US milk price drops, production grows

In December, the 24 most important dairy states in the US produced 8,22 million tons, an increase of 0,9% compared to the same month in 2021. This means that growth is weakening somewhat. In the four previous months, production increases were always above 1%.

Narrow growth in 2022
On balance, American dairy farmers produced 102.793 million tons last year. This is an increase of 0,2% compared to the previous year and also a narrow improvement on the existing record. The increase is being slowed down because supply in the first half of 2022 was below the 2021 level. States where production clearly increased are Texas and New York.

Milk price down
The fact that production growth declined in December is probably because milk prices are moving downwards. Just like in Europe, American dairy farmers received sky-high prices last summer, but the downward movement has started since November. The class 3 milk price, calculated based on the valorization of cheese, was $20,50 per CWT in December. Converted to more than €40 per 100 kilos. Other products such as milk powder and butter are also under pressure on the American market, despite excellent export figures. 

Growth will continue in 2023
This development was a reason for the USDA to lower the expected milk production for 2023 compared to previous forecasts. However, small growth is still predicted compared to 2022. What is also likely to slow down the growth of milk supply are the low roughage stocks due to the drought last summer. The USDA has been measuring crude inventories since the mid-60s, but never before have inventories been as low as they are now.