USDA ERS Dairy Forecasts for 2021 & 2022

by: Chris Zoller, Extension Educator, ANR, Tuscarawas County

On June 16, the United States Department of Agriculture Economic Research Service (USDA ERS) released its Livestock, Dairy, and Poultry Outlook.  This publication (https://www.ers.usda.gov/webdocs/outlooks/101460/ldp-m-324.pdf?v=4393.1) provides projections about inventory, use, and pricing.  The next report will be released July 16, 2021.

2021 Dairy Forecast

Recently, milk cow numbers have been trending upward.  USDA ERS projects milk cow numbers to average 9.495 million head, an increase of 25,000 from their May projection.  Because of low cow slaughter numbers and higher feed prices, USDA ERS projects that cow numbers will level off during the second half of 2021.  Extreme heat and its effects on cow comfort and grain production caused USDA ERS to lower its milk per cow slightly for the third quarter, putting annual production per cow at 24,065 pounds.

Reduced cheese prices and higher expected dry whey prices have USDA ERS projecting the following milk prices for 2021:

 

Class Price
Class III $17.45/cwt.
Class IV $15.85/cwt.
All-Milk $18.85/cwt.

 

2022 Dairy Forecast

While the number of cows is expected to average 30,000 more than the May projection, USDA ERS puts cow numbers for the year at 9.495 million head, unchanged from 2021.  High input costs and lower expected milk price in mid-2021 translates into a decline in 2022 of milk cow numbers from the levels seen in the second half of 2021.  Milk per cow is expected to increase slightly in 2022, 24,335 pounds.

A projected stronger economy in 2022 should result into positive news for domestic use.  Additionally, international demand for U.S. lactose and whey products is expected to contribute to an increase over the May projection.

USDA ERS makes these projections for milk price in 2022:

 

Class Price
Class III $17.15/cwt.
Class IV $15.95/cwt.
All-Milk $18.75/cwt.

Planning

Once again, the dairy farm economy is going to be tight for the remainder of 2021 into 2022.  Dairy farmers are encouraged to closely monitor expenses, evaluate inputs, and meet with trusted advisors.  The Ohio State University Dairy Excel 15 Measures of Dairy Farm Competitiveness  (https://dairy.osu.edu/sites/dairy/files/imce/2019%2015%20Measures%20of%20Dairy%20Farm%20Competitiveness%20Final%20%281%29.pdf) bulletin is an excellent resource that allows dairy farmers to compare performance against established benchmarks.

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