Update highlights

Natzke dave
Editor / Progressive Dairy

USDA cuts 2022-23 milk production forecasts, raises price projections

The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report released June 10, 2022, revised the 2022-23 U.S. milk production estimates lower due to slower growth in milk per cow than previously expected. With the outlook for production lowered, projected farm-level milk prices were raised for both years.

Compared to last month, the USDA cut the 2022 milk production forecast by 300 million pounds to 226.4 billion pounds. If realized, 2022 production would be up just 100 million pounds from 2021.

Price forecasts for cheese, butter and nonfat dry milk were raised from the previous month’s forecast on recent price strength and stronger anticipated demand. The projected annual average Class III price was raised 15 cents from last month at $22.90 per hundredweight (cwt). The projected Class IV price was raised 85 cents to $24.65 per cwt. The 2022 all-milk price forecast was raised 45 cents from last month to $26.20 per cwt.

For 2023, the USDA projected milk production at 229.3 billion pounds, 200 million pounds less than last month’s forecast. If realized, 2023 production would be up about 1.3% from the 2022 estimate.


Prices were forecast higher for cheese, butter and nonfat milk, with the price for dry whey unchanged. Annual average price projects for 2023 were: Class III – $20.65 per cwt, Class IV – $21.90 per cwt and all-milk – $23.80 per cwt.

  • Beef outlook: The 2022 beef production estimate was raised from the previous month, with higher expected steer and heifer and cow slaughter more than offsetting lower expected carcass weights. For 2023, the beef production forecast was unchanged from last month, which called for declines in both fed and non-fed cattle supplies.

The 2022-23 cattle price forecasts were unchanged from last month. The USDA estimated 2022 annual average prices for fed cattle at about $140 per cwt, about $18 more than the 2021 average of $122.40 per cwt. The estimated 2023 annual average price for fed cattle was $153 per cwt.

The USDA will release its annual Acreage report on June 30, which will provide survey-based indications of 2022 planted and harvested area. The WASDE report provided some updated feed supply and demand estimates and price projections:

  • Corn: This month’s 2022-23 U.S. corn outlook called for larger beginning stocks, slightly higher use and increased ending stocks. Corn area and yield forecasts are unchanged. At $6.75 per bushel, the projected season-average corn price received by producers was unchanged from last month’s forecast, but up 85 cents (14%) from the 2021-22 average of $5.90 per bushel and about $2.22 (49%) more than 2020-21 average of $4.53 per bushel.
  • Soybeans: The 2022-23 U.S. soybean supply and use outlook projected lower beginning and ending stocks and higher prices. The U.S. season-average soybean price received by producers for 2022-23 was forecast at $14.70 per bushel, up 30 cents from last month’s forecast, $1.35 (10%) more than the $13.35 per bushel average for 2021-22 and $3.90 (36%) more than the $10.80 per bushel average in 2020-21. The 2022-23 soybean meal price was projected at $400 per ton, unchanged from last month’s forecast and down $25 from the average in 2021-22, but $7.70 more than the average for 2020-21.

FMMO update coming next week

Federal Milk Marketing Order (FMMO) uniform price and producer price differentials for May milk marketings are scheduled to be released, June 11-14. Check the Progressive Dairy website for an update on factors affecting prices and pooling.

RaboResearch: Global milk production growth to remain slow

Rabobank forecasts milk production in the “Big 7” dairy export regions (the U.S., European Union, China, Brazil, Argentina, Australia and New Zealand) will contract 1.1% for the April-June 2022 quarter, making it the fourth consecutive quarter in which milk output is lower than the same quarter a year earlier. Output was down 1.9% during the first quarter of 2022, according the latest quarterly dairy report from Rabobank.

Higher farmgate milk prices across most regions do not guarantee production growth, however. Milk producers around the globe are facing higher feed prices and weather disruptions. Overall inflation pressures in energy, fuel and wages are also impacting profitability. Milk production is expected to recover modestly in the second half of 2022, cutting the overall 2021-22 decline to about 0.5%. Longer term, Rabobank forecasts for 2023 suggest a year-over-year milk production gain of just 0.5%.

“The current slowdown in global milk output is directly related to higher costs of production and weather events. In the past, production has recovered and surpassed previous peaks, but now there are structural issues that could limit a significant rebound in production from some key exporters,” said Andrés Padilla, senior analyst at Rabobank.

The weaker global milk production is being countered by a slowdown in demand, creating a scenario for moderate price declines in dairy commodities during the second half of 2022. Consumers are feeling the significant impact of inflation on their purchasing power, making it difficult for milk processors to pass increased production costs on to consumers.

China’s market will be critical to the global dairy demand outlook. The country is lowering dairy import volumes due to strong domestic milk production coupled with weaker consumer demand related to COVID-19-related measures, contributing to higher dairy product and inventories.

Global dairy product prices declined in May

The average global cost of dairy products declined in May after increasing for eight consecutive months, according to the latest United Nations’ Food and Agriculture Organization (FAO) Food Price Index.

The FAO Dairy Price Index includes global average prices for butter, cheese, skim milk (SMP) and whole milk powders (WMP). The May 2022 index decreased about 3.5% from April 2022 but remained almost 17% higher than May 2021.

World prices of all milk products fell, with milk powders declining the most despite persistent supply tightness, underpinned by the continued COVID-19 lockdown in China. Butter prices also dropped significantly due to weaker import demand in tandem with some improvements to supplies from Oceania and limited internal sales in Europe. Meanwhile, robust retail sales and high demand from restaurants ahead of the summer holidays in the Northern Hemisphere prevented cheese prices from falling significantly, despite weakened global import demand.

The FAO Food Price Index is a measure of the monthly change in international prices of a basket of five food commodities – cereal, vegetable oil, dairy, meat and sugar.