Dairy Market R
Dairy Management Inc.
Vol u m e 2 5 | N o. 1
Overview
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January 2022
D MI | NMP F
Dairy markets are in a very different situation than almost any experienced since 2014.
The dominant features of the basic U.S. dairy situation continue to be tighter milk production, record export volumes, higher prices, sluggish domestic consumption, and dropping inventories. Total dairy cows and total milk production in the United States were both lower than a year earlier during the September–November rolling quarter. December prices for nonfat dry milk and dry whey were the highest monthly prices since 2014; they, as well as December butter and cheese prices, were all among the highest observed during all months since the beginning of the year 2000. The long period of tough market conditions from 2014 until recently constitutes a major reason for the production contraction that’s driving the current situation.
Commercial Use of Dairy Products Growth in total commercial use of milk in all dairy products in all markets, domestic and export, was positive for both milkfat and skim solids and averaged about one percent during September–November. However, that growth was due entirely to exports, since domestic commercial use during that period dropped by about half a percent from a year earlier. Fluid milk and American-type cheese were two key categories that showed lower consumption in the United States.
U.S. Dairy Trade The United States exported the equivalent of 17.6 percent of domestic milk solids production during calendar year 2021
to date through November, a record by this measure for the first eleven months of any calendar year, the next highest being 16.2 percent in 2020. Strong growth in exports of fats and cheese coupled with generally lower exports of dried milk and whey products during September–November raises the question of how much these changes indicate a rebalancing of the preponderance of skim milk products in the typical U.S. dairy export mix. The answer is: noticeably, but minor. During the first half of 2021, exports of mostly skim ingredient products, defined as those consisting of 70 percent or more skim milk solids, accounted for an average of 85 percent of total milk solids exported. During July through November, this percentage dropped to 83 percent. The corresponding percentages of higher-fat products, defined continued on page 2
Domestic Commercial Use
Sept–Nov 2021
Sept–Nov 2020
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)
11,229 1,141 615 1,293 1,994 3,287 177 57,548 44,877 48,772
11,517 1,107 613 1,341 1,938 3,279 226 57,903 45,029 49,002
2020–2021 Change
Percent Change
-288 33 2 -48 56 7 -49 -355 -152 -231
-2.5% 3.0% 0.3% -3.6% 2.9% 0.2% -21.6% -0.6% -0.3% -0.5%
(million pounds)
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U.S. Dairy Trade from page 1
as those with fat content of 20 percent or more, were 14 percent and 16 percent. Although exportable supplies of dairy products are getting tighter among the world’s major export suppliers in Europe and Oceania, and world prices are rising in response, U.S. imports of the traditional key product categories of cheese and concentrated protein products are up significantly, as U.S. domestic supplies tighten up, prices rise, and importers prioritize supplying the coveted U.S. market.
Milk Production Milk production was marginally lower, by .07 percent, from a year earlier during the three-month period September through November. U.S. milk production has been steadily growing for decades, but production growth has actually been negative, on average, during one out of every six
U.S. Dairy Exports
rolling three-month periods over the past two and a half decades. Lower cow numbers were the driver for this latest drop, as average cow productivity still showed a small increase. Milk solids production growth was unchanged from a month earlier in November, as reported by USDA’s Economic Research Service, while USDA/NASS-reported year-over-year milk production growth dropped well into negative territory that month.
Dairy Products Although cheddar cheese production was lower than a year earlier during September through November, growth during the period for most cheese and whey products contrasted sharply with marked declines in butter and dry skim milk products. Despite recent significant price increases for butter and skim milk products, compared with more modestly higher prices for cheese, available milk is still being preferentially routed to cheese and whey production.
Sept–Nov 2021
Sept–Nov 2020
2020–2021 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
10,855 5,493 15,483 15,608 87,613 103,221 213,385 7,130 55,666 45,996 103,534 17.4%
5,151 929 8,160 8,206 68,828 77,034 200,457 9,666 59,693 54,859 88,553 16.0%
5,704 4,564 7,323 7,402 18,785 26,187 12,928 -2,536 -4,027 -8,863 14,981 1.4%
111% 491% 90% 90% 27% 34% 6% -26% -7% -16% 17% 9%
U.S. Dairy Imports
Sept–Nov 2021
Sept–Nov 2020
2020–2021 Change
Percent Change
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
12,190 54,871 100 12,679 17,128 3.5%
9,227 47,581 105 6,751 13,235 2.9%
2,963 7,290 -5 5,928 3,893 0.5%
32% 15% -5% 88% 29% 18%
(metric tons)
2 – Dairy Market Report | January 2022
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Dairy Product Inventories American-type cheese is the only major dairy product category to show larger stocks than a year ago in November. Butter, dry skim milk and dry whey stocks were all lower that month than a year earlier by mostly double-digit percentages, while stocks of other than American type cheese were unchanged over the year. Compared to their year-over-year changes, November stocks were lower by even larger percentages for almost all product categories when compared with their respective maximum levels during the intervening twelve months.
