Monthly Forecast Update – May 2021

Given current international demand and better-than-expected US foodservice and government pull – increased the Class IV and Class III milk prices.
For Class III, that increased the 2021 average price to $18.44/cwt., up from $17.73 last month.
Q2 and Q3 reflected most of the increases. Adjusted May and June prices higher given strong demand at the CME supporting prices; still, Ceres forecast is less than current Class III
milk futures forecasts.

Increased CME blocks to average $1.8188/lb. this year – that is approximately 5-cents more than last month’s estimate.

Increased CME barrels to average $1.7151/lb. this year – that is nearly 7-cents higher than last month’s forecast.

That resulted in a lower block-barrel spread for the year.

Increased whey by 1.5-cents vs. last month with most of those increases in Q4 2021 – do not expect the fall off to happen in this year.

We increased the Class IV milk price forecast by 62-cents/cwt. with an average of $16.33 for the rest of this year.
Substantially increased the 2022 and 2023 prices by raising both butter and NDM price expectations.

Increased the average CME butter and NDM prices this year by five and 6-cents, respectively, compared to last month.

That makes the Ceres NDM and futures prices comparable for Q2 forward.

Ceres increased the butter forecast – lifting prices to reach the $2 mark by Q3.

The most significant change to the forecasts is the increases in 2022 and 2023.

In turn, those increased lifted the Class I and II skim and butterfat forecasts from this point forward. The forecast excludes any potential changes to the Class I formula as it is
unlikely to impact 2021 and 2022 prices.
Most of the Class I price came from increasing the Class IV milk price.

Should demand from Asia or the United States slow – that could cause a re-forecast. For now, the indications suggest that prices could remain elevated through Q3/Q4 when China returns as
a significant buyer.

The 2022 and 2023 increases focus on slower-than-expected milk production growth rates that have been unable to keep pace with expanding dairy demand.