DAIRY MARKET REPORT VOLUME 27 | ISSUE 1
1/23/2023
OVERVIEW While milk production growth continues to be sluggish and farmer margins are improving, USDA analysis shows total domestic use of milk increased by 2.8 percent on a milk equivalent, total milk solids basis during September-November. Because this was faster than milk production, and faster than milk solids production grew during the same period, stocks of the major dairy products have continued to drop. The Dairy Margin Coverage Program margin finally recovered in November to a level slightly above the maximum $9.50/cwt Tier 1 coverage level, the first time in 2023 that farmers insured at the maximum level didn’t receive a payment.
COMMERCIAL USE OF DAIRY PRODUCTS Year to date through November, domestic commercial use of butter is up 7.2 percent over the same period in 2022, yogurt is up by 3.6 percent, and American-type cheese by 2.2 percent; meanwhile, domestic use of all cheese other than American-type is down over a year ago by 0.6 percent, and total fluid milk is 1.4 percent lower. For
DOMESTIC COMMERCIAL USE
the aggregate measures, domestic use of milk in all dairy products rose year-over-year during the year’s first 11 months by 1.5 percent on a milk equivalent, milkfat basis, and by 3 percent on a milk equivalent, nonfat milk solids basis.
SEP-NOV 2023
SEP-NOV 2022
2022-2023 CHANGE
PERCENT CHANGE
(million pounds) Total Fluid Milk Products
10,967
10,951
16
0.1%
Yogurt
1,167
1,132
35
3.1%
Butter
566
537
28
5.3%
American-type Cheese
1,396
1,363
33
2.4%
All Other Cheese
2,021
2,028
-8
-0.4%
Total Cheese
3,417
3,392
25
0.7%
Dry Skim Milk
156
196
-41
-20.7%
All Products (milk equiv., milkfat basis)
57,448
56,764
684
1.2%
All Products (milk equiv., skim solids basis)
46,322
44,710
1,612
3.6%
All Products (milk equiv., total solids basis)
49,845
48,486
1,359
2.8%
U.S. DAIRY TRADE U.S. dairy exports mostly kept pace with export levels of one and two years earlier during the first quarter of last year, but then dropped to remain in a band between 16 percent and 17 percent of milk solids production between April and November. By contrast, 2022 monthly exports remained mostly between 17 percent and 20 percent by that measure during the same period. However, the dairy export gap
U.S. DAIRY EXPORTS
between last year and the two previous years has slowly narrowed during that time. U.S. imports of concentrated milk proteins, both MPC and casein, surged in the last several months of 2022 but have not done so in 2023 as of November, resulting in year-overyear percentage drops well into the double digits for imports of both products.
SEP-NOV 2023
SEP-NOV 2022
2022-2023 CHANGE
PERCENT CHANGE
(metric tons) Butter
5,568
20,411
-14,843
-73%
Anhydrous Milk Fat/Butteroil
783
3,190
-2,407
-75%
American-type Cheese
12,673
20,399
-7,726
-38%
Cheddar Cheese
12,598
20,217
-7,619
-38%
All Other Cheese
98,528
89,786
8,743
10%
Total Cheese
111,201
110,185
1,016
1%
Dry Skim Milk
185,250
208,319
-23,070
-11%
Whole Milk Powder
5,692
6,480
-788
-12%
Dry Whey
44,792
65,530
-20,738
-32%
Whey Protein Concentrate/Isolate
58,523
58,376
147
0%
Lactose
121,055
114,569
6,486
6%
Percent of U.S. Milk Solids Exported
16.6%
18.4%
-1.7%
-10%
U.S. DAIRY IMPORTS
SEP-NOV 2023
SEP-NOV 2022
2022-2023 CHANGE
PERCENT CHANGE
(metric tons)
2
Butter
14,226
13,491
736
5%
Cheese
55,643
54,023
1,619
3%
Dry Skim Milk
267
201
66
33%
MPC (all protein levels)
9,710
14,809
-5,099
-34%
Casein
13,855
19,605
-5,749
-29%
Percent of U.S. Milk Solids Imported
3.5%
3.7%
-0.2%
-6%
MILK PRODUCTION U.S. milk production continues to languish. USDA preliminarily reported November production was down by 0.6 percent over a year ago, the fifth straight month of annually lower production. During this period, production per cow has mostly been lower on the year, and cow numbers have been
consistently down, by increasingly large numbers. Milk solids production during September-November was up by 0.3 percent over a year earlier. This was 0.8 percent faster than milk production growth.
