Weekly forecast update – Nov. 25, 2022

Forecast updates

  • Adjusted Q1 2023 cheese prices higher lower;
  • Adjusted NOV 2022 for spot market adjustments;
  • Adjusted 1H 2023 buttermilk prices lower.

Milk Market

Milk moved to manufacturing plants this week during the Thanksgiving holiday. On Monday, milk should return to bottling for the final weeks of the holiday season, but peak demand is likely behind markets. But, much more milk will head to manufacturing in the year’s final week. USDA announced the December 2022 advanced Class I milk price at $22.58/cwt, $1.51 less than in November. That made the 2022 Class I price average $23.66 – the highest on record, surpassing 2014 by 37¢.

USDA released the October 2022 milk production data this week. Output totaled 18.85 billion pounds, 1.2% more than the previous year and 0.15% less than September on a daily average basis. The US milking herd increased to 9.42 million, head up 0.33% compared to last year. Western states continue to add more cows, but Midwest and east states are less than a year ago, except for Georgia and Indiana. Output-per-cow 2,000 pounds per cow, up 0.83% compared to last year – this was the primary driver of higher production in October. All states except Arizona, California, Florida, and South Dakota increased output-per-cow. Six states, including California, produced less milk than last year, but gains elsewhere more than offset those declines.

Cheese Market

During the shortened holiday trading week, spot barrels plummeted to the low-$1.80s while blocks conceded just 5¢. Barrels averaged $1.8217/lb, down 18.73¢ from the previous week with two loads changing hands. Cheddar blocks averaged $2.1833, down 4.27¢ with no loads trading. Reports suggest that western barrels are floating around the market weighing on prices. It may be the result of fewer exports in the final month of the year. While blocks are not tight, some indicate that demand remains positive for now and that is keeping product from the market.

US cheese stocks totaled 1.45 billion pounds as of Oct. 31 – 0.03% less than last year. This year reflected a more significant month-to-month decline than the last two years. That is consistent with anecdotal reports indicating that demand was robust throughout October and November, driven by foodservice demand. American cheese stocks were 830.8 million pounds – 1.5% less than the previous year. That was a 12 million pound drop, far more than last year’s less than one million pounds. That may help explain the recent uptick in cheese prices.

Butter Market

CME spot butter prices increased throughout the short holiday trading week. Butter averaged $2.9258/lb, up 1.13¢ from the previous week. Cream moved to butter churns over the weekend. While cream will move back to consumer use for a few weeks, butter processing will pick up throughout December. Markets are still forecasting a sizeable decline headed into December – indicating 30 cent decline that could begin as soon as next week. Demand over the last week will be instrumental to 2022 carry-out stocks as faltering demand in September and October has led to YoY stock gaps closing.

US butter stocks totaled 239.6 million pounds on Oct. 31 – 14.1% less than last year. The YoY gap is shrinking compared to earlier months. Higher prices again took a toll on demand. The MTM decline was 27.8 million pound from September to October compared to 44-45 million pounds over the last two years. At the current rate, butter stocks could land between 2020 and 2021 carry-out stock levels.

China’s October butterfat imports jumped to 22.4 million pounds – the most for that month on record. That was 59% more than last year. YTD imports are now 4.6% higher than in the same period last year. Over 90% of the imports came from New Zealand, which were 1.2X the imports from last year. Imports from elsewhere were similar to last year’s levels.


Spot NDM prices were mixed this week. CME prices averaged $1.4142/lb, down 2.63¢ compared to the previous week. Dairy Market News central mostly was unchanged at $1.445/lb; western mostly increased 2.25¢ to $1.48/lb. NDPSR NDM dropped 1.05¢ to end the week at $1.4855/lb. Markets remain unsettled and prone to moving lower as more milk heads to manufacturing during the final weeks of the year. While most are hoping that China could return to the market, widespread protests in Shanghai over recent lockdowns could result in the central government cracking down and arresting dissenters – undermining the small steps the government took in early November toward reducing Covid-19 tracking.

China’s imports are rising for butter and cheese. Still, WMP and SMP remain stunted as the nation continues to work through stockpiles built during earlier lockdowns that destroyed demand and milk powder production increased. SMP imports were 49.2 million pounds, 32% less than the previous year and 14% lower than September on a daily average basis. SMP imports from New Zealand were unchanged, but volumes from the United States and Europe were sharply lower. WMP imports were 59.8 million pounds in October, nearly 17% less than the previous year. Higher imports from New Zealand were more than offset by declines from Australia and Uruguay.

Whey & Lactose Products

US whey price series were primarily stable this week. CME whey prices were unchanged at 44¢, from the previous week. DMN western mostly whey prices were 48.5¢ and unchanged from the prior week; central prices were unchanged at 44¢. Lactose prices were unchanged at 48.5¢. With little new information, prices continue to track near unchanged.

China imported 123.8 million pounds in October, up 12.4% compared to last year. That was the third consecutive month of improved YoY performance. Imports from France fell 71% compared to last year. China imported 25% more whey from the United States, followed by Belarus and Poland.