According to the September USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2021 milk production projection was reduced three million pounds from the previous month on smaller dairy cow numbers and lower milk per cow yields. 2021 projected milk production equates to a 2.3% YOY increase from 2020 levels, which would remain the largest growth rate experienced throughout the past seven years.

U.S. milk production volumes are expected to increase by an additional 1.2% throughout 2022, although the 2022 milk production projection was reduced six million pounds from the previous month as lower forecasted cow numbers and milk per cow yields were carried forward.

2021 dairy export forecasts were raised from the previous month on both a milk-fat and skim-solids basis on strong sales of butter, cheese, whey and skim milk powder. 2021 dairy import forecasts remained unchanged on both a milk-fat and skim-solids basis.

2022 dairy export forecasts were also raised from the previous month on both a milk-fat and skim-solids basis as U.S. butter prices are expected to remain competitive while global demand for whey and skim milk powder is expected to remain strong. 2022 dairy import forecasts were raised slightly on a milk-fat basis on strong demand for imported cheese, while remaining unchanged on a skim-solids basis.

2022 projected dairy export volumes equated to 18.1% 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 equal to the record high level projected throughout 2021.

2021 butter, cheese and nonfat dry milk price forecasts were raised from the previous month on improving demand and lower production, while the dry whey price remained unchanged. The 2021 Class III milk price forecast of $16.65/cwt was raised $0.10/cwt from the previous forecast but remained 8.3% below the previous year price level. The 2021 Class IV milk price forecast of $15.55/cwt was raised $0.40/cwt from the previous forecast, finishing 15.3% above the previous year price level. The 2021 All-Milk price forecast of $18.15/cwt was raised $0.20/cwt from the previous forecast but remained 0.9% below the 2020 price level.

2022 butter, cheese and nonfat dry milk price forecasts were also raised from the previous month on improving demand and lower production, while the dry whey price remained unchanged. The 2022 Class III milk price forecast of $16.45/cwt was raised $0.30/cwt from the previous forecast but remained 1.2% below the previous year’s projected price level. The 2022 Class IV milk price forecast of $16.05/cwt was raised $0.75/cwt from the previous forecast, finishing 3.2% above the previous year’s projected price level. The 2022 All-Milk price forecast of $18.40/cwt was raised $0.55/cwt from the previous month, finishing 1.4% above the previous year’s projected price level and reaching a three year high level, overall.