Monthly forecast update – July 2021

• At the mid-point of the year, milk production is still running above last year’s levels and that is resulting in more dairy product production. Exports remain elevated compared to last year, but USDA’s pandemic-driven buying is slowing. Foodservice orders are recovering and that is offsetting slower retail sales.
• Data is competing suggesting that prices could still recover into the second half of the year, but that there is a chance that if exports are unable to remove excess milk solids prices could retreat. Presently, international demand and modest milk production growth are keeping US dairy products headed off-shore. Should exports slow – that could cause prices to decline.
• The forecast still reflects higher prices into late Q3 through Q4; however, the top-end is less than previous forecasts.
• The forecast expects that whey prices could retreat further as China is buying less product from the United States and replacing that product with less expensive whey.
• Expect that butter prices can reach $1.90s when the holiday demand season kicks in.
• A project that the spot CME cheese price will continue to improve with prices lifting throughout July, but lifting at a faster pace in August. Expect the block-barrel spread to remain moderate through August. When barrel seasonal demand passes, expect the spread to widen.
• Expect NDM prices to return to the 130s in August/September.
• All of these changes will impact milk prices. The Class I price, for now, is forecast to peak in November and December.