The USDA lowered its 2023 milk production forecast in the Feb. 8 World Agricultural Supply and Demand Estimates report (WASDE), stating, “Weaker forecast milk prices are expected to result in lower cow inventories.” It also referenced The Cattle report’s dairy cow inventory and lower heifer numbers, and slightly reduced the forecast milk output per cow for 2023.

2023 production and marketings were estimated at 228.3 and 227.3 billion pounds respectively, down 900 million pounds on both from a month ago. If realized, 2023 production would be up 1.7 billion pounds or 0.75 percent from 2022.

Cheese was projected to average $1.86 per pound in 2023, down 7 cents from January’s estimate, and compares to $2.1122 in 2022, $1.6755 in 2021, and $1.9236 in 2020.

The 2023 butter price average was estimated at $2.33 per pound, unchanged 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 average $1.2250 per pound, down 11.50 cents from last month’s estimate, and compares to $1.6851 in 2022, $1.2693 in 2021, and $1.0417 in 2020.

Dry whey will average 36.50 cents per pound in 2023, down a nickel from the January estimate, and compares to 60.35 cents in 2022, 57.44 cents in 2021, and 36.21 cents in 2020.

Class III milk will average $17.90 per hundredweight in 2023, according to the WASDE, down 95 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 2023 Class IV average was projected at $18.25, down $1 from last month’s estimate, and compares to $24.47 in 2022, $16.09 in 2021, and $13.49 in 2020.

Prices were lowered for cheese as stocks remain relatively large and domestic demand is expected to remain generally soft, according to the WASDE. Butter was unchanged as higher early-year prices are offset by weaker prices later in the year. Nonfat dry milk and whey prices were lowered on expectations of increased export competition and somewhat softer international demand.

Corn used for ethanol production was reduced 25 million bushels in the WASDE. Ending stocks were up 25 million bushels from last month and the season-average corn price was unchanged at $6.70 per bushel.

The soybean crush was forecast at 2.23 billion bushels, down 15 million from last month, and the global crush was reduced 3.4 million tons. Ending stocks were forecast at 225 million bushels, up 15 million. The U.S. season-average soybean price for 2022/23 was forecast at $14.30 per bushel, up a dime from last month. Soybean meal was forecast at $450.00 per short ton, up $25. The soybean oil price forecast was unchanged at 68 cents per pound.

U.S. dairy exports ended 2022 on a strong note and added much value to U.S. dairy farm incomes. The data shows 18 percent of total U.S. milk solids left our shores, according to HighGround Dairy (HGD) President Eric Meyer in the Jan. 13 Dairy Radio Now broadcast, “The third straight year of record exports.”

Nonfat-skim milk powder exports totaled 139.7 million pounds, up 8.0 percent from December 2021, although down 6.2 percent on the year from 2021. Gains to Mexico accounted for most of the December increase, according to HGD, but there were notable gains to China, partially offset by declines to Vietnam and Philippines.

Dry whey exports totaled 39.3 million pounds, up 17.9 percent from December 2021, while down 0.2 percent for the year. Exports to China were the highest ever for December.

The U.S. exported 78.9 million pounds of cheese, up 16.4 percent in December, and up 12.1 percent for all of 2022. December Cheddar exports, at 14.5 million pounds, were up 40.3 percent from a year ago, and up 58.2 percent for the year.

Unfortunately, prospects for 2023 are not so rosy, Meyer warned, as European prices have fallen considerably, making the U.S. less competitive. He urged listeners to look at risk management options to make sure they’re covered for any major downswing. He agreed that China remains the “elephant in the room” as to exports but said “There’s not a lot of information out of that country which is now in a post-COVID era like we were and, while there’s rumors that consumer spending is rising, we’re not seeing any massive buying interest of, not only dairy commodities but other commodities, so there’s still a lot of uncertainty.”

You’ll recall December U.S. milk production was up just 0.8 percent from 2021. The latest Dairy Products report indicates that cheese vats and butter churns saw most of the milk.

Cheese output totaled 1.202 billion pounds, up 4.2 percent from November, and was up 2.2 percent from December 2021. It’s the highest monthly production since March and the 26th consecutive month output topped that of the previous year. Output for all of 2022 totaled 13.95 billion pounds, up 1.8 percent from 2021.

Butter output jumped to 187.0 million pounds, up 16 million pounds or 9.4 percent from November, and was up 7 million pounds or 3.9 percent from a year ago. Butter output for all of 2022 totaled 2.1 billion pounds, down 0.7 percent from 2021.

Yogurt totaled 361.0 million pounds, down 2.6 percent from a year ago, with YTD output at 4.6 billion pounds, down 2.7 percent.

Dry whey production climbed to 76 million pounds, up 4.1 million pounds or 5.7 percent from November’s total, which was revised down 2.7 million pounds, and was virtually unchanged from a year ago. Whey output for 2022 totaled 948.4 million pounds, up 1.5 percent from 2021.

Stocks climbed to 78.6 million pounds, up 5.6 million or 7.7 percent from November, and up 21.5 million pounds or 37.7 percent from 2021.

In politics, the USDA has proposed changes to nutrition standards for school meals, which could impact chocolate milk consumption, warns the Feb. 6 Daily Dairy Report. The DDR says USDA put two options forward, both including a reduction in sugar in flavored milks, such as chocolate.

The National Milk Producers Federation and the International Dairy Foods Association expressed “optimism” for the updates, “specifically USDA’s plans to maintain low-fat flavored milk for students. NMPF and IDFA continued to call on USDA to expand milk and dairy options in schools to ensure children have access to the nutrients they need each day, consistent with the 2020-2025 Dietary Guidelines for Americans.”

“Children having access to the healthful foods they need in school is a key priority for dairy farmers,” said NMPF’s Jim Mulhern. “Milk is the top source of calcium, potassium, phosphorus, and vitamin D in kids ages 2-18, and 1 percent flavored milk is a nutrient-dense, low-fat option students will actually choose to drink. We are pleased USDA is maintaining low-fat flavored milk in schools, providing children with an additional, and favored, choice to access the 13 essential nutrients milk provides, including three of the four nutrients of public health concern. But we question why USDA would propose school meal options that could limit a child’s access to these nutrients and we urge instead that they expand access to dairy options.”