Dairy Market R
Dairy Management Inc.
Vol u m e 2 5 | N o. 2
Overview
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F ebruary 2022
D MI | NMP F
The stage is being set for 2022 to be a considerably better year than most of the last several for U.S. dairy farmers. Record exports, flat milk production, just
over half a percent milk solids production growth, and over 2 percent consumption growth made a winning combination during the fourth quarter of 2021, sending some key prices to long-time high levels at the start of this year. Meanwhile, as foreign and domestic demand increase, domestic stock levels are not burdensome, by several metrics, for most major dairy product categories.
Commercial Use of Dairy Products Domestic commercial use of milk in all dairy products in the fourth quarter of 2021 were 2 percent above a year earlier. Consumption improved in many major product categories. Export growth continued, but moderated during the fourth quarter, boosting fourth-quarter annual increase in total commercial use to just 2.2 percent.
U.S. Dairy Trade The United States exported the equivalent of 17.3 percent of domestic milk solids production during calendar year 2021, a record by this measure for any calendar year, the next highest being 16.0 percent in 2020. Both export values and volumes reached records for the year, with across-the-board gains among major categories even though some saw year-over-year declines in the fourth quarter. 2021 milk solids exports in the largest product categories were mostly up by
more than 10 percent from their average levels during the preceding eight years. Over this period, exports have been concentrating: The larger half of the product categories are contributing progressively more to the milk solids total than the bottom half. About 80 percent of U.S. butter imports during the past two years have come from Ireland, and just about the same proportion of the year-over-year increase in 2021 came from there as well. Ireland was also the second largest importer of casein into the United States during the past two years, behind New Zealand, but it didn’t increase its imports this year, as New Zealand did.
Milk Production The four-month plunge in milk production growth from May to September last year has slowed significantly. Production was basically flat year-over-year in September, and during continued on page 2
Domestic Commercial Use
Oct–Dec 2021
Oct–Dec 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)
11,468 1,112 624 1,330 1,984 3,314 184 57,716 45,383 49,239
11,814 1,074 611 1,331 1,939 3,270 201 56,711 44,482 48,284
2020–2021 Change
Percent Change
-346 38 13 -1 46 44 -17 1,005 901 955
-2.9% 3.6% 2.1% -0.1% 2.4% 1.4% -8.4% 1.8% 2.0% 2.0%
(million pounds)
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Milk Production from page 1
the fourth quarter as a whole, and was just 0.14 percent lower by December. This change of pace is beginning to shift the dynamics of supply, demand and prices in the various dairy product markets. Cheese prices reacted with a tough, but temporary drop in the daily CME cash markets during the second half of January. Milk solids production was just over half a percent higher than a year ago during the fourth quarter.
Dairy Products Production of butter and dry skim milk products continues to play its traditional role of using residual milk supplies not required to produce other products. Reduced production of those products provided an indicator of the extent to which residual milk production fell during the fourth quarter. Meanwhile, continued growth of non-American type cheese production likely reflects some continued strength of its
U.S. Dairy Exports
use in food service, particularly in fast food and takeout, although some indications suggested that restaurant dining slowed as the Omicron pandemic surge dragged on.
Dairy Product Inventories Stocks of both American-type and other cheese rose in December from a month earlier. By contrast, stocks of both types of cheese dropped month-to-month in November, although December non-American type cheese stocks continue to be basically flat compared to a year earlier. The halt in the recent plunge in milk production growth is not necessarily adding more products to the markets. However, it’s allowing slowing demand to add to stocks, particularly of cheese, and thereby putting some pressure on cheese prices compared to other products. The rise in stocks of dry skim milk from November to December reflects increased production during that time, although production is down from a year earlier.
Oct–Dec 2021
Oct–Dec 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
11,209 3,431 16,157 16,329 83,829 100,158 200,884 8,643 51,312 42,739 100,525 16.2%
6,588 1,223 7,230 7,295 67,148 74,442 197,795 9,991 58,020 55,817 85,181 15.6%
4,621 2,209 8,927 9,034 16,682 25,716 3,089 -1,348 -6,707 -13,078 15,344 0.6%
70% 181% 123% 124% 25% 35% 2% -13% -12% -23% 18% 4%
U.S. Dairy Imports
Oct–Dec 2021
Oct–Dec 2020
2020–2021 Change
Percent Change
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
11,879 51,369 77 10,536 16,914 3.3%
6,615 48,729 51 10,074 13,742 3.0%
5,263 2,640 27 463 3,172 0.4%
80% 5% 52% 5% 23% 13%
(metric tons)
2 – Dairy Market Report | February 2022
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Dairy Product and Federal Order Class Prices The January monthly average NDPSR survey price for butter rose almost 55 cents a pound from a month earlier to $2.61, the highest since August 2017. The nonfat dry milk survey price and the Class IV milk price in January were both the highest since August 2014, while the January dry whey price was last above that level on July 2007. As reported by the Bureau of Labor Statistics, retail butter prices rose by almost 20 cents a pound from December to January, a little more than a third as much as the wholesale
NDPSR butter price increased at the same time. Retail prices for natural cheddar cheese rose by half as much as did the NDPSR 40-pound block cheese prices while the retail processed cheese price was up by just under a third as much as the NDPSR barrel cheese price. The BLS-reported Consumer Price Index for dairy and related products is increasing at a faster rate than in recent months, 3.1 percent in January over a year earlier. However, this is still well below the rate of inflation for all food and beverages and the overall rate of inflation which, which were up over a year ago by 6.7 percent and 7.5 percent, respectively, in January. Fluid milk prices are leading the dairy index runup.
