7% 1.4% 9.1% 2.7% 5.6% 4.7%
(million pounds)