According to the August USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2021 milk production projection was reduced one million pounds from the previous month on slightly lower 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 1.4% throughout 2022, although the 2022 milk production projection was reduced four million pounds from the previous month as lower forecasted cow numbers were carried forward.

2021 dairy export forecasts were reduced slightly from the previous month on a milk-fat basis but raised slightly on a skim-solids basis on stronger expected sales of whey and lactose. 2021 dairy import forecasts were raised on both a milk-fat and skim-solids basis on firm demand for butterfat, cheese and milk proteins.

2022 dairy export forecasts were raised on a milk-fat basis as U.S. butter prices are expected to be competitive, while remaining unchanged on a skim-solids basis. 2022 dairy import forecasts were raised on a milk-fat basis on continued strong demand for butter and butterfat, while remaining unchanged on a skim-solids basis.

2022 projected dairy export volumes equated to 17.9% 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 3.6% of total U.S. milk solids production, on pace to reach a four 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 weaker than previously expected demand. The 2021 Class III milk price forecast of $16.55/cwt was reduced $0.25/cwt from the previous forecast, finishing 8.9% below the previous year price level. The 2021 Class IV milk price forecast of $15.15/cwt was also reduced $0.25/cwt from the previous forecast but remained 12.3% above the previous year price level. The 2021 All-Milk price forecast of $17.95/cwt was reduced $0.35/cwt from the previous forecast, finishing 2.0% below the 2020 price level.

2022 butter, cheese, dry whey and nonfat dry milk price forecasts were also reduced from the previous month on weaker than expected domestic demand and higher forecasted beginning stocks. The 2022 Class III milk price forecast of $16.15/cwt was reduced $0.60/cwt from the previous forecast, finishing 2.4% below the previous year’s projected price level. The 2022 Class IV milk price forecast of $15.30/cwt was reduced $0.45/cwt from the previous forecast but remained 1.0% above the previous year’s projected price level. The 2022 All-Milk price forecast of $17.85/cwt was reduced $0.65/cwt from the previous month, finishing 0.6% below the previous year’s projected price level and reaching a four year low level, overall.