This column was written for the marketing week ending Jan. 13.
You’ll recall November milk production was up 1.3 percent from 2021. The latest Dairy Products report indicates that extra milk primarily went to the vat and the churn.
Cheese production totaled 1.149 billion pounds, down 1.9 percent from October output which was revised up 4 million pounds, but was up 1.6 percent from November 2021. Output year-to-date hit 12.7 billion pounds, up 1.7 percent from a year ago.
Wisconsin produced 284.1 million pounds of that total, down 0.7 percent from October, but 1 percent above a year ago. California produced 208.7 million pounds, up 1.1 percent from October and 2.4 percent more than a year ago. New Mexico output slipped to 80.7 million pounds, down 3.3 percent from October but 2.4 percent more than a year ago. Idaho output dropped to 74.3 million pounds, down 12.7 percent from October, and 3.8 percent below a year ago.
Italian cheese output fell to 484.9 million pounds, down 2.4 percent from October but 1.1 percent above a year ago. Year-to-date, Italian stands at 5.4 billion pounds, up 2.7 percent.
American-type cheese slipped to 459.7 million pounds, down 2.1 percent from October, but 2.2 percent above a year ago. Year-to-date output, at 5.1 billion pounds is down 0.2 percent.
Mozzarella output, at 380.9 million pounds, was up 1.5 percent from a year ago, with year-to-date at 5.1 billion pounds, down 0.2 percent.
The Jan. 6 “Daily Dairy Report” says, “Cheesemakers consistently made big volumes of Mozzarella in 2022, a sign that Americans’ appetite for pizza and other foods replete with Italian-style cheeses continued to grow.”
Cheddar production fell to 319 million pounds, down 17.1 million pounds or 5.1 percent from October’s count, but was up 5.5 million pounds or 1.7 percent from November 2021. Year-to-date, cheddar is at 3.6 billion pounds, down 1.1 percent from a year ago.
Butter output climbed to 169.9 million pounds, up 8.1 million pounds or 5 percent from October, and up 13.9 million pounds or 8.9 percent from a year ago. Year-to-date, butter output however stands at 1.9 billion pounds, down 1.2 percent from a year ago.
Yogurt totaled 346.8 million pounds, down 2.4 percent from a year ago, with year-to-date output at 4.3 billion pounds, down 2.7 percent.
Less cheese meant less whey. Output slipped to 74.6 million pounds, down 2.7 million pounds or 3.5 percent from October, and 1.3 million or 1.7 percent below a year ago. Year-to-date, whey is at 875.1 million pounds, up 2 percent. Stocks climbed to 72.9 million pounds, up 4.5 million pounds or 6.5 percent from October, and 13.2 million pounds or 22.1 percent above those a year ago.
Nonfat dry milk jumped to 159.5 million pounds, up 35.5 million pounds or 28.6 percent from October, but was 1.5 million pounds or 0.9 percent below a year ago. Year-to-date, powder was at 1.8 billion pounds, down 3.2 percent. Stocks grew to 256 million pounds, up 8.2 million or 3.3 percent from October, and 29.2 million or 12.9 percent above a year ago.
Skim milk powder output fell to 39.4 million pounds, down 16.8 million pounds or 29.9 percent from October, and down 20.2 million or 33.9 percent from a year ago. Year-to-date, skim milk powder was at 486.3 million pounds, down 25.1 percent from 2021. HighGround Dairy called the report neutral on cheese and nonfat but bearish on butter and dry whey.
The U.S. Department of Agriculture lowered its 2022 and 2023 milk production forecasts in the Jan. 12 World Agricultural Supply and Demand Estimates report. The 2022 estimate was reduced, based on lower expected milk per cow.
The 2023 forecast was lowered, due to a smaller expected herd size for the year, though output per cow was unchanged from last month. USDA’s Cattle Report, to be issued Jan. 31, will provide an indication of producer intentions for retaining dairy heifers for addition to the breeding herd, according to the WASDE.
2022 production and marketings were estimated at 226.8 and 225.8 billion pounds respectively, down 200 million pounds on production and down 100 million on marketings from last month’s estimates. If realized, 2022 production would only be up 500 million pounds or 0.2 percent from 2021.