MILK PRODUCTION
SEP-NOV 2023
SEP-NOV 2022
2022-2023 CHANGE
PERCENT CHANGE
Cows (1,000 head)
9,369
9,407
-39
-0.4%
Per Cow (pounds)
5,869
5,871
-2
0.0%
Total Milk (million pounds)
54,982
55,235
-253
-0.5%
Total Milk Solids (million pounds)
7,303
7,282
21
0.3%
13.3%
13.2%
0.1%
0.8%
Milk Solids Composition of Milk (percent)
DAIRY PRODUCTS During September-November last year, 40 percent of all U.S. cheese production consisted of American types, 42 percent Italian types, and 18 percent other types. American types other than Cheddar, primarily Colby and Monterey Jack, grew by 4.7 percent annually during the period. Just under 80 percent of Italian cheese production was mozzerella, and combined production of the other Italian types declined by 3.8 percent from a year earlier. The largest category of
DAIRY PRODUCTS PRODUCTION
other type cheese, cream and Neufchatel, accounted for almost 45 percent of that category and grew by 4.4 percent over a year earlier during the period, while the other cheese category as a whole was up by 2.5 percent. Production of dry skim milk products and butter was down from last year on lower milk production and lower exports, for skim milk products.
SEP-NOV 2023
SEP-NOV 2022
Cheese American Types
2022-2023 CHANGE
PERCENT CHANGE
(million pounds) 1,402
1,389
13
1.0%
Cheddar
963
969
-6
-0.7%
Italian Types
1,472
1,484
-13
-0.9%
Mozzarella
1,160
1,160
0
0.0%
Total Cheese
3,508
3,492
16
0.5%
470
474
-4
-0.8%
Nonfat Dry Milk
344
413
-69
-16.7%
Skim Milk Powder
157
183
-26
-14.1%
Dry Whey
219
223
-5
-2.1%
Whey Protein Concentrate
119
118
1
0.6%
Butter Dry Milk Products
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DAIRY PRODUCT INVENTORIES Lower production or modest growth of the key dairy products, relative to demand, continued to draw down
DAIRY PRODUCT INVENTORIES
inventories in November.
NOV 2023
OCT 2023
NOV 2022
2022-2023 CHANGE
(million pounds) Butter
215
240
200
8%
American Cheese
826
834
816
1%
Other Cheese
608
625
615
-1%
Dry Skim Milk
217
228
259
-16%
Dry Whey
71
75
73
-3%
DAIRY PRODUCT AND FEDERAL ORDER CLASS PRICES The December NDPSR prices for butter and all cheddar cheese were all at least $0.10/lb lower than a month earlier, while those prices for nonfat dry milk and dry whey were up slightly. This was likely due to the usual post holiday season drop in purchases of the former products, which generally pick up again during Super Bowl season. These product price movements dropped December Class II, III and IV prices down on the month by well over $1/cwt.
DAIRY PRODUCT AND FEDERAL ORDER PRICES
General inflation ticked up again in December, as the consumer price index (CPI) for all items was up by 3.4 percent over a year earlier. The index rose by 3.1 percent over a year earlier in November. The CPIs for most dairy products were down by at least one percent in December, with the notable exception of ice cream and frozen dairy products, which has been increasing since May 2023, to 2.8 percent over December 2022.
