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USDA lowers 2023 milk production estimate
 
Mielke Market Weekly
By Lee Mielke
 
 The USDA lowered its 2023 milk production estimate in the latest World Agricultural Supply and Demand Estimate report, citing slower growth in milk-per-cow than previously expected. Milk output for 2024 was unchanged.
2023 production and marketings were estimated at 228.4 and 227.4 billion pounds respectively, down 200 million pounds on both from a month ago. If realized, both would be up 1.9 billion pounds or 0.8 percent from 2022.
2024 production and marketings remained at 230.8 and 229.8 billion pounds respectively. If realized, 2024 production and marketings would be up 2.4 billion pounds or 1.1 percent from 2023.
The 2023 cheese price is expected to average $1.73 per pound, down 9.50 cents from last month’s estimate, and compares to the 2022 average of $2.1122 and $1.6755 in 2021. The 2024 average is estimated at $1.7750, 4.5 cents lower than last month’s projection.
Butter is expected to average $2.4350 per pound in 2023, up 50 cents from a month ago, and compares to $2.8665 in 2022 and $1.7325 in 2021. The 2024 average was estimated at $2.3350.
Nonfat dry milk is projected to average $1.19 per pound, up 50 cents from last month’s estimate, and compares to $1.6851 in 2022 and $1.2693 in 2021. The 2024 average was projected at $1.13, up a penny from a month ago.
The dry whey average was projected at 37 cents per pound, down 2.50 cents from last month’s estimate, and compares to 60.57 cents in 2022 and 57.44 cents in 2021. The 2024 average was put at 36 cents per pound.
The 2023 Class III milk price average estimate was lowered to $16.70 per hundredweight, down $1.05 from last month’s projection and compares to $21.96 in 2022 and $17.08 in 2021. The 2023 average was projected at $17, down 50 cents from a month ago.
The 2023 Class IV average was $18.35, up a nickel from last month’s estimate, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 Class IV average was projected at $17.45, up a dime from last month’s estimate.
Checking dairy demand, April total cheese usage came in at 1.19 billion pounds, up 0.6 percent, thanks to a 1.6 percent increase domestically outweighing an 11.7 percent drop in exports. Those exports were likely booked in late 2022 or early 2023, explains HighGround Dairy, “when U.S. prices carried a premium to the rest of the world.”
Butter utilization hit 187.5 million pounds, up 7.9 percent and up 4.1 percent year to date. It topped prior-year levels for the third consecutive month, according to dairy economist Betty Berning in the June 19 ‘Dairy Radio Now’ broadcast. She said the gain was driven by higher domestic consumption, up 11.6 percent. Exports however were down 53.1 percent, lowest volume since November 2020.
Berning blamed high U.S. butter prices at the end of 2022 for the drop in exports. She also pointed to higher output of American cheese, particularly Cheddar, for putting the produce mix “off kilter,” adding to inventory, without the export demand for it.
Nonfat and skim milk powder demand, at 238.1 million pounds, was up 3.6 percent. Domestic usage was up 34.1 percent while exports were down 9.2 percent from a year ago. HGD says domestic consumption was the highest since September 2020.
Admittedly fluid milk sales continue to struggle, but overall demand for dairy continues to grow in the U.S., contrary to what plant-based producers would like consumers to believe. The International Dairy Foods Association (IDFA) reports that, in September 2022, the USDA reported U.S. per capita dairy consumption jumped 12.4 pounds per person in 2021, continuing a 50-year growth trend that started in 1975 when USDA began tracking annual consumption.
Domestic consumption and exports also generated significant growth in the dairy industry, according to the IDFA, adding nearly 60,000 new jobs in the past two years, increasing average wages by 11 percent, and increasing its total impact on the U.S. economy by $41 billion, according to IDFA’s latest economic impact report.
IDFA’s 2023 Economic Impact Study showed the U.S. dairy industry’s economic impact totaled $793.75 billion. The report, released at the beginning of National Dairy Month, is conducted every two years.
Newly released figures indicate the U.S. dairy industry supports 3.2 million total jobs, including 1.078 million in dairy product manufacturing, up from 1.018 million in 2021, plus $49 billion in direct wages for workers, up from $42 billion in 2021. The report shows $72.0 billion in federal, state and local taxes (not including sales taxes paid by consumers), up from $67.1 million in 2021, 3 percent of U.S. GDP.
“The dairy industry is growing to keep pace with intense global demand, and that means more jobs, higher wages, more tax benefits, and more economic growth for communities across the U.S.” said Michael Dykes, IDFA president and CEO.
Unfortunately, that good news hasn’t been so good for farmers. The June 12 Daily Dairy Report points out that dairies “continue to struggle as margins remain tight. In 2021, 6 percent or 1,794 farms called it quits, and last year, another 7 percent or 1,910 operations sold out, leaving just 27,932 farms to meet growing demand,” according to USDA. Dairy futures offer little hope for a turnaround any time soon.
CME block Cheddar fell to a $1.3750 per pound Friday finish, the lowest CME price since May 8, 2020, down 4.75 cents on the week and 77 cents below a year ago. With the exception of a half-cent increase the week of May 15, the blocks dropped 11 weeks in a row, losing 72.50 cents in that timeframe.
The barrels closed at $1.5250, 4.50 cents lower, 63.25 cents below a year ago, and 15 cents above the blocks. 30 cars of block sold on the week and 3 of barrel.
Midwest weather is prolonging the flush and milk is being dumped though Dairy Market News reports that some cheese plants say spot milk offers were not as numerous this week. There are continued expectations that milk availability will slacken as late spring weather begins, but spot prices got as low as $12 under Class this week, compared to $5 to $1 under a year ago. Cheese processing is busy. Cheese demand is active, according to a number of upper Midwestern processors, and “customers are clearly less hesitant to purchase for near-to mid-term needs when prices are at current levels.”
Cheese demand remains steady for Western retail and food service channels. Export demand is mixed for the remainder of second quarter, ranging from steady obligations to softened, while third quarter interest is reportedly quieter. Cheese vats are running strong production with plenty of milk, says DMN.
Cash butter fell to $2.3525 per pound Tuesday, lowest since April 14. It rallied Wednesday, slipped some Thursday, and closed Friday at $2.3650, up 0.25 cents on the week but 57.50 cents below a year ago, with 10 sales on the week.
Central butter makers reported similar demand interest as the past two weeks. Retail sales are increasing but nothing out of the norm for late spring. Cream availability remains somewhat steady. Multiples are holding firm in the low to mid 1.20s from cream sources regionally, although some Midwestern plants are still taking cream from Western states, according to DMN.

6/20/2023