According to the July USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2021 milk production projection was reduced three million pounds from the previous month as slower expected growth in milk per cow yields more than offset higher forecasted cow numbers. 2021 projected milk production equates to a 2.5% YOY increase from 2020 levels, which would remain the largest growth rate experienced throughout the past 15 years.

U.S. milk production volumes are expected to increase by an additional 1.5% throughout 2022 as higher forecasted cow numbers are carried forward.

2021 and 2022 dairy export forecasts were raised on a skim-solids basis on increased demand for whey, skim/nonfat dry milk powder and lactose, while remaining unchanged from the previous month on a milk-fat basis. 2021 and 2022 dairy import forecasts were raised from the previous month on both a skim-solids and milk-fat basis on stronger expected imports of cheese and butterfat containing products.

2022 projected dairy export volumes translated to 17.8% of total U.S. milk solids production, down slightly from the record high level projected throughout the previous year, while import volumes were equivalent to 3.5% of total U.S. milk solids production, on pace to reach an eight year low level. 2022 net dairy trade is projected to finish slightly below the record high level projected throughout 2021.

2021 butter, cheese, dry whey and nonfat dry milk price forecasts were reduced from the previous month on relatively high stocks and weaker than previously expected demand. The 2021 Class III milk price forecast of $16.80/cwt was reduced $0.65/cwt from the previous forecast, finishing 7.5% below the previous year price level. The 2021 Class IV milk price forecast of $15.40/cwt was reduced $0.45/cwt from the previous forecast but remained 14.2% above the previous year price level. The 2021 All-Milk price forecast of $18.30/cwt was reduced $0.55/cwt from the previous forecast, finishing 0.1% below the 2020 price level.

2022 butter and cheese price forecasts were reduced from the previous month on larger expected stocks and higher production. Nonfat dry milk and dry whey price forecasts were unchanged from the previous month. The 2022 Class III milk price forecast of $16.75/cwt was reduced $0.40/cwt from the previous forecast, finishing 0.3% below the previous year’s projected price level. The 2022 Class IV milk price forecast of $15.75/cwt was reduced $0.20/cwt from the previous forecast but remained 2.3% above the previous year’s projected price level. The 2022 All-Milk price forecast of $18.50/cwt was reduced $0.25/cwt from the previous month but remained 1.1% above the previous year’s projected price level.