Dairy Market R
Dairy Management Inc.
Vol u m e 2 5 | N o. 5
Overview
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M ay 2022
D MI | NMP F
Robust growth of both domestic consumption and exports of all cheese have been bright spots in the overall U.S. dairy situation. Milk prices reached their
highest-ever monthly level during March, as measured by the U.S. average all-milk price, and the total export volume of all dairy products recovered markedly that month from the relative doldrums of the prior three months. However, record or near-record levels of the cost of virtually all inputs needed to produce milk are tempering the gains on farmer balance sheets. Meanwhile, retail price inflation has been accelerating for several dairy product categories, including fluid milk and butter, which are significantly outpacing consumer price increases for all food and beverages as well as the overall rate of inflation. Price inflation for cheese and frozen dairy products continues to be relatively subdued, by comparison.
Commercial Use of Dairy Products Significant increases in consumption of all cheese was a bright spot in the domestic dairy market during the first quarter. Overall, the U.S. population consumed a full percent less milkfat in all dairy products during the first quarter, while total skim solids consumption was relatively little changed. The drop in milkfat uptake was caused partly by lower butter consumption as well as an estimated 2.5 percent reduction in total milkfat consumed in all fluid milk products.
U.S. Dairy Trade U.S. dairy exports recovered strongly during the first quarter of 2022 from January’s lowest point in three years to March’s seventh highest-ever month, as measured by monthly percent of U.S. milk solids production. This rise from 13.6 percent to
18.1 percent was the second-highest ever percentage-point increase in this measure over two consecutive months. A disproportionate number of the largest two-month increases of this type take place during the January through March period in various years. The largest product volume increases over the period this year were in the usual leading categories of milk powders, most whey products and, to a somewhat lesser extent, butter and cheese. Growth in the major product categories of U.S. dairy imports has moderated considerably from the high levels reached during the last several months of 2021. March imports of butter, MPC and casein were below year-earlier levels, while total cheese imports were up that month by barely in the double-digit percentages.
Domestic Commercial Use
Jan–Mar 2022
Jan–Mar 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)
11,076 1,184 484 1,355 1,940 3,295 156 52,321 44,960 47,275
11,381 1,212 522 1,318 1,844 3,163 223 52,859 44,979 47,433
2021–2022 Change
Percent Change
-305 -27 -39 37 96 132 -68 -539 -20 -158
-2.7% -2.2% -7.4% 2.8% 5.2% 4.2% -30.3% -1.0% 0.0% -0.3%
(million pounds)
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Milk Production U.S. dairy cow numbers continued to decline from year-earlier levels in March, but U.S. milk production may be starting to come back, due to increased average milk production per cow. During the first quarter of 2022, milk production was one percent lower than in the first quarter of 2021, almost entirely due to a similar drop in cow numbers, while production per cow was essentially flat. Indications that the low point of the national milk production pull-back of the past year may have already been reached a few months prior to March are more noticeable in western states than elsewhere in the country. Milk solids production was essentially unchanged from a year earlier during the quarter, indicating that the average component composition of producer milk continues to expand at a relatively rapid pace.
Dairy Products Comparing the first quarter change in U.S. milk solids production of 0.1 percent from a year earlier with the corresponding
U.S. Dairy Exports
changes in production of the major dairy product categories, it is clear that Italian-type cheese and higher-protein whey products continue to claim a disproportionate share of available milk at the expense of butter and dry skim milk products.
Dairy Product Inventories The various metrics for evaluating individual dairy product inventories do not yet show indications of demand weakness relative to production except to some extent for whey products, reflecting recent import pullbacks by China.
Dairy Product and Federal Order Class Prices The monthly survey prices of dairy products used to determine the federal order component and class prices, and the announced class prices themselves, were all higher again
Jan–Mar 2022
continued on page 3
Jan–Mar 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
14,728 4,162 19,186 19,605 84,474 104,079 202,950 9,075 46,517 52,979 92,133 16.1%
10,445 1,171 11,079 11,161 81,166 92,327 220,985 10,270 60,683 53,567 87,379 16.4%
4,283 2,991 8,107 8,444 3,308 11,752 -18,035 -1,195 -14,167 -588 4,754 -0.3%
41% 255% 73% 76% 4% 13% -8% -12% -23% -1% 5% -2%
U.S. Dairy Imports
Jan–Mar 2022
Jan–Mar 2021
2021–2022 Change
Percent Change
Butter Cheese Dry Skim Milk MPC (all protein levels) Casein Percent of U.S. Milk Solids Imported
9,056 40,548 218 15,778 17,962 3.1%
7,539 39,182 71 13,200 16,945 2.8%
1,517 1,366 147 2,578 1,017 0.2%
20% 3% 209% 20% 6% 8%
(metric tons)
2 – Dairy Market Report | May 2022
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Dairy Product and Federal Order Class Prices from page 2
Milk and Feed Prices
in April from a month earlier, except for dry whey, which reflected recent export weakness.
