Dairy Skim – December 2022 U.S. Dairy Products Report

Dairy Skim is a bite-size episode series where HighGround’s Eric Meyer breaks down the latest USDA Dairy data release, the December 2022 U.S. Dairy Products Production & Dry Stocks 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


[00:04] Hello there! It’s Friday, February third. Eric Meyer here, President of HighGround Dairy and this is the Dairy Skim. This afternoon, we’re going to take a quick review of the December 2022 U.S. Dairy Products Production and Dry Stock report. This report always has a lot of data to get through. It takes us a little bit of extra time to peruse through all of the data to give you that great analysis and so I would expect that will be out by Monday, end of day.

[00:34] Just taking a quick look at the top-level data: I think a couple of things came to mind here. First, from a very high level, comparing milk production growth versus dairy product production growth against the previous year, it seems like production was pretty good considering that we only had 0.8% year-on-year growth in U.S. milk production. To us, the conclusion there is that milksolids—the fat and protein in the milk—is still very strong, allowing for stronger yields in production. Taking look at some of the numbers here: year-over-year percentage growth of total cheese was up 2.2%. Cheddar was up 1.4% and that was slightly down from the growth in November but was the third straight year-over-year increase on the cheddar side. Big growth in mozzarella again to close out the year, up 4% vs the previous year which was almost 405 million pounds of mozzarella out of a total of 1.2 billion pounds of total cheese that was made to close out the year. From a cheese perspective, really neutral against expectations.

[01:43] From a butter perspective, we did see growth, yet again, up 3.9% versus previous year to 187 million lbs. That wasn’t as robust as the year-over-year growth in November but that’s still a decent number and again, we would call that number a bit bearish.

[02:00] Looking at the nonfat dry milk side, robust nonfat dry milk growth. Flat but improved skim milk powder production, where we were very close to year-over-year levels there. With that said, nonfat dry milk stocks were 4.5% above the previous year and 264 million pounds. Not necessarily as robust sales of nonfat dry milk in December were quite firm. We did tick higher versus the previous month but down a little bit versus the year-over-year gains.

[02:32] And then the last thing that we saw that I thought was really interesting: the only product on our initial take that we deemed bearish was the dry whey side. But when digging in to some of the whey, whey protein concentrate, and whey protein isolate revisions from November, I think these are some really robust numbers. Nonfat dry whey was revised 2.7 million pounds down, which was nearly 4% below where the original figure was. Whey protein concentrate was down 6 million or over 15% from the original value. And then the whey protein isolate number was down almost 1.5 million pounds which was down over 16% versus those originals. That seems bullish on the surface, doesn’t it? Well, when you look at the inventory levels, those are still incredibly robust. Dry whey to close out the year with over 77 million pounds which is up over 37% versus previous year. Whey protein concentrate was up 15%, whey protein isolate was nearly 60% above the previous year. Those continue to build against a year-over-year trend with lower production which was where those levels were. Whey year-over-year in December was only down 1.1%. but larger declines year-over-year on the WPC and WPI. Yet, inventories continued to build, suggesting still a bearish tone in the whey complex. Now, those prices are down quite a bit in those but still the data—albeit 5 weeks behind—still suggests that we have plenty of inventory available at this point.

That does it here for the Dairy Skim! Again, we will have a full analysis for our HighGround Dairy market intelligence subscribers by Monday, end of day Chicago time. We hope everyone has a great weekend and we’ll talk to you soon!