Monthly forecast update – Apr. 2022

This month’s forecast is moving higher again. Milk production remains behind last year, and strong demand with widespread concerns of food scarcity has prompted a forecast with well-above-average prices for 2022. Additionally, Ceres increased the 2023 forecast during the first half of the year as it could be difficult for prices to settle immediately. The 2024 outlook remains similar to last month – with prices correcting lower but above the five-year average. As of this weekend, there is a more significant push for European nations to step away from Russian natural gas, oil, and fuel purchases. That event is not in the current forecast and remains a risk to NDM/SMP and butter prices moving higher and cheese prices tempering. European policymakers have a contingency plan that includes curtailing natural gas to milk powder driers for extended periods to make more natural gas available to the market when needed. European processors have more swing capacity suggesting more milk could head to cheese processing later this year, further constraining SMP and butter available to the global market. That event could be sufficient to send NDM/SMP prices above $2/lb and butter above $3/lb.

  • Increased the 2022 Cheddar block and barrel forecasts. Raised the 2023 cheese price above the five-year average but below the current year. While February 2022, cheese production increased +6% vs. last year – the stock build was less. That may indicate that sales are brisk.
  • Increased the 2022 butter price with several months projected above $3/lb. Presently, US exporters are shipping a good amount of butter overseas. Additionally, the higher production in February did not head to stocks suggesting good sales velocity.
  • Maintained the 2022 NDM/SMP but increased the EU and NZ SMP prices for the rest of the year. Increased the 2023 NDM/SMP forecast – prices could ease, but they may stay higher than expected.
  • Reduced the whey forecast for 2022. Again, the curtailment in Europe could impact whey – that outcome is less clear.
  • Increased the buttermilk forecasts – higher butter and stable to modestly higher NDM could lift that price.