Digest highlights

July 2022 Class I base price still at record high

After setting a new all-time record high in June, the Federal Milk Marketing Order (FMMO) advanced Class I base price is unchanged in July at $25.87 per hundredweight (cwt). The July 2022 price is $8.45 more than July 2021.

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Editor / Progressive Dairy

The six-month average 2022 Class I base is $23.69 per cwt, up $7.37 from the January-July 2021 average of $16.31 cwt and is also the highest average for that period on record.

Class I zone differentials are added to the base price at principle pricing points to determine the actual Class I price in each FMMO. With those additions, July 2022 Class I prices will again average approximately $28.69 per cwt across all FMMOs, ranging from a high of $31.27 per cwt in the Florida FMMO #6 to a low of $27.67 per cwt in the Upper Midwest FMMO #30.

Even though the Class I base and individual FMMO Class I prices were unchanged in July, the newer Class I mover “average-of plus 74 cents” formula slightly reduced Class I prices paid to producers compared to the previous ”higher-of” formula.

The difference between the advanced Class III skim milk pricing factor ($13.07 per cwt) and the advanced Class IV skim milk pricing factor ($14.72 per cwt) increased in July to $1.65 per cwt.


Based on Progressive Dairy calculations, the Class I mover calculated under the higher-of formula would have resulted in a Class I base price of $25.94 per cwt, 8 cents more than the price determined using the average-of plus 74 cents formula.

Vitaliano: Dairy in unique economic times

Dairy farmers and the entire industry continue to deal with a high-price, high-cost environment unlike any seen for at least a decade, and in many ways not in the past four decades, notes National Milk Producers Federation’s Peter Vitaliano, summarizing markets in the June 2022 Dairy Management Inc./National Milk Producers Federation Dairy Market Report.

March and April set consecutive all-time highs for the monthly average all-milk prices in the U.S., while the four FMMO class prices set a collective record in May. Monthly retail prices of whole and lowfat milk, butter, ice cream and yogurt also reached all-time highs.

Meanwhile, monthly U.S. dairy exports posted a strong recovery in April from a recent low in January, amounting to 18.7% of U.S. milk solids production, the third highest ever for a single month by this measure.

For more information on commercial use, dairy trade, milk production, product inventories, prices and margins, click here.

Cheese inventories rise

Volumes of cheese in cold storage increased in May despite a slight decline in milk production during the month, based on latest USDA estimates.

According to the USDA’s monthly Cold Storage report, released June 23:

  • Total natural cheese stocks were estimated at about 1.512 billion pounds, up 2% from April 2022 and up 4% from May 2021. Stocks of American cheese were estimated at about 857.9 million pounds, up 3% from April and 4% more than May a year ago.
  • Butter stocks were estimated at 321.6 million pounds, up 8% from April but down 22% compared with May 2021.

The USDA’s preliminary Milk Production report indicated May 2022 U.S. milk output was down 0.7% compared to May 2021, at 19.72 billion pounds.

Read: May 2022 milk production remains below year-earlier levels.

GDT price index dips

The latest Global Dairy Trade (GDT) auction saw the overall price index decline 1.3%, with individual product categories mixed:

  • Skim milk powder was up 1% to $4,276 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was down 0.6% to $4,125 per MT.
  • Butter was up 2.4% to $6,213 per MT.
  • Cheddar cheese was down 9% to $4,875 per MT.
  • Anhydrous milkfat was down 4.7% to $5,913 per MT.

The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is July 5.

Dairy cull cow marketing slowed in May

Following seasonal patterns and higher milk prices, marketing of U.S. dairy cull cows in U.S. slaughter plants slowed in May to 225,200 head, a 12-month low.

The May 2022 total was down 12,600 head from April but 1,800 head more than May 2021. Both May 2022 and 2021 had 26 non-holiday weekdays and Saturdays.

At 1.288 million head, year-to-date (January-May 2022) cull dairy cow slaughter was about 38,000 less than the same period a year earlier. Factoring in the slowdown, the USDA’s Milk Production report previously estimated there were 9.405 million cows in U.S. herds in May 2022, down about 102,000 head from the same month a year earlier.

