According to the May USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2021 milk production projection was raised two million pounds from the previous month on an increase in dairy cow numbers. 2021 projected milk production equates to a 2.4% YOY increase from 2020 levels, which would be the largest growth rate experienced throughout the past seven years.

The initial 2022 milk production projection called for a 1.1% increase from 2021 projected levels as continued increases in milk per cow yields are expected to more than offset a slight reduction in dairy cow numbers.

2021 dairy export forecasts were raised on a milk-fat basis on higher expected exports of butterfat products but reduced on a skim-solids basis as weaker than anticipated powder sales more than offset higher than expected whey product exports. 2021 dairy import forecasts were raised on both a milk-fat and skim-solids basis on recent import data and higher than expected butterfat imports.

The initial 2022 dairy trade forecasts called for reduced milk-fat exports as higher domestic butter prices are expected to reduced competiveness in world markets. 2022 skim-solid export volumes are projected higher, however, on strong global demand and weaker domestic prices for cheese, whey and powder. 2022 dairy imports are expected to decline from the previous year on both a milk-fat and skim-solids basis.

2022 projected dairy export volumes translated to 17.5% of total U.S. milk solids production, unchanged from the record high levels projected throughout the previous year, while import volumes were equivalent to 3.4% of total U.S. milk solids production, on pace to reach an eight year low level. 2022 net dairy trade is projected to reach a record high level for the third consecutive year.

2021 cheese, dry whey and nonfat dry milk price forecasts were raised from the previous month while butter prices were reduced slightly from the previous month. The 2021 Class III milk price forecast of $17.70/cwt was raised $0.60/cwt from the previous forecast but remained 2.5% below the previous year price level. The 2021 Class IV milk price forecast of $15.75/cwt was raised $0.60/cwt from the previous forecast, finishing 16.8% above the previous year price level. The 2021 All-Milk price forecast of $18.95/cwt was raised $0.55/cwt from the previous forecast, finishing 3.4% above the 2020 price level.

Initial 2022 cheese, dry whey and nonfat dry milk prices were reduced from the previous year’s projected price levels while 2022 butter prices were projected above previous year levels. 2022 projected cheese prices were reduced on an increased proportion of milk expected to move into cheese production while dry whey and nonfat dry milk prices were projected lower on increased competition within international markets.

The initial 2022 Class III milk price forecast of $16.85/cwt was 4.8% below the previous year’s projected price level while the initial 2022 Class IV milk price forecast of $15.70/cwt was 0.3% below the previous year’s projected price level. The initial 2022 All-Milk price forecast of $18.50/cwt was 2.4% below the previous year’s projected price level.