Dairy Market Watch - July 2021

Katelyn Walley-Stoll, Business Management Specialist and Team Leader
Southwest New York Dairy, Livestock and Field Crops Program

July 27, 2021

July 16th's Livestock, Dairy, and Poultry Outlook showed the softening of what was probably an overly optimistic milk price forecast. USDA's all milk price forecast for 2021 is $18.30,  Class III at $16.80, and Class IV or $15.40.

 

An improved export market seems to be helping industry prices recover. Red meat exports increased by 7.2% in 2021 compared to 2020, beef in particular by 16%. Dairy exports are increasing by almost 9% and should remain at that level through 2022 as Mexico, China, and Southeast Asia all up their purchases. While these numbers are all relatively large increases, there is strong international prices competition as the US, and worldwide, economy remains unsteady. 

 

However, wholesale purchases have slowed or declined from their pickup as things started "returning to normal" across the country. While Fall would typically bring increased school orders and glimpses of a robust holiday season, the coming months remain uncertain as the Delta variant continues to work its way through vulnerable and unvaccinated communities. The prices for 40-pound cheese blocks (down 9 cents), 500-pound barrels (down 8 cents), and butter (down 1 cent) all decreased from June to July.

 

Additionally, cow numbers were higher than expected and continue to rise. May's estimated number of milk cows was 9.505 million, and 5,000 increase from April. According to USDA, this increase in cow numbers has been continual since July 2020.  May to June's increase did seem to even out a bit.

 

Perhaps strong beef prices, tight forages, and pricey grain/commodity prices will pull the reins on cow numbers moving into 2022, helping to reduce milk production and improve prices - but that situation includes a lot of moving pieces that would all need to come together and stay around for a while. From April to May we didn't see a huge milk per cow increase, reflective of high feed costs and seasonal weather conditions.

 

Another thing to watch will be the Western drought situation. This will bring decreased milk per cow, reduced forage harvests, and have caused some heat-related plant closures.

 

In their recent dairymarkets.org podcast, Bob Cropp and Mark Stephenson shared that the dairy stocks have tightened, which should help give prices a boost as well. Cheese stocks declined from May to June and Butter remained stable. They also shared, what we saw here in NY, that a lot of folks saw a return of positive PPD's this month as the Class III and Class IV prices moved closer together.

 




Dairy Market Watch 2021 07 (July 2021) (pdf; 2016KB)


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