Executive Summary

U.S. dairy product production figures provided by the USDA were recently updated with values spanning through Dec ’20. Highlights from the updated report include:

• Dec ’20 U.S. butter production finished 11.8% higher on a YOY basis, remaining at a record high seasonal level for the sixth consecutive month.
• Dec ’20 U.S. cheese production finished 0.5% higher on a YOY basis, remaining at a record high seasonal level for the second consecutive month, while dry whey production finished higher on a YOY basis for the first time in the past five months, increasing by 2.3% and reaching a three year high seasonal level.
• Combined production of U.S. nonfat dry milk and skim milk powder increased 6.8% on a YOY basis during Dec ’20, reaching the highest monthly figure on record. Nonfat dry milk production increased 24.1% YOY throughout the month, reaching a record high monthly level and more than offsetting a 36.9% YOY decline in skim milk powder production.

Additional Report Details

Butter – Production Remains at a Record High Seasonal Level, Finishes up 11.8% YOY

According to the USDA, Dec ’20 U.S. butter production finished 11.8% higher on a YOY basis, remaining at a record high seasonal level for the sixth consecutive month and reaching the second highest monthly figure on record. The YOY increase in butter production was the 17^th experienced throughout the past 19 months and the second largest experienced throughout the past nine years. Higher butter production experienced throughout the Central U.S. (+20.7%) and Western U.S. (+9.3%) more than offset a reduction in Atlantic U.S. (-7.5%) production experienced throughout the month. Previous month butter production figures were also revised 2.9% above levels originally stated.

’19-’20 annual butter production increased 5.6% YOY, reaching the highest annual level on record for the third consecutive year. ’20-’21 YTD butter production has increased by an additional 7.0% on a YOY basis throughout the first quarter of the production season.

Cheese – Production Remains at a Record High Seasonal Level, Finishes up 0.5% YOY

U.S. cheese production finished 0.5% higher on a YOY basis throughout Dec ’20, remaining at a record high seasonal level for the second consecutive month. The YOY increase in cheese production was the fifth experienced throughout the past seven months. Higher cheese production experienced throughout the Central U.S. (+3.3%) and Atlantic U.S. (+0.3%) more than offset a reduction in Western U.S. (-2.5%) production experienced throughout the month.

Cheddar cheese production increased 1.2% on a YOY basis throughout the month, while other-than-cheddar cheese production finished 0.2% higher YOY. The YOY increase in cheddar cheese production was the tenth experienced throughout the past 11 months while other-than-cheddar cheese production finished higher on a YOY basis for the first time in the past five months.

’19-’20 annual cheese production reached a record high annual level for the 19^th consecutive year, although the production growth rate of <0.1% was the smallest experienced over the 19 year period. Cheddar cheese production increased 1.1% throughout the year, more than offsetting a 0.4% YOY decline in other-than-cheddar cheese production. ’20-’21 YTD cheese production has increased by an additional 0.1% on a YOY basis throughout the first quarter of the production season.

Dry Whey – Production Increases to a Three Year High Seasonal Level, Finishes up 2.3% YOY

U.S. dry whey production finished 2.3% higher on a YOY basis throughout Dec ’20, reaching a three year high seasonal level. The YOY increase in dry whey production was the first experienced throughout the past five months. Higher dry whey production experienced throughout the Western U.S. (+11.2%) and Atlantic U.S. (+5.0%) more than offset a reduction in Central U.S. (-3.1%) production experienced throughout the month.

Combined whey protein concentrate (WPC) and whey protein isolate (WPI) production finished higher on a YOY basis for just the second time in the past 19 months during Dec ’20, increasing by 3.0%. Combined production of dry whey, WPC and WPI finished 2.6% higher on a YOY basis throughout the month.

’19-’20 annual dry whey production rebounded 1.1% YOY from the four year low level experienced throughout the previous production season. ’20-’21 YTD dry whey production has declined by 8.1% on a YOY basis throughout the first quarter of the production season, however, and is on pace to reach a six year low level.

NFDM/SMP – Combined Production Reaches the Highest Monthly Figure on Record, up 6.8% YOY

U.S. nonfat dry milk (NFDM) production increased 24.1% on a YOY basis throughout Dec ’20, reaching the highest monthly figure on record. The YOY increase in NFDM production was the fifth experienced in a row and the largest experienced throughout the past six years on a percentage basis. YOY increases in NFDM production were widespread and led by the Central U.S. (+50.8%), followed by the Western U.S. (+22.7) and the Atlantic U.S. (+4.8%). Previous month NFDM production figures were also revised 4.9% above levels originally stated.

Production of skim milk powder (SMP), which is more suited to the requirements of most global markets, finished lower on a YOY basis for the first time in the past eight months during Dec ’20, declining by 36.9% and reaching an eight year low seasonal level. Previous month SMP production figures were also revised 3.7% below levels originally stated. Combined production of NFDM and SMP remained 6.8% above previous year levels, reaching the highest monthly figure on record, as the increase in NFDM production more than offset the reduction in SMP volumes. The YOY increase in combined production of NFDM and SMP was the fifth experienced in a row

’19-’20 annual combined production of NFDM and SMP increased 5.2% YOY, reaching a record high level for the fourth consecutive year. NFDM production increased 3.2% YOY but remained slightly below historical highs, while SMP increased 11.7%, reaching a record high annual level. ’20-’21 YTD combined production of NFDM and SMP has increased by an additional 8.9% on a YOY basis throughout the first quarter of the production season as a 15.1% YOY increase in NFDM production has more than offset a 7.7% YOY decline in SMP production.

Overall, nonfat dry milk production increased most significantly YOY on a percentage basis during Dec ’20, followed by butter production, while skim milk powder production declined most significantly on a percentage basis throughout the month.