Dairy Market R
Dairy Management Inc.
Vol u m e 2 4 | N o. 6
Overview
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June 2021
DMI | NMP F
Overall U.S. dairy-product demand appears headed back to pre-pandemic levels, and U.S. dairy exports have achieved near-record highs as a percent of U.S. milk
solids production during 2021 so far. Meanwhile, wholesale prices for butter, nonfat dry milk and dry whey in May were all higher than before the pandemic began, but cheese prices continue to struggle. However, capturing the state of dairy through data is unusually difficult at this moment, and will be for several months, as the industry is entering a series of months during which year-over-year comparisons are affected by the COVID-19 pandemic’s disruptions to dairy markets one year ago at this time. For example, U.S. milk production has been increasing, pressuring milk prices since early May, but year-over-year growth comparisons are somewhat misleading due to last year’s atypical seasonal production patterns. Similarly, year-over-year domestic fluid milk sales were down sharply this March and April, while commercial cheese use was up sharply in April.
Commercial Use of Dairy Products Larger than usual measured drops in domestic fluid milk sales during March and April brought year-over-year fluid sales down by almost 4 percent during February through April. The comparison, however, was against higher than usual fluid sales during the first months of the pandemic in March and April 2020, despite supply chain disruptions during those months. By contrast, domestic commercial use of both American-type and other cheese was considerably higher during February through April than during the same months in 2020, due in large part to year-over-year increases
Domestic Commercial Use
of more than 20 percent for both types of cheese in April. This was due, in turn, largely to a base effect, since domestic use of all cheese was significantly depressed in April 2020 as the pandemic registered its first full month of demand destruction in food service, and supply chains had not yet had time to redirect enough cheese to retail outlets. Allowing for this, the large April numbers for cheese indicate a recovery to close to normal consumption this year. As a broader indicator of this recovery, commercial use of milk in all products, both domestic and total, was generally
Feb–Apr 2021
continued on page 2
Feb–Apr 2020
2020–2021 Change
Percent Change*
-583 52 12 100 100 200 -19 1,959 144 726
-3.9% 5.6% 3.5% 9.5% 7.0% 8.0% -9.0% 5.0% 1.5% 2.7%
(million pounds)
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)
11,227 1,237 513 1,315 1,826 3,141 173 53,080 44,358 47,063 *adjusted for leap year
11,810 1,185 501 1,215 1,726 2,941 192 51,121 44,215 46,337
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Commercial Use of Dairy Products from page 1
higher during 2021 than during comparable periods two years earlier, prior to the pandemic. Domestic use of dry skim dairy ingredients, including the whey complex, was largely down during the pandemic months, as strong export demand competed aggressively with domestic users for the available supply.
January and February exports also reached high points for their particular months. Dairy imports into the United States were higher during February through April than a year earlier for many of the major imported product category, although total imports as a percent of domestic milk solids production was down slightly during the period.
Milk Production
U.S. Dairy Trade U.S. dairy exports surged during the first third of 2021, in spite of continued shipping difficulties. Exports of all major product categories during February through April were up over a year earlier by mostly double-digit percentages. Even more significantly, as a percentage of U.S. milk solids, April exports were 18.7 percent, the second highest for any month, while March exports were 18.4 percent, the third highest.
April milk production was 3.3 percent higher than it was during April 2020. This followed a string on months during which year-over-year production had been declining, from 3.5 percent in November 2020 to 1.9 percent in March. However, while milk production has indeed been increasing somewhat more rapidly than total consumption, comparisons continued on page 3
2020–2021 Change
Percent Change*
4,276 876 10,578 10,643 80,362 91,005 184,747 10,230 49,415 47,443 96,861 15.2%
8,286 402 1,754 1,752 14,761 16,513 51,865 2,555 13,949 6,067 3,186 2.9%
197% 48% 18% 18% 20% 19% 30% 26% 30% 14% 4% 19%
Feb–Apr 2020
2020–2021 Change
Percent Change*
U.S. Dairy Exports
Feb–Apr 2021
Feb–Apr 2020
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
12,563 1,278 12,332 12,395 95,123 107,518 236,612 12,784 63,364 53,510 100,047 18.0%
(metric tons)
*adjusted for leap year
U.S. Dairy Imports
Feb–Apr 2021
(metric tons)
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
10,597 40,277 66 13,556 15,661 3.0% *adjusted for leap year
2 – Dairy Market Report | June 2021
7,241 39,131 154 13,732 14,369 3.2%
3,356 1,146 -88 -176 1,292 -0.2%
48% 4% -57% 0% 10% -6%
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Milk Production from page 2
to a year ago have become misleading because production during April though December 2020 was skewed by the pandemic. April and May production a year ago was sharply lower than usual, as cooperatives established base-excess plans in response to the sharp disruptions that supply chains experienced at the beginning of the pandemic. Production from July through December did not drop off as rapidly as had been typical going into the summer and fall. Had April 2020 production followed typical seasonal patterns,
production during April 2021 would have been up by about 2.2 percent year-over-year. Should 2021 production follow typical seasonal patterns, May production could show an increase above 5 percent over actual May 2020. Production will not likely fall below 1 percent over a year earlier until the last few months of the year. Although also affected by the same base effect comparison, U.S. milk solids production growth over a year earlier exceeded growth of liquid milk production during February through April by almost a full percentage point, according to data from USDA’s Economic Research Service.