DEC 2023
NOV 2023
NDPSR Dairy Product Prices
2022-2023 CHANGE
(per pound)
Butter
$2.631
$3.029
$2.776
-$0.145
Cheddar Cheese
$1.623
$1.742
$2.056
-$0.432
40-Pound Blocks
$1.639
$1.751
$2.159
-$0.521
500-Pound Barrels
$1.581
$1.703
$1.929
-$0.348
Nonfat Dry Milk
$1.192
$1.186
$1.456
-$0.264
Dry Whey
$0.417
$0.383
$0.457
-$0.040
Federal Order Class Prices for Milk
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DEC 2022
(per hundredweight)
Class I Base
$19.76
$19.75
$22.58
-$2.82
Class II
$19.88
$21.21
$23.11
-$3.23
Class III
$16.04
$17.15
$20.50
-$4.46
Class IV
$19.23
$20.87
$22.12
-$2.89
Retail Dairy Product Prices Fluid Whole Milk (per gallon)
$4.008
$3.997
$4.211
-$0.203
Lowfat Fluid Milk (per gallon)
$3.678
$3.692
$3.845
-$0.167
Cheddar Cheese (per pound)
$5.545
$5.650
$5.995
-$0.450
Butter (per pound)
$4.505
$4.520
$4.811
-$0.306
MILK AND FEED PRICES The November margin under the DMC inched up $0.14/ cwt from a month earlier to $9.58/cwt, its first time in 2023 above the maximum $9.50/cwt Tier 1 coverage level. By contrast to much of the year, this monthly change was a product of modest price movements. The all-milk price rose $0.10/cwt to $21.70/cwt while the DMC feed cost formula dropped $0.04/cwt to $12.12/cwt of milk. A bit more drama surrounded the DMC feed cost formula, with a $0.35/cwt
increase in the soybean meal price factor slightly more than offset by a combined drop in the prices of corn and premium alfalfa hay. During the first ten months of this year, the average monthly change, plus or minus, in the margin was $1.22/cwt, the average monthly change in the all-milk price was $1.15/cwt and the average monthly change in the DMC feed cost was $0.37/cwt.
NOV 2023
OCT 2023
NOV 2022
2022-2023 CHANGE
$21.70
$21.60
$25.40
-$3.70
Corn (per bushel)
$4.66
$4.93
$6.49
-$1.83
Soybean Meal (per ton)
$464
$416
$437
$28
Premium Alfalfa Hay (per ton)
$271
$278
$331
-$60
Corn
$5.00
$5.29
$6.96
-$1.96
Soybean Meal
$3.41
$3.06
$3.21
$0.20
Premium Alfalfa Hay
$3.71
$3.81
$4.53
-$0.82
DMC Feed Cost* (per cwt.)
$12.12
$12.16
$14.71
-$2.58
DMC Margin* (per cwt.)
$9.58
$9.44
$10.89
-$1.32
MILK AND FEED PRICES Producer Prices All Milk (per cwt.) Feed Prices
Feed Prices (per cwt of milk)
*DMC calculations are not revised
LOOKING AHEAD USDA has progressively lowered its monthly World Agricultural Supply and Demand (WASDE) estimates for 2023 annual milk production, from 1.3 percent over 2022 5
production before the year began to basically flat over 2022 in January, when almost all the data were in. The WASDE forecasts of 2024 milk production have also been steadily
dropping, from last May’s estimate of 1.3 percent over 2022 to 0.8 percent over 2022 in January, with strong likelihood of further reductions. With one more month to be reported for last year, the 2023 average DMC margin is on track to come in at about $6.80/ cwt, which would be the second lowest annual average
margin for the DMC and its predecessor Margin Protection Program (MPP), just above 2021’s average margin of $6.70/ cwt. The futures markets’ indications for this year’s margins have been steadily improving. Those markets in mid-January projected that margins would average about $8.85/cwt during January-September and then improve to average about $10.85/cwt during the fourth quarter.
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®. Peter Vitaliano, National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
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The National Milk Producers Federation (NMPF) develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies.