Monthly Forecast Update – Sept. 2021

Forecast updates

  • Added 2024 to the forecast file for all products.
  • Expect that US milk production is in a holding pattern and could decline in 2022 – that could support prices and keep declines from dropping to extremely low levels. EU milk should maintain its current course with a small YoY gap.
  • After reviewing the July Dairy Product report adjusted Q4 2021 higher – removing the updates from last week.
    • Still expect a wide block-barrel spread through the end of the year.
    • Given demand, improving exports, and seasonally moderating production – that could support 40# block prices through the end of the year. Barrels could increase but are unlikely to catch blocks as burger & sandwich season winds down.
    • Have block and barrel annual averages similar through 2022.
      • Expect some increases in 2023 as global demand continues to increase absorbing more US production.
      • Forecast 2024 prices lower due to the likelihood of new capacity online.
    • Increased butter forecast as stocks are declining and, for now, demand remains positive. A significant slowdown in foodservice business could cause prices to dip earlier than noted in the forecast. The forecast assumes a slowdown in foodservice compared to the summer, but better than last year.
      • The 2022 forecast assumes the butter price begins to rise toward a $2/lb average given stronger butterfat demand from China; higher domestic AMF product and growing demand for other cream use.
      • The current forecast assumes a decline in December that continues into January 2022, but that prices start to improve late Q1 2022 due to 1) higher exports and 2) lower stocks.
    • Maintained higher NDM forecast with expectations prices could retreat by Q2.
      • Reports suggest that Europe could have extremely low stocks;
      • US could remain less than EU and NZ prices due to shipping issues and widely available milk that could displace NDM to cheese vats.
      • Prices could be prone to moving up if China has a strong fall pull – the converse is also true. The forecast assumes China continues to pull at modestly higher levels compared to last year.
    • Whey prices should ease, but it could take months for prices to show up in NDPSR. Central prices are dropping faster. Lactose prices are mostly steady. Whey prices may stay out of the 30s due to the strong demand for WPC80 products currently. New capacity could impact prices 2023/2024.
    • Assume demand during the fall-winter is less than summer due to Covid-19, but better than last year.