Dairy Product and Federal Order Class Prices The monthly average NDPSR survey price for block cheese increased by about a dime a pound from November to December, while the barrel cheese price dropped by about the same amount, leaving the overall cheese price essentially unchanged for the month. By contrast, butter, nonfat dry milk and dry whey prices rose significantly in December. Federal order class prices increased accordingly, with Class III moving up by only 33 cents a hundredweight while the others rose by over a dollar. continued on page 4
Milk and Dairy Products Production
Sept–Nov 2021
Sept–Nov 2020
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,398 5,820 54,698 7,153
9,414 5,814 54,737 7,118
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
2020–2021 Change
Percent Change
-16 6 -39 35
-0.2% 0.1% -0.1% 0.5%
(million pounds)
1,345 936 1,458 1,130 3,406
1,342 950 1,398 1,102 3,343
3 -14 60 29 63
0.2% -1.4% 4.3% 2.6% 1.9%
Butter
461
486
-25
-5.1%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
375 181 226 131
423 209 221 121
-48 -28 6 10
-11.4% -13.5% 2.5% 8.1%
Dairy Product Inventories
Nov 2021
Oct 2021
212 835 586 204 62
279 843 605 234 58
Nov 2020
2020– 2021 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
252 762 586 258 68
-16% 10% 0% -21% -9%
Dairy Market Report | January 2022 – 3
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Dairy Product and Federal Order Class Prices from page 3
The December retail price data for dairy products reported by the Bureau of Labor Statistics shows both whole and lowfat milk prices up by about 7 cents a gallon from a month earlier, while average cheddar cheese retail prices dropped by the same amount per pound at the same time. The Consumer Price Index for dairy and related products increased again by 1.6 percent from a year ago in December, as reported by the Bureau of Labor Statistics. It had increased scarcely
Dairy Product and Federal Order Prices NDPSR Dairy Product Prices Butter Cheddar Cheese 40-Pound Blocks 500-Pound Barrels Nonfat Dry Milk Dry Whey
more than that during any month after February in 2021. By contrast, the overall rate of inflation has risen pretty steadily all last year, to reach 7.1 percent in December, while inflation in all food and beverages has done the same since April, hitting 6.0 percent in December.
Milk and Feed Prices The November margin under the Dairy Margin Coverage program was $9.14/cwt, up $0.60/cwt. from October. The continued on page 5
Dec 2021
Nov 2021
$2.064 $1.754 $1.863 $1.626 $1.547 $0.639
$1.950 $1.759 $1.761 $1.727 $1.477 $0.583
Dec 2020
2020–2021 Change
(per pound)
$1.443 $1.643 $1.771 $1.494 $1.095 $0.417
$0.621 $0.111 $0.093 $0.132 $0.452 $0.222
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$19.17 $19.84 $18.36 $19.88
$17.98 $18.40 $18.03 $18.79
$19.87 $14.01 $15.72 $13.36
-$0.70 $5.83 $2.64 $6.52
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$3.743 $3.359 $5.257 $3.474
$3.671 $3.288 $5.326 $3.477
$3.535 $3.118 $5.540 $3.533
$0.208 $0.241 -$0.283 -$0.059
Nov 2021
Oct 2021
Nov 2020
2020–2021 Change
Producer Prices All Milk (per cwt.)
$20.80
$19.70
$21.10
-$0.30
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost (per cwt.)
$5.27 $359 $246 $11.66
$5.02 $325 $247 $11.16
$3.79 $388 $200 $9.66
$1.48 -$29 $46 $2.00
$9.14
$8.54
$11.64
-$2.50
Milk and Feed Prices*
DMC Margin (per cwt.) *Prices not revised for DMC calculations
4 – Dairy Market Report | January 2022
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Milk and Feed Prices from page 4
all-milk price component of the November margin was $20.80/cwt., $1.10/cwt. higher than a month earlier. The November DMC feed cost was also higher for the month, by $0.50/cwt., almost equally from higher corn and soybean meal prices. But prior to this November uptick, feed costs had been generally dropping since last spring. The November premium alfalfa hay price was down slightly from a month earlier after rising steadily almost every month since September 2020. Monthly corn prices had also risen steadily since September 2020 but dropped this year during the harvest months of September and October before rising again in November. Monthly soybean meal prices have been up and down in 2021 but have remained well below their level during the first quarter of the year since then. USDA reported that, as of Jan. 18, a total of nearly $1.2 Billion was expected to be paid to 18,823 operations enrolled in the 2021 DMC program, for an average of over $63,000 per enrolled operation.
Looking Ahead The effects of the current, rather dramatic pullback in cow numbers and production on dairy product production,
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
Dairy Management Inc.
stocks and prices has been marked. To no surprise, it’s causing much speculation about how long it will last. Dairy futures markets signal that the trend will last well into 2022. Futures as of mid-January indicated that the 2022 calendar year average U.S. all-milk price would be about the same as the $24.00 per hundredweight record average this price attained during the 2014 calendar year. USDA’s mid-January monthly forecast update predicts U.S. milk production will rise by just 0.7 percent this year from 2021’s estimated total of 226.2 billion pounds. At the same time, USDA raised its forecast for the 2022 U.S. average all-milk price by $1.85 per hundredweight from just a month earlier to $22.60 per hundredweight, which is still about $1.50 per hundredweight less than the futures were indicating at that time. Another record that will almost assuredly be set soon is the percentage of U.S. milk solids exported during an entire calendar year. With data for just the final month of December to be reported, U.S. exports last year are on track to reach 17.4 percent of solids production last year, 1.4 percentage points higher than the previous record by this measure the year before.
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 | January 2022 – 5