U.S. milk production forecasts for 2022 and 2023 were raised from last month in the October 12 World Agricultural Supply and Demand Estimates (WASDE). Cow numbers were raised “reflecting a more rapid pace of expansion in late 2022 and the first half of 2023,” says the WASDE. Output-per-cow was also raised for the remainder of 2022 and into the first part of 2023. 

2022 production and marketings were estimated at 226.9 and 225.8 billion pounds respectively, up 400 million pounds on both from last month’s estimates. If realized, 2022 production and marketings would still only be up 600 million pounds or 0.27% from 2021. 

2023 production and marketings were estimated at 229.2 and 228.2 billion pounds respectively, up 400 million pounds on production and 500 million on marketings. If realized, 2023 production would be up 2.3 billion pounds or 1.0% from 2022, and marketings would be up 2.4 billion pounds or 1.1%.

Fat and skim-solids imports for 2022 were raised, largely driven by recent trade data and higher expected imports of cheese and other products. The skim imports increase also reflects strong milk protein concentrate and casein imports. Forecasts for 2023 imports for both were raised largely on stronger imports of butter. Exports for both years were raised on expectations of stronger whey, lactose, and butterfat exports. However, export growth in skim milk powder is expected to be slower in 2022, according to the WASDE.

Forecasts for 2022 butter and cheese prices were raised on current strength, but nonfat dry milk (NDM) and whey was lowered. Class III and Class IV milk price forecasts were raised, reflecting the higher butter and cheese prices.

Forecasts for 2023 butter and cheese were raised while the NDM price was lowered. The Class III price was raised on higher cheese and Class IV was raised as the higher butter price more than offsets lower expected NDM prices. 

HighGround Dairy’s Lucas Fuess said in the Oct. 17 Dairy Radio Now broadcast that the consensus is that U.S. milk output might be a little stronger than normal this fall and into 2023. Milk prices have been “decent” the past few months, he said, though he admitted input costs have also been high, stressing farm margins but “slight profitability has been achieved in most areas.” 

Cow numbers will likely top year ago levels in September, he said, that plus yield gains, spell more milk ahead and we’ll see some of that in the September report which is issued Oct. 20. 

Checking the herd; culling in the week ending Oct. 1, totaled 61,100 dairy cows, down 200 from the previous week but 400 head or 0.66% above a year ago.

The Global Dairy Trade held its sixth Pulse Auction on Oct. 11, with 2.2 million pounds of Fonterra whole milk powder being sold, unchanged from the last Pulse, but at $3,425 per metric ton. That’s down $185 or 5.1% from the September 27 Pulse and down $90 or 2.6% from the Oct. 4 GDT. There were 19 winning bidders on the day, up 7 from the last Pulse, out of 28 participants.

Discounts on spot milk for Midwestern cheesemakers were not as strong this week, according to Dairy Market News. Some were at $1 under Class but more were at or just over. Demand is “well rounded,” says DMN, and producers are busy though some plants continue to refuse new orders, just making enough for existing orders. There has been some “production plant issues” but customer needs are being met and, if there’s any extra inventory it’s quickly spoken for. Some remain concerned about the prolonged inversion of the barrel-over-block price however “market tones have not been negatively affected, in general.”

Butter closed Friday at $3.1750 per pound, down 4.25 cents on the week but $1.40 above a year ago. The price has stayed above $3 for 36 consecutive sessions. Only 8 loads exchanged hands on the week at the CME.

The Daily Dairy Report’s Sarina Sharp warned on the Oct. 7 Milk Producers Council newsletter however that “In just a few weeks grocers will be done stocking up for the holiday baking season, and prices are expected to plummet.”

Cream availability continues to grow for churning in the Midwest. Cream orders have been refilled in the hurricane effected areas, and locally sourced cream is becoming easier to get. Butter demand is strong, despite record prices. Retail customers are getting ahead of holiday demand. Churning rates have increased and concern remains that stocks could be short by the end of fourth quarter. 

Grade A nonfat dry milk closed Friday at $1.49 per pound, down a nickel on the week, lowest since Aug. 10, and 4.25 cents below a year ago, on 5 sales. 

CME dry whey finished the week at 44.25 cents per pound, 2 cents higher, but 16 cents below a year ago. There were 2 sales reported for the week.

Meanwhile, the Dairy and Food Market Analyst warns that the third-largest railroad union voted down the proposed contract and asks; “What if railroads strike? Will that disrupt trucking, too? Will we be able to get our products through West Coast ports? Our view: There’s nothing bullish about log-jammed logistics, but duration does matter. A one-day strike is certainly different from a weeks-long strike that would gum up the ports,” the Analyst stated.

As I have sadly reported monthly for some time, U.S. fluid milk consumption continues to decline and it is doubtful that can be reversed, although Coke’s lactose-free, ultra-filtered FairLife milk is making a gallant attempt.

Contrary to what the plant-based fluid and food producers would have you believe, the popularity of dairy is as high as ever, if not more so. The International Dairy Foods association, citing new data from the USDA’s Economic Research Service, says “2021 per capita consumption of dairy grew by 12.4 pounds per person over the previous year, continuing a near 50-year growth trend that started in 1975 when USDA began tracking annual consumption of milk, cheese, butter and everything else in the dairy case.” 

“The average American consumed 667 pounds of dairy on a milkfat basis in 2021 versus 539 pounds in 1975 when data was first established. Among the products showing strong growth are American-type cheese, up 0.5 pounds, butter up 0.2 pounds, and yogurt adding 0.7 pounds. Yogurt consumption grew at its strongest rate in a decade and American-type cheese consumption was the second biggest increase over the past 20-years,” according to the IDFA.

The Oct. 6 Daily Dairy Report points out that dairy consumption fell in the late 1980s and ‘90s during the “low fat craze,” but that soon faded though it saw “a brief pause during the Great Recession.”

Pizza and cheese snacks drive cheese popularity. Annual per capita cheese consumption has jumped 16% over the past decade, according to the DDR, with butter consumption up 20%, “more than making up for changing tastes elsewhere in the dairy case.”

The National Milk Producers Federation admits dairy product consumption does shift over time but “the overall trajectory is positive. Despite more and more competition from nondairy competitors, despite an increasingly demanding consumer, and despite disruptions that range from diet fads to pandemics. Consumers continue to find dairy increasingly useful, preferable, and important.”