Dairy Skim – March 2023 USDA Dairy Products Report Snapshot

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Betty Berning discusses the March 2023 USDA Dairy Products Report. You can view the snapshot report here. Subscribe so that you never miss an episode!

Subscribe on Spotify | Subscribe on Apple Podcasts | Subscribe on Amazon Music


[00:00] Betty:  Hello everyone and welcome back to the Dairy Skim, HighGround Dairy’s bite-sized podcast intended to give the dairy industry some flavor into recent reports or events that can impact global commodity pricing.  Today is Friday, May 5th, Cinco de Mayo! My name is Betty Berning, Contributing Dairy Economist, joining you on this beautiful Friday afternoon here in Minneapolis. USDA just released its March 2023 Dairy Products report and the team at HighGround has been poring over the data.

[00:35] Cheese production fell in March 2023 by 0.2%, totaling 1.229 billion pounds. Year-over-year cheese production has only declined three times in the last 30 months, so this was a bit of a surprise, considering the excess milk in the Upper Midwest that we’ve been talking about throughout the winter and early spring.

[00:57] Digging further into these numbers, though, American and Cheddar production grew 3.2% and 3.6% annually, which are made in the milk-heavy Upper Midwest and are more storable and tradable than other varieties of cheese. However, in almost every other category of cheese, production was down. Mozzarella cheese was down 1.3%, equaling 402 million pounds, probably due to reduced demand for pizza. Cream cheese production was down 4.2%. With prices as low as they are in the cheese complex and stocks building from February to March, the story here really seems to be poor demand.

[01:42] Moving on to a different commodity, dry whey for human consumption fell 3.5% in March, with total production at 73.4 million pounds. However, stocks of dry whey fell by 5.3%, indicating that perhaps demand is picking up slightly, and this leaves us at HighGround feeling a little bullish about whey.

[02:07] Butter production increased by 1.4% from March 2022, weighing in at almost 205 million pounds, and neutral to our expectations. In the cold storage report released two weeks ago, butter stocks tightened from February to March, eschewing the normal seasonal trend, and today’s production number, coupled with March export data released earlier this week, is indicative of improved domestic demand.

[02:34] Nonfat dry milk production was up 4.4% in March, and stocks increased by 10.8% versus March 2022, tipping the scales at 319 million pounds. This appears bearish to us versus the recent rally at CME Spot and futures current markets as demand is slower than current production and inventories are rising.

Whew, that’s a lot of ground to cover. More comprehensive analysis will be coming out on Monday. Stay tuned for that and have a wonderful weekend!

Be sure to subscribe so that you never miss an episode. And if you’re interested in receiving more information, as well as our analysis, please visit highgrounddairy.com to request a free 30-day trial today. Futures and options trading involves substantial risk and is not suitable for all investors.