According to the December USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2021 milk production projection was reduced two million pounds from the previous month on smaller dairy cow numbers and lower milk per cow yields, reaching a 13 month low projected level. 2021 projected milk production equates to a 1.6% YOY increase from 2020 levels, which would finish below the 2020 growth rate of 1.9%.

U.S. milk production volumes are expected to increase by an additional 0.7% throughout 2022, although the 2022 milk production projection was reduced four million pounds from the previous month as lower forecasted cow numbers and milk per cow yields were carried forward. The 2022 YOY increase in U.S. milk production volumes would be the smallest experienced throughout the past three years and the second smallest experienced throughout the last nine years.

2021 dairy export forecasts were reduced from the previous month on a milk-fat basis on weaker sales of butterfat products but raised from the previous month on a skim-solids basis on stronger global demand for lactose. 2021 dairy import forecasts were raised from the previous month on a milk-fat basis on higher imports of cheese and butterfat products while remaining unchanged on a skim-solids basis.

2022 dairy export forecasts were raised from the previous month on both a milk-fat and skim-solids basis on larger shipments of butterfat, lactose and other dairy products. 2022 dairy import forecasts were unchanged from the previous month on both a milk-fat and skim-solids basis.

2022 projected dairy export volumes equated to 18.3% of total U.S. milk solids production, reaching a record high projected level, 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 reach a record high annual level for the third consecutive year.

2021 butter, cheese and dry whey price forecasts were raised from the previous month on current prices and strength in demand, while the nonfat dry milk price forecast was unchanged from the previous month. The 2021 Class III milk price forecast of $17.05/cwt was raised $0.10/cwt from the previous forecast but remained 6.1% below the previous year price level. The 2021 Class IV milk price forecast of $16.05/cwt was raised $0.05/cwt from the previous forecast, finishing 19.0% above the previous year price level. The 2021 All-Milk price forecast of $18.60/cwt was raised $0.10/cwt from the previous forecast, finishing 1.5% above the 2020 price level.

2022 butter, cheese, dry whey and nonfat dry milk price forecasts were all raised from the previous month on lower expected milk supplies. The 2022 Class III milk price forecast of $18.15/cwt was raised $0.40/cwt from the previous forecast, finishing 6.5% above the previous year’s projected price level. The 2022 Class IV milk price forecast of $19.00/cwt was raised $0.30/cwt from the previous forecast, finishing 18.4% above the previous year’s projected price level. The 2022 All-Milk price forecast of $20.75/cwt was raised $0.50/cwt from the previous month, finishing 11.6% above the previous year’s projected price level and reaching an eight year high level, overall.