Dairy Market R
Dairy Management Inc.
Vol u m e 2 5 | N o. 6
Overview
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June 2022
D MI | NMP F
Dairy farmers and the entire industry continue to deal with a high-price, high cost environment unlike any seen for at least a decade, and in many ways, not
in the past four decades. March and April set consecutive all-time highs for the monthly average all-milk price in the U.S., while the four federal order class prices set a collective record in May. Monthly retail prices of whole and lowfat milk, butter, ice cream and yogurt also reached all-time highs. Meanwhile, monthly U.S. dairy exports posted a strong recovery in April from a recent low in January, amounting to 18.7 percent of U.S. milk solids production, the third highest ever for a single month by this measure. The combination of continued lower U.S. cow numbers, milk production and record-high milk and retail dairy prices is beginning to show signs of impacting domestic dairy product consumption at retail and also food service. However, since retail price inflation is occurring for all food and beverages, and throughout the entire economy, it is unclear how or whether this will play out differently than if higher dairy product prices were an exception in an overall non-inflationary economy.
Commercial Use of Dairy Products Domestic yogurt consumption growth was almost entirely robust during the first two years of the COVID pandemic, but it has turned negative during 2022. Consumption of other than American-type cheese has been generally stronger than for American types during the past year. Year-over-year changes in domestic consumption of most skim milk ingredient products, including dry skim milk, dry whey and lactose, has been mostly negative during the months of the pandemic, with whey protein concentrate an
exception. Domestic use of milk in all products was about 2 percent lower than a year earlier during February–April.
U.S. Dairy Trade 18.71 percent of U.S. milk solids production was estimated to have been exported in April, the third-highest ever for a single month by this measure, potentially positioning the industry for another strong calendar year of exports following an uncertain start and a sign of how export demand may be structurally higher than in the past, given that the strength continued on page 2
Domestic Commercial Use
Feb–Apr 2022
Feb–Apr 2021
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)
10,907 1,187 473 1,321 1,930 3,251 140 52,002 43,739 46,325
11,227 1,242 509 1,329 1,846 3,176 221 53,140 44,609 47,254
2021–2022 Change
Percent Change
-320 -55 -36 -8 84 76 -81 -1,137 -869 -930
-2.9% -4.4% -7.0% -0.6% 4.5% 2.4% -36.7% -2.1% -1.9% -2.0%
(million pounds)
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U.S. Dairy Trade from page 1
is occurring in spite of high prices. April exports represented a more than 5 percentage-point increase from the recent low of 13.63 percent in January this year. Over half of this net volume recovery was contributed by lactose, skim milk powder, dry and modified whey. U.S. dairy imports were moderately higher than a year ago during February–April, with the major product categories of cheese and dairy proteins mostly increasing between 6 and 8 percent year-over-year.
Milk Production April U.S. milk production reported by USDA shows production continuing in contraction territory, with little indication of when it might return to growth. Total dairy cow numbers in the country also continued to decline from year-earlier levels in April. Very modest growth occurred during February–April in milk production per cow as well as in production of total
U.S. Dairy Exports
milk solids. The only real supply-side expansion to take place during this period was total U.S. milkfat production, which was 1.3 percent higher during these three months than a year earlier.
Dairy Products Butter production was close to flat during February–April, indicating some recovery from several prior months of annual reductions. Continued lower dry skim milk production would indicate that reduced milk production is still being claimed preferentially by cheese production at the expense of butter-powder. However, higher milkfat production would suggest that cream supply was not necessarily the primary cause of earlier tighter butter production. Cheese supply growth is still noticeably greater for other than American types of cheese, used heavily in food service. Upticks in American-type cheese use in summer grilling had not yet shown up in production data as of April.
Feb–Apr 2022
Feb–Apr 2021
2021–2022 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
15,661 5,086 22,896 23,205 92,816 116,021 217,073 11,176 51,406 57,839 106,170 17.9%
12,563 1,278 12,332 12,395 95,123 107,518 236,612 12,784 63,364 53,510 100,047 18.0%
3,098 3,808 10,565 10,810 -2,307 8,503 -19,539 -1,609 -11,958 4,329 6,124 -0.2%
25% 298% 86% 87% -2% 8% -8% -13% -19% 8% 6% -1%
U.S. Dairy Imports
Feb–Apr 2022
Feb–Apr 2021
2021–2022 Change
Percent Change
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
9,770 42,883 137 14,685 16,597 3.2%
10,597 40,277 66 13,556 15,661 3.0%
-827 2,606 71 1,129 936 0.2%
-8% 6% 108% 8% 6% 6%
(metric tons)
2 – Dairy Market Report | June 2022
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Dairy Product Inventories Cold storage stocks of other than American-type cheese, and stocks of all types of cheese, reached record single-month levels at the end of April. Manufacturers’ stocks of dry skim milk and dry whey also showed some tendencies toward excessive, although not record levels, at that time.
