Cheese Production Up 5% in 2022
Published: Friday, April 15, 2022
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department raised its estimate for 2022 milk production in last Friday's World Agricultural Supply and Demand Estimates report, citing expected higher dairy cow numbers.
Price forecasts for cheese and butter were raised from the previous month on tighter stocks and firm demand. Non-fat dry milk prices were raised fractionally while whey prices were lowered, as U.S. prices are expected to become competitive with international prices. Milk price projections were also raised.
2022 production and marketings were estimated at 226.3 and 225.3 billion pounds, respectively, up 300 million pounds on both. If realized, 2022 production would mirror output in 2021.
Meanwhile, U.S. cheese vats "got milk" in February, despite milk output being down 1 percent from February 2021. The Dairy Products report shows total cheese production slipped to 1.109 billion pounds, down 5.3 percent from January, but was up a bearish 6.3 percent from February 2021. Cheese stocks, you'll recall, were up 2 percent from a year ago, according to the month's Cold Storage report. Cheese output for the first two months of 2022 totaled 2.3 billion pounds, up a hefty 4.7 percent from the same period a year ago.
Wisconsin produced 278.3 million pounds of the February total, down 2.9 percent from January but 5.3 percent above a year ago. California provided 201.6 million pounds, down 3.4 percent from January but 4 percent above a year ago. Idaho vats added 73.0 million pounds, down 16.6 percent from January but unchanged from a year ago.
Italian cheese totaled 469.9 million pounds, down 6.7 percent from January but 6 percent above a year ago. YTD Italian stands at 973.5 million pounds, up 5.3 percent from a year ago.
American-type cheese, at 444.4 million pounds, was down 5.8 percent from January but 4.3 percent above a year ago. YTD output, at 916 million pounds, was up 1.7 percent. Mozzarella output totaled 360.8 million pounds, up 4.4 percent from a year ago, with YTD at 755.6 million, up 4.9 percent.
Cheddar, the cheese traded at the CME, totaled 312.3 million pounds, down 20.2 million pounds, or 6.1 percent, from January's output, which was revised down 4.9 million pounds, but was up 11.8 million pounds, or 3.9 percent, from February 2021, ending four consecutive months that Cheddar output was below that of a year ago.
Butter churns produced 183.6 million pounds, down 10.4 million pounds, or 5.4 percent, from January, and 2.7 million, or 1.4 percent, below a year ago, eighth consecutive month output was below a year ago. YTD butter stands at 377.7 million pounds, down 4.6 percent from a year ago. Butter stocks were down 26 percent from February 2021.
Yogurt output totaled 373 million pounds, down 2.1 percent from a year ago, with YTD output at 745.9 million pounds, down 2.7 percent.
Dry whey production fell to 75 million pounds, down 5.4 million pounds, or 6.7 percent, from January and 300,000 pounds, or .4 percent, below a year ago. YTD is at 155.4 million pounds, down 2.5 percent.
Dry whey stocks climbed to 63 million pounds, up 6.4 million, or 11.4 percent, from January, but were 6.9 million pounds, or 9.9 percent, below those a year ago.
Nonfat dry milk output totaled 171 million pounds, up 700,000 pounds, or .4 percent, from January, but was down 12.6 million, or 6.9 percent, from a year ago. YTD powder was at 341.3 million pounds, down 10.6 percent. Stocks climbed to 288.8 million pounds, up 27.2 million pounds, or 10.4 percent, from January, but were down 54.9 million pounds, or 16 percent, below those a year ago.
Skim milk powder output fell to 29.6 million pounds, down 13.8 million pounds, or 31.8 percent, from January, but were down 2 million, or 6.4 percent, below a year ago. YTD SMP was at 73 million pounds, up 8 percent from a year ago.
Chicago-based StoneX Dairy Group stated in its April 4 Early Morning Update, "When we peel back the layers it either looks like the USDA has overstated cheese and butter production or understated February milk production."
Concern over the falling global milk supply wasn't enough to pause the slippage in the Global Dairy Trade auction. Event number 305 saw its weighted average fall 1 percent, after slipping .9 percent on March 15.
Traders brought 47.4 million pounds to market, down from 51.5 million on March 15, and the smallest since May 18, 2021. The average metric ton price fell to $4,981, down from $5,039 in the last event.
Anhydrous milkfat led the declines, down 2.5 percent, after it inched up .4 percent last time. Butter was off .6 percent, following a 1.8 percent descent. Whole milk powder was down 1.5 percent, after dropping 2.1 percent, and lactose rounded out the losses, off .6 percent.
Buttermilk powder led the gains, up 6.3 percent, after not trading last time. GDT Cheddar was up 2.7 percent, after inching .3 percent higher, and skim milk powder was up 1 percent, after a 1.6 percent rise on March 15.
StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $3.1258 per pound, down 3 cents, after losing 5.7 cents on March 15, and compares to CME butter which closed last Friday at a bargain $2.7825. GDT Cheddar, at $2.9355, was up 2.7 cents, and compares to Friday's CME block Cheddar, a steal at $2.32. GDT skim milk powder averaged $2.0859 per pound, up from $2.0615. Whole milk powder averaged $2.0558 per pound, down from $2.0849. CME Grade A nonfat dry milk closed last Friday at $1.8225 per pound.
Volume purchased by the North Asia region, which includes China, has been running weak since July, says StoneX, and weakened even further in this event. Purchases by North and South America were also down.
A big factor in global dairy trade is, and will be, milk output. The April 4 Daily Dairy Report warned, "The global slowdown in milk production worsened as input costs increased in the world's major dairy exporting regions. Combined output in the United States, Europe, Australia, New Zealand and Argentina fell 1.8 percent in January, compared to year-earlier levels. Year-over-year milk collections in the EU-27 fell .7 percent in January, the seventh straight month of contraction, according to data from the Milk Market Observatory."
The April 7 DDR adds that Australian milk production fell 6.1 percent in February from February 2021 to just under 1.3 billion pounds, according to Dairy Australia. Season-to-date production of 13.5 billion pounds, is 3.1 percent lower than the comparable period in the previous season, according to the DDR, and Dairy Australia expects production to drop between 1 percent and 3 percent for the season. Poor weather and declining cow numbers are to blame, according to the DDR.
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