Excellent prospects for the American dairy market

The average estimated milk price (all milk) for 2022 amounts to $20,75 per CWT (50,8 kilos). This would be the highest milk price in years. In recent years, the milk price has been under pressure due to overproduction and the trade wars that former President Donald Trump fought with China, Canada and Mexico, among others. That pressure is now over.

Currently, the US dairy sector benefits from high domestic consumption figures and good export opportunities on the world market. In spite of the logistical disruptions dairy export figures remain intact. Expressed in Milk Sollids, the export volume in October was 186.000 tons, which is 0,9% lower than the same month last year. At the same time, the underlying value rose by 17,3% to $97,5 million. This is due to the increased dairy prices.

Outlook 2022
USDA expects favorable market conditions for next year. The average year-round price of cheese is estimated at $3.950 and butter at $4.300 per tonne. This is fractionally lower than current price levels, which means that the higher prices - with some fluctuations in between - are likely to hold. At the same time, estimating prices for the whole of 2022 is a piece of cake, given that the outlook is relatively far into the future.

The growth of the American milk pool for 2022 is smaller than previously thought. This is partly due to flattening growth in milk production per cow. The USDA estimates production at around 102 million tons, slightly lower than the estimated production for this year. Since the summer, the milk supply has declined considerably due to the rapid increase in raw material prices. This leads to high feed costs and this also has an inhibiting effect on production.