As reported last week, the USDA left its 2022 milk production forecast unchanged in its World Agricultural Supply and Demand Estimates report (WASDE), but raised the 2023 estimate slightly, citing higher expected cow numbers and slightly more rapid growth in output per cow.

Cheese was projected to average $2.11 per pound in 2022, up a penny from last month’s WASDE, and compares to $1.6755 in 2021 and $1.9236 in 2020. The 2023 cheese average was projected at $1.9950, up 2.50 cents from a month ago, but that would be 11.50 cents below the projected 2022 average.

The 2022 butter price average was estimated at $2.8750 per pound, up 3 cents from a month ago, and compares to $1.7325 in 2021 and $1.5808 in 2020. The 2023 average was projected at $2.4650, up a penny from a month ago, but 41 cents below the expected 2022 average.

Nonfat dry milk will average $1.68 in 2022, unchanged from last month’s estimate, and compares to $1.2693 in 2021 and $1.0417 in 2020. The 2023 average was estimated at $1.3750, down 3 cents from a month ago, and would be 30.50 cents below the anticipated 2022 average.

The dry whey average for 2022 was unchanged at 60.50 cents per pound and the 2023 average was lowered 2 cents to 46.50 cents per pound, 14 cents below the expected 2022 average.

The 2023 Class III milk price was projected to average $19.80 per hundredweight, up 15 cents from last month’s WASDE, but would be $2.15 below what the 2022 average is expected to be.

The 2023 Class IV price was estimated to average $20.10, down 25 cents from last month’s estimate, and would be $4.40 below the anticipated 2022 average.

This week’s Livestock, Dairy, and Poultry Outlook reported that October alfalfa hay averaged $281 per short ton, $4 higher than September and $62 above Oct. 2021. The 5-State weighted-average price for premium alfalfa hay was $348 per short ton, $6 higher than September and $94 higher than October 2021. 

The Outlook reflected milk price and production projections in the Dec. 9 WASDE and reported that “Dairy cow slaughter has been active and has been in line with 2021 for the past couple of weeks.”

The Outlook stated that the National Restaurant Association reported restaurant activity from January to October was below 2021 levels. “Nevertheless, the restaurant performance index has been above 100 points, showing an expansion that may boost domestic use for dairy products for the rest of 2022 and 2023.”

Dairy product consumption in October was a “mixed bag,” according to HighGround Dairy’s Lucas Fuess in the Dec. 19 Dairy Radio Now broadcast.

Cheese disappearance totaled 1.22 billion pounds, up 2.4% from Oct. 2021, third month in a row to top that of a year ago, though Fuess said the gain weakened slightly from September’s growth. Year to date consumption was up 2.1%. U.S. cheese exports, at 81.4 million pounds, were up 4.5%.

Butter disappearance totaled 199.9 million pounds, down 8.0% from a year ago, pulled lower by an 11.3% drop in domestic consumption, though exports were up 61.9%, the strongest of any month since 2014. October was the third consecutive month total butter utilization was below a year ago however and HGD points out it was the lowest October utilization since 2017.

Nonfat dry milk-skim milk powder disappearance amounted to 208.5 million pounds, down 12.8%. Domestic usage was down 49.4% while exports were up 10.6%, first year over year gain since Nov. 2021, according to HGD.

Dry whey utilization totaled 76.3 million pounds, down 4.5% from a year ago, though, like nonfat dry milk, exports were strong, up 20.0% from a year ago, as Chinese demand for dry whey has returned, according to Fuess.

Cooperatives Working Together (CWT) member cooperatives accepted two offers of export assistance this week from CWT that helped capture sales contracts for 1.2 million pounds of American-type cheese. The product is going to customers in Central America and Oceania from January through May 2023. 

CWT-assisted exports to-date total 93.3 million pounds of American-type cheeses, 657,000 pounds of butter, 30.7 million pounds of whole milk powder, and 8.8 million pounds of cream cheese. The products are going to 21 countries and are the equivalent of 1.168 billion pounds of milk on a milkfat basis.

More details were announced Dec. 12 on the USDA’s solicitation of the Special Supplemental Nutrition program for Women, Infants, and Children. A total of 8.56 million pounds of natural Cheddar was awarded to three different vendors, with delivery between March and September 2023 or about a 1.22 million pound average per month. No process cheese or fluid milk was awarded.

Retail and food service demand for cheese is steady in the West. Export demand is mixed. Lower prices for internationally produced cheese is contributing to softer demand, while strong demand remains from Asian purchasers. Contacts report that block loads are selling more quickly while barrel inventories are growing. Milk is available for strong regional cheese production however labor shortages and delayed deliveries of supplies continues to limit output of some.

Spot butter started the week falling 11.25 cents to $2.70 per pound, lowest since Nov. 3, but then reversed direction and ended Friday at $2.8550, up 4.25 cents on the week and 76.25 cents above a year ago, putting 23 sales on the board.

Butter producers report slowing demand, as retail customers have their holiday ordering met. Food service demand has also seasonally slowed, says DMN, “Particularly as butter prices remain above where some were expecting them to be this late in the year.” Cream availability is mixed. Some plants are full and not entertaining spot offers while others say cream availability is steady with previous weeks. Churning remains very busy and plant managers expect to churn as much butter as possible despite the holidays.

Demand for cream is steady to lighter in the West. Cream multiples have moved lower in the region amid softer demand and strong availability. Butter makers are running busy schedules, though some say tanker and labor shortages continue to keep them operating below capacity. Demand for butter is softening in retail markets, as customers have filled holiday needs. Food service demand is steady. Spot purchasers report butter loads are becoming more available, says DMN, though unsalted butter inventories remain tighter than salted. Some players anticipate that butter prices will slip lower into the New Year; thus causing some buyers to limit their orders.