The USDA raised its 2023 U.S. milk production estimate in the March 6 World Agricultural Supply and Demand Estimates report (WASDE), citing a larger cow inventory. Output per cow was unchanged from last month.

2023 production and marketings were estimated at 228.5 and 227.5 billion pounds respectively, up 200 million pounds on both from a month ago. If realized, 2023 production would be up 2.0 billion pounds or 0.9 percent from 2022.

Cheese price forecasts were lowered as supplies are expected to be relatively large and domestic demand projected to be relatively soft. The 2023 average was projected at $1.81 per pound, down a nickel from February’s estimate, and compares to $2.1122 in 2022, $1.6755 in 2021, and $1.9236 in 2020.

Butter prices were raised on recent data and projected to average $2.3350 per pound, up 50 cents from a month ago, and compares to $2.8665 in 2022, $1.7325 in 2021, and $1.5808 in 2020.

Nonfat dry milk is expected to see a weak first quarter offset by a stronger fourth quarter and to average $1.23 in 2023, up 50 cents from last month’s estimate. That compares to $1.6851 in 2022, $1.2693 in 2021, and $1.0417 in 2020.

Whey prices were raised on recent price observations and stronger expected demand and should average 39 cents per pound, up 2.50 cents from February’s estimate. That compares to 60.35 cents in 2022 and 57.44 cents in 2021.

Class III milk prices were projected lower, with the 2023 average estimated at $17.55 per hundredweight, down 35 cents from last month’s estimate, and compares to the $21.96 average in 2022, $17.08 in 2021, and $18.16 in 2020.

The Class IV average was raised to $18.30, up a nickel from last month’s estimate, and compares to $24.47 in 2022, $16.09 in 2021, and $13.49 in 2020.

The January Dairy Products report indicates that January’s 1.3 percent increase in milk production kept cheese vats and butter churns particularly busy.

Cheese production totaled a whopping 1.209 billion pounds, up 1.2 percent from December output, which was revised down 7 million pounds, but was up 3.2 percent from January 2022, a record for January, and the highest monthly output since March 2022.

Wisconsin produced a tad under 296 million pounds of the January total, down 0.6 percent from December but 3.2 percent above a year ago. California produced 204 million pounds, down 2.4 percent from December and 2.3 percent less than a year ago. New Mexico added 95.5 million pounds, up 14.5 percent from December and 13.6 percent above a year ago. Idaho, at 90.9 million, was up 4.7 percent from December and 3.9 percent above 2022.

Italian cheese totaled 501.4 million pounds, down 1.3 percent from December and 0.4 percent less than a year ago. American cheese hit 501 million pounds, up 3.8 percent from December, and 6.2 percent above a year ago. Mozzarella slipped to 394.7 million pounds, down 1.3 percent from December, but virtually unchanged from a year ago.

Cheddar production hit a record 356.1 million pounds, up 16.1 million or 4.7 percent from December’s count, which was revised up 1.5 million pounds, and was up an eye catching 23.6 million pounds, or 7.1 percent, from January 2022.

Butter output jumped to 201.4 million pounds, up 13.6 million pounds or 7.3 percent from December, and 7.4 million pounds or 3.8 percent above a year ago. Yogurt production totaled 395.7 million pounds, up 6.1 percent from a year ago.

Dry whey output, at 77.9 million pounds, was up 3.1 million pounds or 4.1 percent from December’s total, which was revised down 1.2 million pounds, and was 2.5 million pounds or 3.1 percent below a year ago.

Stocks fell to 69.9 million pounds, down 600,000 pounds or 0.8 percent from December, but up 13.3 million pounds or 23.5 percent from a year ago.

Nonfat dry milk output climbed to 177 million pounds, up 9.4 million pounds or 5.6 percent from December’s total which was revised down 11.4 million pounds. Output was up 6.7 million pounds or 4.0 percent from January 2022.

Stocks jumped 16.5 million pounds, to 271.7 million, up 6.5 percent from December, and 10.1 million or 3.9 percent more than a year ago.

Skim milk powder production totaled 42.8 million pounds, down 12.2 million or 22.2 percent from December’s total which was revised up 6.1 million pounds, and was 600,000 pounds or 1.5 percent below that of a year ago.

Thankfully, U.S. dairy exports remain strong. January cheese climbed to 75 million pounds, up 15.6 percent from January 2022, and an all-time high for the month, according to HighGround Dairy. Lots of it was shipped to Mexico and “kicked off the calendar year at a record pace,” says HGD. Shipments fell to South Korea, the second largest destination, but strengthened to Japan, Bahrain, and Australia “helping offset losses elsewhere.”

HGD adds that Cheddar sales totaled 16.7 million pounds, up 37.5 percent, despite discounted European cheese, driven by larger sales to Japan and Australia.

Nonfat dry milk exports totaled 150.4 million pounds, up 14.8 percent. Mexico’s market share reached 53.5 percent, highest since August 2019, says HGD, “Maintaining similar strong volumes throughout second half 2022, the U.S. reported the strongest January shipments to Mexico on record,” with notable gains made to Thailand and Colombia.

“Total dairy exports to China expanded over prior year for the eighth consecutive month,” says HGD, “which also marked the third month in a row that achieved monthly highs. Much of the growth continues in the form of dry whey, which totaled 29 million pounds, up 8.6 percent from a year ago.

Some are skeptical U.S. dairy exports will be able to remain that strong in 2023. StoneX broker Dave Kurzawski is not one of them. Speaking in the March 13 Dairy Radio Now broadcast, he said he’s seeing strong cheese exports out into April and May so they won’t “shrivel up and die.” “We’re a bigger player in the world market than we’ve ever been,” he said. “I think that’s going to continue, but it does ebb and flow.” He also said current beef prices are a powerful incentive for dairy farmers to “make some decisions” regarding their operations for this year.