Heaviest dairy culling during May 2022 occurred in the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 54,500 head. That was followed in the Southwest (Arizona, California, Hawaii and Nevada), where 51,300 dairy cows were marketed for beef.

Other regional totals were estimated at 37,300 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 30,700 head in Alaska, Idaho, Oregon and Washington; and 24,300 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

Primary data for the USDA’s Livestock Slaughter report are obtained from reports completed by inspectors from the USDA Food Safety and Inspection Service (FSIS). These counts are combined with data from state-administered non-federally Inspected (NFI) slaughter plants to derive total commercial slaughter estimates. The USDA estimates there are approximately 900 livestock slaughter plants in the U.S. operating under federal inspection and nearly 1,900 state-inspected or custom-exempt slaughter plants.

Wooten returns to SMI

Shana Wooten has returned to Southeast Milk Inc. (SMI) as director of milk marketing.

Wooten most recently worked at the dairy supply chain integration software firm Dairy.com. Prior to that, she began her career with SMI in 1999, as an assistant supervisor in the producer payroll department. She became SMI’s producer payroll department supervisor in 2006, milk procurement manager in 2010 and director of milk marketing services in 2016. In 2019, she was announced as chief operating officer of the cooperative.

SMI is a full-service dairy cooperative operating across six states. It markets nearly 1.8 billion pounds of milk annually on behalf of its nearly 130 members.

World Dairy Expo to feature Global Dairy Symposium

International experts will share insights on issues facing the dairy industry during a Global Dairy Symposium, scheduled in conjunction with World Dairy Expo. The program will be held Oct. 6, 8:30 a.m.-noon (Central time) in the Alliant Energy Center, Madison, Wisconsin.

Speakers scheduled to participate include:

  • Krysta Harden – CEO of the U.S. Dairy Export Council
  • Torsten Hemme – President of International Farm Comparison Network (IFCN)
  • Ad Van Velde – President of Global Dairy Farmers
  • Sheryl Meshke – Co-President and CEO of Associated Milk Producers Inc.

This event is available at no cost but space is limited. Advance registration is required by Sept. 30. For more information or to register, email Jennifer Lu, economic development consultant, International Agribusiness Center.

Bill extends school meal provisions through summer

Leaders of House and Senate committees have agreed on a proposal extending school meal program waivers and increasing federal reimbursement rates through summer. The Keep Kids Fed Act will extend funding and program flexibility provisions originally created under 2020 federal pandemic relief but set to expire on June 30.

The full Senate unanimously approved the bill on June 23, and the bill was headed to the full House at Progressive Dairy's deadline.

The bill also provides support to schools and daycare centers to respond to supply chain challenges and high food costs for the coming school year.

IDDBA: Inflation driving food spending

Inflation continues to be the dominating topic affecting food spending patterns, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA). Based on data from the Information Resources Inc. (IRI), the price per unit across all foods and beverages increased 11.8% in the five weeks ending May 29 versus the same five weeks in 2021 and were up 22.8% compared to pre-COVID-19 May 2019.

“Compared with the fall of 2021, inflation is higher, more people are making changes and the supply chain challenges from labels to packaging to transportation and labor continue to be significant,” said Heather Prach, director of education for IDDBA. “The consumer reactions combined with supply side volatility are creating an environment of continued change and uncertainty.”

The good news for dairy is that sales remain consistent on a value basis, with milk, natural cheese and yogurt the biggest sellers in May 2022. While value is up, however, sales volume is down across all product categories, with declines of 2.8% (fluid milk), 1.7% (natural cheese) and 4.4% (yogurt) compared to May 2021.

Awareness and concern over food price inflation are intensifying by the month, with 30% of U.S. households stating affordability of groceries was a struggle in May. More than three-fourths of primary shoppers said they were making different purchase decisions to combat higher costs, including looking for sales and coupons, cutting back on nonessentials, buying more private brands and buying fewer items.

The share of home-prepared meals continues to average around 80%. Restaurant takeout remained big, which may also be a money-saving tactic versus eating on premise.

What’s ahead? The war in Ukraine, the renewed COVID-19 lockdowns in China, record inflation, labor shortages and supply chain challenges will have a continued effect on food and food sales in the months to come. Opportunities for retail remain the home-cooked meal (from scratch) and renewed in-person socializing through outdoor cooking.