2023 production and marketings were estimated at 229.2 and 228.2 billion pounds respectively, down 300 million pounds on both from a month ago. If realized, 2023 production would be up 2.4 billion pounds or 1.1 percent from 2022.
Cheese was projected to average $2.1122 per pound in 2022 and compares to $1.6755 in 2021 and $1.9236 in 2020. The 2023 average was projected at $1.93, down 6.5 cents from last month’s estimate.
The 2022 butter price average was estimated at $2.8665 per pound and compares to $1.7325 in 2021 and $1.5808 in 2020. The 2023 average was projected at $2.33, down 13.5 cents from a month ago.
Nonfat dry milk will average $1.6851 per pound in 2022, says the WASDE, up from $1.2693 in 2021 and $1.0417 in 2020. The 2023 average was estimated at $1.34, down 3.5 cents from a month ago.
Dry whey will average 41.50 cents per pound in 2022, up from 57.44 cents in 2021 and 36.21 cents in 2020. The 2023 average was lowered a nickel to 41.5 cents per pound.
The 2023 price forecasts were lowered on expectations of weak domestic demand and price pressure in international markets, says the WASDE
The 2022 Class III milk price average was $21.96 per hundredweight, up from $17.08 in 2021 and $18.16 in 2020. The 2023 average was projected at $18.85, down 95 cents from last month’s estimate.
The 2022 Class IV average is $24.47 and compares to $16.09 in 2021 and $13.49 in 2020. The 2023 estimate is $19.25, down 85 cents from a month ago.
This month’s corn outlook is for reduced production, food, seed and industrial use, feed and residual use, exports, and ending stocks. Corn production was estimated at 13.73 billion bushels, down 200 million as an increase in yield was more than offset by a 1.6 million acre cut to harvested area.
Total corn use was reduced 185 million bushels to 13.915 billion. Exports were reduced 150 million bushels to 1.925 billion, reflecting the slow pace of shipments through December, and the lowest level of outstanding sales as of early January since the 2019-20 marketing year.
Food, seed and industrial use was lowered 10 million bushels. Feed and residual use was down 25 million bushels to 5.275 billion. With supply falling more than use, corn stocks were lowered 15 million bushels and the season-average corn price was unchanged at $6.70 per bushel.
Soybean production was estimated at 4.28 billion bushels, down 69 million. Harvested area was estimated at 86.3 million acres and yield was estimated at 49.5 bushels per acre, down 0.6 bushels. The soybean export forecast was reduced 55 million bushels to 2 billion, reflecting lower supplies, reduced import demand for China, and a higher export forecast for Brazil. Ending stocks were projected at 210 million bushels, down 10 million from the previous forecast. The season-average soybean price was projected at $14.20 per bushel, up 20 cents. Soybean meal was projected at $425 per short ton, up $15.
Looking backwards, 2022 corn production was estimated at 13.7 billion bushels, down 9 percent from the 2021 estimate, according to the USDA’s Crop Production Summary. The average yield was estimated at 173.3 bushels per acre, 3.4 bushels below the 2021 record high of 176.7 bushels. Area harvested was estimated at 79.2 million acres, down 7 percent from the 2021 estimate.
Soybean production totaled 4.28 billion bushels, down 4 percent from 2021. The average yield per acre was estimated at 49.5 bushels, down 2.2 bushels, and harvested area was up slightly from 2021 to 86.3 million acres.
Dairy cow slaughter in the week ending Dec. 31 totaled 53,475 head, up 2.1 percent above a year ago. Total slaughter for 2022 was up 1.7 percent from 2021.
Cash cheese prices shot higher the week of Friday the 13th, then suffered a relapse. The cheddar blocks gained 14.25 cents Jan. 9, hitting $2.1975 per pound, highest since Nov. 22, but cooled to a Jan. 13 finish at $2.00, down 5.5 cents on the week, while 8 cents above a year ago.
The barrels, after diving 13.25 cents the previous week, gained a dime on Jan. 9, hitting $1.825, but closed Jan. 13 at $1.7075. This is 1.75 cents lower on the week, 25.25 cents below a year ago, and 29.25 cents below the blocks. Sales totaled 10 cars of block and 24 of barrel for the week at the Chicago Mercantile Exchange.