Milk and Dairy Products Production
Feb–Apr 2021
Feb–Apr 2020
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,475 5,989 56,742 7,405
9,382 5,967 55,981 7,243
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
2020–2021 Change
Percent Change*
93 22 761 162
1.0% 1.5% 2.5% 3.4%
(million pounds)
1,376 968 1,426 1,114 3,356
1,307 941 1,379 1,092 3,206
69 28 47 22 149
6.5% 4.1% 4.6% 3.2% 5.8%
Butter
570
622
-52
-7.3%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
578 113 229 120
551 146 236 113
26 -33 -7 7
6.0% -21.9% -1.9% 7.1%
*adjusted for leap year
Dairy Product Inventories
Apr 2021
Mar 2021
385 831 622 312 60
357 834 635 327 64
Apr 2020
2020– 2021 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
373 834 644 405 77
3% 0% -3% -23% -22%
Dairy Market Report | June 2021 – 3
Dairy Management Inc.
Dairy Products
Dairy Product Inventories
Cheddar cheese production growth dropped off sharply in April, but Mozzarella and overall Italian cheese production growth jumped that month, presumably reflecting increased use in of food service. The net result is that total cheese production was up over a year earlier by almost 6 percent during February through April. Butter production was down by over 7 percent during the period after being flat during the first quarter, while total production of dry skim milk and dry whey products was higher.
Month-ending inventories did not increase from March to April for American-type cheese and dropped for other cheese. This was somewhat surprising given the strong production growth of American-type cheese in recent months and the weakness of cheddar cheese prices. Butter stocks have returned to the general levels of the first several months following the onset of the pandemic a year ago, while stocks of dry skim milk and whey products were lower, reflecting strong export demand.
Dairy Product and Federal Order Prices NDPSR Dairy Product Prices Butter Cheddar Cheese 40-Pound Blocks 500-Pound Barrels Nonfat Dry Milk Dry Whey
May 2021
Apr 2021
May 2020
2020–2021 Change
(per pound)
$1.811 $1.821 $1.807 $1.804 $1.239 $0.650
$1.781 $1.711 $1.792 $1.601 $1.168 $0.614
$1.307 $1.299 $1.305 $1.264 $0.849 $0.382
$0.503 $0.522 $0.502 $0.539 $0.390 $0.268
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$17.10 $16.22 $18.96 $16.16
$15.51 $15.56 $17.67 $15.42
$12.95 $12.30 $12.14 $10.67
$4.15 $3.92 $6.82 $5.49
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$3.497 $3.078 $5.421 $3.561
$3.447 $3.045 $5.441 $3.521
$3.210 $2.877 $5.558 $3.535
$0.287 $0.201 -$0.137 $0.026
Apr 2021
Mar 2021
Apr 2020
2020–2021 Change
Producer Prices All Milk (per cwt.)
$18.40
$17.40
$14.40
$4.00
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost (per cwt.)
$5.31 $413 $199 $11.46
$4.89 $410 $196 $10.94
$3.29 $295 $195 $8.37
$2.02 $118 $4 $3.09
$6.94
$6.46
$6.03
$0.91
Milk and Feed Prices
DMC Margin (per cwt.)
4 – Dairy Market Report | June 2021
Dairy Management Inc.
Dairy Product and Federal Order Class Prices Monthly federal order prices for butter, nonfat dry milk, dry whey and Class IV milk reached their highest levels in May since before the pandemic began to affect the dairy industry in March 2020. By contrast, May federal order prices for cheese and Class I and Class III milk were significantly lower than at various times during the pandemic months. Retail prices for the major dairy products in May were all down from various points during the pandemic, although retail prices for fluid milk have been rising during the past two months after dipping temporarily.
Milk and Feed Prices The U.S. average all-milk price increased by a full dollar per hundredweight from a month earlier to $18.40/cwt in April. This had been anticipated by the strong increases in April Class III and Class IV prices announced several weeks earlier, together with smaller increases in April Class I and Class II prices. The Dairy Margin Coverage feed cost calculation increased by $0.52 /cwt, mostly from a higher corn price,
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
Dairy Management Inc.
producing a monthy net increase of $0.48/cwt in the April DMC margin, and an April payment of $2.56/cwt for coverage at $9.50/cwt. USDA estimated that 2021 DMC payments for disbursment reached $446 million as of June 7. Half of these estimated payments were to enrolled producers in the four states of Wisconsin, California, New York and Minnesota.
Looking Ahead USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) forecast released in early June projects annual U.S. milk production will expand by 2.7 percent year-over-year in 2021 and by a further 1.1 percent in 2022. The Department forecasts the all-milk price to average $18.85/cwt in calendar year 2021 and $18.75/cwt in 2022. At the same time, the dairy futures were indicating the 2021 and 2022 all-milk prices would average $19.20/cwt and $20.50/cwt, respectively. The dairy and grain futures continued to indicate that the DMC margins would remain below $9.50/cwt for the second and third quarters of 2021 but might rise modestly above this level 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 ®. 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 | June 2021 – 5