U.S. dairy margins starting 2023 ‘relatively flat’

and fourth quarter sales are sluggish with the current spot prices being offered.

Grade A nonfat dry milk closed at $1.1525 per pound, down 2.25 cents, the lowest Chicago Mercantile Exchange price since March 24, 2021, and 65.25 cents below a year ago, on 19 sales.

Dry whey closed at 32.75 cents per pound up a quarter-cent on the week, but 51.25 cents below a year ago, with 18 sales reported on the week.

The second Global Dairy Trade Pulse of 2023 saw 2.2 million pounds of Fonterra whole milk powder sold (the same as on Jan. 10); but at $3,200 per metric ton. This is up $30, but lagged the Jan. 17 GDT. There were nine less participating bidders and five fewer winning bidders. This is the lowest number of participating and winning bidders since the Pulse began Aug. 9.

HighGround Dairy says, “China’s ongoing economic volatility and struggle with Covid, combined with the current Lunar New Year holiday celebrations, have kept buyers away from the market and buying activity to a minimum.”

China’s December imports looked a little more promising. “After trending below prior year levels since February, skim milk powder imports rose above 2021 to mark their highest December volume since 2013,” says HighGround Dairy. The increase was driven by larger shipments from New Zealand, Belarus, and the United States. Skim milk powder imports in 2022, however, were the lowest since 2018 and well below 2021.

Cheese imports continued upwards month-overmonth, says HighGround Dairy, but still 15.1 percent below a year ago for the second straight month. Imports from New Zealand were up but down from Australia, Italy, the United States and Denmark.

Butter imports were up 19.4 percent from a year ago and up 4.3 percent year-to-date, while imports of anhydrous milkfat were up 130.1 percent from 2021 and up 24.1 percent year-to-date.

The Jan. 23 “Daily Dairy Report” says, “China kicked off its Lunar New Year celebrations, welcoming the Year of the Rabbit. According to Chinese tradition, the Year of the Rabbit is likely to be calm and contemplative, in contrast to the energy and positivity associated with 2022’s Year of the Tiger.”

Monica Ganley Quarterra wrote in the Jan. 20 Milk Producers Council newsletter, “China announced that its population declined last year for the first time in 60 years, sparking concerns about economic prospects of the world’s largest dairy importer. Furthermore, economists continue to express pessimism about the 2023 outlook with 63 percent of the chief economists surveyed by the World Economic Forum expecting that this year will bring a global recession.”

Cooperatives Working Together member coopera-