Milk and Dairy Products Production
Oct–Dec 2021
Oct–Dec 2020
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,383 5,913 55,484 7,329
9,429 5,892 55,557 7,287
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
2020–2021 Change
Percent Change
-46 21 -73 42
-0.5% 0.4% -0.1% 0.6%
(million pounds)
1,377 969 1,452 1,124 3,431
1,385 996 1,419 1,113 3,394
-8 -27 33 11 37
-0.5% -2.7% 2.3% 1.0% 1.1%
Butter
497
542
-45
-8.3%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
445 156 234 136
505 179 225 123
-60 -23 9 13
-11.8% -12.9% 3.8% 10.3%
Dairy Product Inventories
Dec 2021
Nov 2021
199 846 599 250 58
210 835 587 235 61
Dec 2020
2020– 2021 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
274 802 595 297 66
-27% 6% 1% -16% -11%
Dairy Market Report | February 2022 – 3
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Milk and Feed Prices 2021 narrowly missed being the first calendar year during which the Dairy Margin Coverage program would have made payments at the maximum $9.50/cwt coverage level during every month. But a milk-price surge pushed the December margin just 3 cents out of the money, to $9.53/cwt. This was $0.39/cwt. higher than November’s margin. From November to December, the all-milk price gained $1.00/cwt, to $21.80/cwt, its highest level since November 2014, while the DMC feed cost gained $0.61/cwt. On a per hundredweight of milk basis,
Dairy Product and Federal Order Prices NDPSR Dairy Product Prices Butter Cheddar Cheese 40-Pound Blocks 500-Pound Barrels Nonfat Dry Milk Dry Whey
half of the feed-cost increase was from higher soybean meal prices, one-third from higher corn prices, and one-sixth from higher premium alfalfa hay prices. Last year’s DMC program has paid out nearly $1.2 billion to 18,923 enrolled operations, as of February 22.
Looking Ahead The mid-February dairy and grain futures continued to indicate a very small likelihood for DMC payments during 2022; still, the generally strong milk price outlook has shown volatility continued on page 5
Jan 2022
Dec 2021
$2.613 $1.898 $1.979 $1.795 $1.649 $0.709
$2.064 $1.754 $1.863 $1.626 $1.547 $0.639
Jan 2021
2021–2022 Change
(per pound)
$1.455 $1.650 $1.717 $1.560 $1.135 $0.460
$1.158 $0.248 $0.262 $0.235 $0.514 $0.249
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$19.71 $22.83 $20.38 $23.09
$19.17 $19.84 $18.36 $19.88
$15.14 $14.18 $16.04 $13.75
$4.57 $8.65 $4.34 $9.34
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$3.787 $3.393 $5.315 $3.672
$3.743 $3.359 $5.257 $3.474
$3.468 $3.045 $5.656 $3.644
$0.319 $0.348 -$0.341 $0.028
Dec 2021
Nov 2021
Dec 2020
2020–2021 Change
Producer Prices All Milk (per cwt.)
$21.80
$20.80
$18.30
$3.50
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost (per cwt.)
$5.47 $400 $253 $12.27
$5.27 $359 $246 $11.66
$3.97 $397 $203 $9.96
$1.50 $3 $50 $2.32
$9.53
$9.14
$8.54
$0.98
Milk and Feed Prices*
DMC Margin (per cwt.) *Prices not revised for DMC calculations
4 – Dairy Market Report | February 2022
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Looking Ahead from page 4
in recent weeks, and grain prices have been showing renewed strength. Forecasts at the time still indicated that record or near-record milk and dairy product prices were expected this year. Record high levels in 2022 for full calendar year average prices were indicated at that time for butter, nonfat dry milk, dry whey, Class IV, Class II, and the U.S. average all milk prices. Second-highest levels, behind 2014, were indicated for cheddar cheese and Class III prices, with this year’s average base Class I price projected to equal 2014’s. The longer-term outlook is favorable for continued growth in U.S. dairy exports, with signs that the top two largest
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
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competing dairy export suppliers, the European Union and New Zealand, will experience reduced milk production over the next few years even as global dairy import demand remains strong. USDA’s mid-February monthly forecast update predicts U.S. milk production will rise by just 0.4 percent this year, to 227.2 billion pounds, from 2021’s total of 226.3 billion pounds. At the same time, USDA raised its forecast for the 2022 U.S. average all-milk price by $0.95 per hundredweight from just a month earlier to $23.55 per hundredweight, which was still about $1.55 per hundredweight less than futures were indicating at that time.
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 | February 2022 – 5