The highest-ever monthly U.S. average all-milk price was reported by USDA’s National Agricultural Statistics Service (NASS) for March, at $25.90/cwt. This was 20 cents/cwt higher than the previous record, set in September 2014. The monthly all-milk price has been above $25.00/cwt only four times, and the other two were also in 2014. The futures-based outlook for the milk price for all of calendar year 2022 halted its steady ascent since last summer during the fourth week of March but hasn’t dropped below
The Bureau of Labor Statistics reported the U.S. average retail price of whole milk in April was just over $4.00 a gallon. This was the highest this monthly price has been reported. BLS reported the annual rate of inflation for fluid milk hit 14.7 percent in April and 16 percent for butter, while the overall April inflation rate eased down slightly to 8.2 percent.
continued on page 4
Milk and Dairy Products Production
Jan–Mar 2022
Jan–Mar 2021
2021–2022 Change
Percent Change
Milk Production Cows (1,000 head) Per Cow (pounds) Total Milk (million pounds) Total Milk Solids (million pounds)
9,381 5,998 56,263 7,460
9,466 6,005 56,847 7,450
-85 -7 -584 10
-0.9% -0.1% -1.0% 0.1%
Dairy Products Production Cheese American Types Cheddar Italian Types Mozzarella Total Cheese
(million pounds)
1,388 968 1,483 1,161 3,474
1,386 990 1,428 1,114 3,374
2 -22 55 47 100
0.1% -2.3% 3.8% 4.2% 3.0%
Butter
580
611
-31
-5.0%
Dry Milk Products Nonfat Dry Milk Skim Milk Powder Dry Whey Whey Protein Concentrate
532 106 233 129
591 145 238 118
-59 -39 -5 11
-10.0% -26.7% -2.1% 9.6%
Dairy Product Inventories
Mar 2022
Feb 2022
283 822 636 296 68
263 831 636 295 63
Mar 2021
2021– 2022 Change
(million pounds)
Butter American Cheese Other Cheese Dry Skim Milk Dry Whey
356 834 635 323 64
-20% -1% 0% -9% 7%
Dairy Market Report | May 2022 – 3
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Milk and Feed Prices from page 3
Looking Ahead
$26.00/cwt since then, indicating potentially more monthly records ahead for this key measure of U.S. dairy farmers’ gross incomes from milk sales. USDA has reported the March margin under the Dairy Margin Coverage program to be $11.55/cwt. Since March 2021, the DMC feed cost has increased by $3.22/cwt, while the all-milk price has risen by $8.50/cwt over the same period.
The USDA’s World Agricultural Supply and Demand Estimates (WASDE) forecast update for May raised its estimate of calendar year 2022 U.S. milk production from last month’s estimate of 226.3 to 226.7 billion pounds, an increase of 0.2 percent from 2021 production. Every May, the WASDE begins reporting estimates for the following year. The 2023 milk production estimate was 229.5 billion pounds, an increase of 1.2 percent from its 2022 estimate. WASDE also lowered 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
Apr 2022
Mar 2022
$2.769 $2.291 $2.276 $2.276 $1.831 $0.739
$2.726 $2.055 $2.075 $2.007 $1.795 $0.794
Apr 2021
2021–2022 Change
(per pound)
$1.781 $1.711 $1.792 $1.601 $1.168 $0.614
$0.988 $0.580 $0.484 $0.675 $0.663 $0.126
(per hundredweight)
Federal Order Class Prices for Milk Class I Mover Class II Class III Class IV
$24.38 $25.71 $24.42 $25.31
$22.88 $24.76 $22.45 $24.82
$15.51 $15.56 $17.67 $15.42
$8.87 $10.15 $6.75 $9.89
Retail Dairy Product Prices Fluid Whole Milk (per gallon) Lowfat Fluid Milk (per gallon) Cheddar Cheese (per pound) Butter (per pound)
$4.012 $3.682 $5.656 $4.150
$3.917 $3.584 $5.486 $4.076
$3.447 $3.045 $5.441 $3.521
$0.565 $0.637 $0.215 $0.629
Mar 2022
Feb 2022
Mar 2021
2021–2022 Change
Producer Prices All Milk (per cwt.)
$25.90
$24.70
$17.30
$8.60
Feed Prices Corn (per bushel) Soybean Meal (per ton) Alfalfa Hay (per ton) DMC Feed Cost* (per cwt.)
$6.56 $494 $269 $14.35
$6.10 $451 $266 $13.50
$4.89 $410 $210 $11.14
$1.67 $84 $59 $3.22
DMC Margin* (per cwt.)
$11.55
$11.20
$6.26
$5.28
Milk and Feed Prices
*Prices not revised for DMC calculations
4 – Dairy Market Report | May 2022
Dairy Management Inc.
Looking Ahead from page 4
its forecast of the 2022 calendar year U.S. average all-milk price slightly, from $25.80 per cwt last month to $25.75 per cwt, which is close to where the dairy futures at the same time indicated it would average. The WASDE newly reported
Peter Vitaliano National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
Dairy Management Inc.
average price for calendar year 2023 was $23.55 per cwt. Also at the same time, the Dairy Margin Coverage DMC Decision Tool hosted on the USDA website projected the DMC margin would peak this year in May and then steadily drift lower while remaining above $9.50 per cwt through the end of the year.
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 | May 2022 – 5