HighGround Dairy’s “Monday Morning Huddle” warned that a fire at AMPI's Portage, Wis. process cheese plant on Jan. 2 “may temporarily make more barrel cheddar available as the coop works to re-open the facility.”
Dairy Market News reported some Midwestern cheesemakers say the bullish market swings are dissimilar to what they are experiencing regarding demand. A majority of them say sales have softened in recent weeks. Not only spot interest, but contractual buyers have reduced some volumes. Milk availability has not changed much over the past three weeks. Spot prices are still being reported as low as $10 under Class. Cheese inventories are expected to grow near term.
Food service and retail cheese demand in the west is steady to lighter but contacts report steady demand from international purchasers but there is concern that lower global prices may contribute to lighter export demand ahead. Barrel inventories are more excessive than blocks, says Dairy Market News, and plenty of milk remains for busy cheese making, although continuing delayed deliveries of supplies and labor shortages is hindering full capacity.
Butter climbed to $2.43 per pound on Jan. 10, but finished Jan. 13 at $2.425. This is up 4.25 cents on the week but 30 cents below a year ago. Only two cars were sold.
Dairy Market News says cream remains abundant within the Central region and from Western suppliers. Butter producers have active schedules, focusing on spring holiday inventory status. Food service demand has gradually picked up, but retail buyers are reportedly buying on a necessity basis. Market tones remain somewhat firm, despite strong production and an expectation of inventory growth.
Cream remains ample in the West while demand for it is steady to lighter. Butter production continues to be strong as cream remains widely available. Some expect churns being kept busy longer into the year than usual and into the flush. Butter availability is moving closer towards balancing with demand. Butter demand is steady to higher, with some reports of limited spot availability as contracted loads are being booked for first quarter 2023. However, there is some hesitation for booking into the remaining quarters of 2023, says Dairy Market News.
Grade A nonfat dry closed Jan. 13 at $1.255 per pound. This is down 4.25 cents on the week, lowest CME price since Aug. 20, 2021, and 56 cents below a year ago. Only five sales were reported on the week.
Dry whey closed at 33.25 cents per pound. This is down 5.75 cents on the week, lowest CME price since Aug. 26, 2020, and 43.75 cents below a year ago. There were 25 sales on the week at the CME, highest since the week of June 8, 2020.
Lucas Fuess, now a senior dairy analyst with Rabo Bank, said in the Jan. 16’s “Dairy Radio Now” broadcast that cheese is the most surprising market so far in 2023 in that prices, particularly the blocks, have been maintaining incredible strength after staying above the $2 mark in December. It’s a bit opposite of seasonal norms, he said, when prices characteristically come down in first quarter. He expects some slippage in the block market ahead, but sees barrels remaining fairly neutral around the $1.80 per pound mark.
Butter saw some significant declines toward the end of the year, as demand finished up in the holiday season, Fuess said, and it has been fairly quiet so far in 2023, supported near the $2.40 per pound mark.
Weaker global demand is the story on nonfat dry milk, according to Fuess, and that has driven prices at the CME. He cited the Dairy Products report showing powder output a bit weaker than a year ago; but that export category is down significantly and stocks climbed, indicative of weak demand at the end of the year. He looks for slow but steady price declines to continue in the powder.
Jan. 10’s Global Dairy Trade Pulse auction was the first one of 2023 and saw 2.2 million pounds of Fonterra whole milk powder sold at $3,170 per metric ton. That’s down $35 from the Dec. 27 Pulse, but unchanged from last week’s GDT auction Contract 2 March price and the ﬁrst time the Pulse price did not decline since Dec. 6, according to StoneX.
HighGround Dairy points out, “whole milk powder inventories in China are speculated to be replete providing ample supply for domestic demand. With little competitive buying interest from the country there is plenty of room for other regions to procure product at these low prices.”
The Covid virus continues to spread in China, says HighGround Dairy, “amid what critics say is a lack of transparency from Beijing. China officially opened their borders and citizens have started to travel cross-border, to either Hong Kong or Russia, and flights from overseas flights started to trickle in. Authorities say they expect domestic rail and air journeys will double over the same period last year, bringing overall numbers close to those of the 2019 holiday period before the pandemic hit.”
Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at email@example.com.