MRV BLOG: MRV Market Commentary August 17, 2022

Check in here to see the MRV commentary on what we have seen and are seeing in the dairy market.  These insights have developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest!

As September’s price approaches, MRV projects fluid dairy items to have a significant decrease compared to prior months. With 2022’s end just around the corner, and a foreseen overall price reduction for 4Q2022, 2023 might bring prices back up.

Feed

Feed, like many other factors this year, has been in turbulent waters with no signs of settling. Overall, (hay and corn) feed production is down vs 2021’s volumes, with the exception of soybean that is projected to be up and have about 1% increase in acreage. However, all feed costs still far surpass 2021 with soybean and hay up in price 33% and 47% respectively.

The recent WASDE report (World Ag Supply and Demand Estimates) showed higher milk production projections partially due to a higher output per cow and also larger cow inventories. 2023’s milk production is forecasted to be up 1% vs 2022’s.

Butter

Butter has skyrocketed over the course of 2022. However, 2023 projections for butter ($/lb) indicate, while still high, we will see a lower cost for 2023. Fat supply for 2023 is estimated to grow marginally while its usage may get eaten by low storages and thriving export market. The solids supply is also anticipated to grow next year, and we are already seeing price decreases on that front. The projected Class IV annual average for 2022 is $23.95 cwt, this was cut $0.75 compared to last month’s estimate.

With storages low, the projected higher milk production could be all for naught as storages will eat that extra production. With exports continuing to thrive, storages low, and feed costs high, MRV expects dairy prices to be elevated for 2023.