Dairy Product and Federal Order Class Prices None of the four NDPSR-reported dairy product prices attained anywhere near an all-time high level in May, but the four federal order class prices narrowly missed setting such a record
collectively. It was widely expected, based on the futures markets, that the May Class I, II, III and IV prices, quoted at the standard 3.5 percent fat level, would each exceed $25.00/cwt for the first time ever. However, the May Class IV price just missed this mark by coming in at $24.99/cwt. Nevertheless, that was still the highest minimum level ever for all four class prices. U.S. average retail prices reported by the Bureau of Labor Statistics for May were the highest ever, in nominal terms, for whole milk and for ice cream. And although there are some gaps in their BLS data, they were also likely the highest ever for lowfat milk, butter and yogurt. The annual rate of continued on page 4
Milk and Dairy Products Production
Feb–Apr 2022
Feb–Apr 2021
2021–2022 Change
Percent Change
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,395 6,003 56,396 7,437
9,483 5,993 56,832 7,417
-88 10 -436 20
-0.9% 0.2% -0.8% 0.3%
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
(million pounds)
1,382 956 1,473 1,153 3,471
1,386 976 1,429 1,114 3,386
-4 -19 44 38 85
-0.3% -2.0% 3.1% 3.4% 2.5%
Butter
567
571
-5
-0.8%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
558 98 236 127
575 153 231 127
-17 -54 5 1
-2.9% -35.5% 2.0% 0.7%
Dairy Product Inventories
Apr 2022
Mar 2022
300 836 644 307 73
283 828 637 295 69
Apr 2021
2021– 2022 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
390 827 622 327 60
-23% 1% 4% -6% 21%
Dairy Market Report | June 2022 – 3
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Dairy Product and Federal Order Class Prices from page 3
Milk and Feed Prices
retail price inflation has rapidly accelerated in recent months into double digit percentages throughout the entire dairy product spectrum, including whole milk, lowfat milk, butter, and the dairy category as a whole. By comparison, the overall rate of inflation in May was 8.6 percent. Of the BLS-reported dairy products, cheese has consistently shown the slowest rate of retail price inflation, at 8.7 percent for May.
The USDA/NASS-reported U.S. average all-milk price is busy setting records. First in March, by beating the prior highest monthly price, in 2014, by $0.20/cwt, and then by blowing away that short-lived record a month later when it jumped above March by $1.20/cwt to hit $27.10/cwt for April. The April DMC margin was $12.29/cwt, $0.74/cwt higher than in March, as the April DMC feed cost rose continued on page 5
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 2022
Apr 2022
$2.736 $2.416 $2.380 $2.419 $1.810 $0.671
$2.769 $2.291 $2.276 $2.276 $1.831 $0.739
May 2021
2021–2022 Change
(per pound)
$1.811 $1.821 $1.807 $1.804 $1.239 $0.650
$0.925 $0.596 $0.573 $0.615 $0.570 $0.021
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$25.45 $25.87 $25.21 $24.99
$24.38 $25.71 $24.42 $25.31
$17.10 $16.22 $18.96 $16.16
$8.35 $9.65 $6.25 $8.83
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$4.204 $3.827 $5.645 $4.285
$4.012 $3.682 $5.656 $4.150
$3.497 $3.078 $5.421 $3.561
$0.707 $0.749 $0.224 $0.724
Apr 2022
Mar 2022
Apr 2021
2021–2022 Change
Producer Prices All Milk (per cwt.)
$27.10
$25.90
$18.30
$8.80
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost* (per cwt.)
$7.08 $477 $271 $14.81
$6.56 $494 $269 $14.35
$5.31 $413 $211 $11.63
$1.77 $63 $60 $3.19
DMC Margin* (per cwt.)
$12.29
$11.55
$6.77
$5.51
Milk and Feed Prices
*Prices not revised for DMC calculations
4 – Dairy Market Report | June 2022
Dairy Management Inc.
Milk and Feed Prices from page 4
$0.46/cwt that month. This increase was driven entirely by a higher corn price, while the soybean meal price dropped, and the premium alfalfa price showed a very small increase.
Looking Ahead USDA’s World Agricultural Supply and Demand Estimates (WASDE) monthly update for June lowered the Department’s estimate of calendar year 2022 U.S. milk production from its May estimate, which it had raised from the prior month. This illustrates the difficulty of foreseeing how much longer U.S. milk production will be constrained in the current unique environment of record high milk prices paired with extremely high production costs and supply chain disruptions. The Department’s June CY 2022 forecast is marginally higher than CY 2021 actual production. January through April production
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
Dairy Management Inc.
is down this year from 2021 by 1.0 percent. Together, this indicates USDA expects U.S. milk production to grow by about half a percent from a year earlier during the last eight months of the year. USDA also expects dairy demand to stay strong and accordingly raised its 2022 outlook for most dairy product and milk prices from May to June, with the exception of dry whey. In particular, the Department raised its calendar year 2022 forecast of the U.S. average all-milk price from May to June by $0.45/cwt, to $26.20/cwt. This was still about $0.40/cwt below where the dairy futures indicated this annual price would come in but was also about $0.15/cwt above where the DMC Decision Tool on the USDA website was projecting at the same time. All forecasts are currently indicating that the DMC margin will not drop below $9.50/cwt during any month of 2022.
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 2022 – 5