Preliminary data had October milk output at 18.5 billion pounds, down 0.5 percent from October 2020. The latest Dairy Products report shows where the milk went, or didn’t.

Cheese output totaled 1.147 billion pounds, up 1.1 percent from September and 0.9 percent above October 2020. Year-to-date (YTD) output hit 11.3 billion pounds, up 3.1 percent from the same period in 2020.

Italian style cheese totaled 489.8 million pounds, up 0.8 percent from September and 3.5 percent above a year ago. American type cheese, at 457.5 million pounds, was up 2 percent from September but 0.6 percent below a year ago. Mozzarella totaled 377.8 million pounds, up 1.7 percent from a year ago.

Cheddar, the cheese traded at the CME, totaled 320.7 million pounds, up 12.2 million pounds or 4 percent from September but 4.7 million pounds or 1.4 percent below a year ago. YTD Cheddar stands at 3.3 billion pounds, up 3.3 percent from 2020.

Less milk meant less powder. Nonfat dry milk output totaled 124.7 million pounds, up 5.5 million pounds or 4.6 percent from September but down 16.6 million or 11.7 percent below a year ago. Powder YTD totaled 1.7 billion pounds, up 3.9 percent. Stocks fell to 221.8 million pounds, down 42.5 million pounds or 16.1 percent from September and were down 13.7 million pounds or 5.9 percent below those a year ago.

Skim milk powder production amounted to 58.3 million pounds, down 4.9 million pounds or 7.7 percent from September and down 5 million pounds or 7.9 percent below a year ago. YTD SMP, at 467.7 million pounds, is down 19.3 percent from 2020.

The USDA lowered its estimate for both 2021 and 2022 milk production in the latest World Agricultural Supply and Demand Estimates report (WASDE), sixth month in a row, again citing lower expected dairy cow numbers and slower growth in milk per cow.

2021 production and marketings were estimated at 226.2 and 225.2 billion pounds respectively, down 200 million pounds on production from last month’s estimates and 100 million pounds lower on marketings. If realized, 2021 production would still be up 3 billion pounds or 1.3 percent from 2020.

2022 production and marketings were estimated at 227.7 and 226.6 billion pounds respectively, down 400 million pounds on both. If realized, 2022 production would be up 1.5 billion pounds or 0.7 percent from 2021.

Butter, cheese, and whey price forecasts for 2021 were raised from last month based on current prices and strength in demand. The nonfat dry milk (NDM) price forecast was unchanged.

The 2021 Class III milk price forecast was raised on higher cheese and whey prices and projected to average $17.05 per hundredweight, up a dime from last month’s estimate and compares to $18.16 in 2020 and $16.96 in 2019. The 2022 average was put at $18.15, up 40 cents from what was expected last month.

The 2021 Class IV forecast was raised on the higher butter price and should average $16.05, up a nickel from last month and compares to $13.49 in 2020 and $16.30 in 2019. The 2022 average was projected at $19, up 30 cents. Cheese, butter, NDM, and whey price forecasts for 2022 were raised on lower expected milk supplies, according to the WASDE.

Butter and milkfat pushed the Dec. 7 Global Dairy Trade auction higher, rising for the fourth consecutive event. The weighted average was up 1.4 percent, following the 1.9 percent advance Nov. 16 and 4.3 percent on Nov. 2.

Butter again led the gains, up 4.6 percent, following the 3.5 percent rise on Nov. 16 and 4.7 percent on Nov. 2. Skim milk powder was up 1.3 percent after a 1.4 percent rise, and whole milk powder inched up 0.6 percent after jumping 1.9 percent last time. GDT Cheddar was up 1 percent after jumping 2.2 percent in the last event.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.5627 per pound U.S., up 11.4 cents, after gaining 8.2 cents last time and 10.6 cents the time before that. CME butter closed Friday at a bargain $2.1225. GDT Cheddar, at $2.3676, was up 2.6 cents after gains of 4.8 cents on Nov. 16 and 28.7 cents on Nov. 2. Friday’s CME block Cheddar was at $1.8650. GDT skim milk powder averaged $1.6877 per pound, up from $1.6676. Whole milk powder averaged $1.8178 per pound, up from $1.8086. CME Grade A nonfat dry milk closed Friday at $1.6250 per pound.

October U.S. dairy exports were “decently impressive,” said HighGround Dairy’s Lucas Fuess in the Dec. 13 Dairy Radio Now broadcast, topping year ago levels for the ninth consecutive month, up 2.1 percent, and helped clear domestic stocks.

 Cheese totaled 78.5 million pounds, up a whopping 43.7 percent from October 2020. Cheese shipments were the strongest on record for the month with Mexico, accounting for 22 percent market share, according to HighGround Dairy, and up 61 percent from a year ago. Notable gains were also made to South Korea and Australia.

China remained the second largest destination, according to HGD, however exports were down 32 percent from 2020. Demand for whey declined, mostly to China, down 56 percent from last year. Nonfat dry milk exports to China were down 32 percent.

The global market holds good promise and the Dec. 3 Dairy and Food Market Analyst (DFMA) cites the lack of global milk supplies and the potential market share gains from American exporters. Shipping delays are also improving.

Unfortunately, domestic demand may slip, according to the DFMA. “Data from restaurant analytics firm Open Table shows a significant slowing in restaurant traffic around the globe. In the 7 days before the omicron news restaurant traffic in the U.S. had been within 1 percent of pre-coronavirus levels, but has moved to be down 10 percent in the latest week. In other countries Open Table shows the same trend.”

Back on the farm, dairy margins were steady to mixed the second half of November, according to the latest Margin Watch (MW) from Chicago-based Commodity & Ingredient Hedging LLC., as “Milk prices and projected feed costs largely traded sideways but held firm.”

The MW stated; “USDA Cold Storage data provided some color around recent strength in Class IV milk prices relative to Class III, citing the latest butter and cheese data which I recently reported. It added that “Strong global demand and production declines in both New Zealand and the EU are helping support U.S. dairy product prices.”

Signup opened for the Dairy Margin Coverage (DMC) program this week and the program was expanded to allow producers better protect their operations by enrolling supplemental production. Signup runs through Feb. 18.

National Milk Producers Federation president and CEO Jim Mulhern said, “Signing up for DMC, which offers cost-effective margin protection for small and medium-sized producers as well as inexpensive catastrophic coverage for larger dairies, is a no-brainer for 2022, especially considering the improvements we fought for in Congress and advocated for at USDA. This year illustrated just how valuable this program is for those producers that can take advantage of it, and DMC will once again be an essential part of many farmers’ risk management.”