The soybean outlook is for higher exports, lower crush and reduced ending stocks

Lee Mielke

The U.S. Department of Agriculture raised its 2023 U.S. milk production estimate in the March 6 World Agricultural Supply and Demand Estimates report (WASDE), citing a larger cow inventory. Output per cow was unchanged from last month.2023 production and marketings were estimated at 228.5 and 227.5 billion pounds respectively, up 200 million pounds on both from a month ago. If realized, 2023 production would be up 2.0 billion pounds or 0.9% from 2022.Cheese price forecasts were lowered as supplies are expected to be relatively large and domestic demand projected to be relatively soft. The 2023 average was projected at $1.81 per pound, down a nickel from February’s estimate, and compares to $2.1122 in 2022, $1.6755 in 2021 and $1.9236 in 2020.Butter prices were raised on recent data and projected to average $2.3350 per pound, up 50 cents from a month ago, and compares to $2.8665 in 2022, $1.7325 in 2021 and $1.5808 in 2020.Nonfat dry milk is expected to see a weak first quarter offset by a stronger fourth quarter and to average $1.23 in 2023, up 50 cents from last month’s estimate. That compares to $1.6851 in 2022, $1.2693 in 2021 and $1.0417 in 2020Whey prices were raised on recent price observations and stronger expected demand and should average 39 cents per pound, up 2.50 cents from February’s estimate. That compares to 60.35 cents in 2022 and 57.44 cents in 2021.Class III milk prices were projected lower, with the 2023 average estimated at $17.55 per hundredweight, down 35 cents from last month’s estimate and compares to the $21.96 average in 2022, $17.08 in 2021 and $18.16 in 2020.The class IV average was raised to $18.30, up a nickel from last month’s estimate and compares to $24.47 in 2022, $16.09 in 2021 and $13.49 in 2020.This month’s corn outlook is for lower exports and larger ending stocks. Exports were reduced 75 million bushels reflecting the poor pace of sales and shipments to date, despite relatively competitive U.S. prices. Ending stocks are up 75 million bushels from last month. The season average corn price was lowered a dime to $6.60 per bushel based on reported prices to date.The soybean outlook is for higher exports, lower crush and reduced ending stocks compared with last month’s report. Soybean exports were raised 25 million bushels to 2.02 billion based on higher than expected shipments through February. Crush was reduced on a small reduction in domestic soybean meal disappearance combined with a higher extraction rate. With higher exports more than offsetting lower crush, ending stocks were reduced 15 million bushels to 210 million. If realized, ending stocks would be the lowest in seven years, according to the WASDE. The U.S. season-average soybean price forecast was unchanged at $14.30 per bushel. Soybean meal was forecast at $465 per short ton, up $15.The January Dairy Products report indicates that January’s 1.3% increase in milk production kept cheese vats and butter churns particularly busy.Cheese production totaled a whopping 1.209 billion pounds, up 1.2% from December output, which was revised down seven million pounds, but was up 3.2% from January 2022, a record for January and the highest monthly output since March 2022.Wisconsin produced a tad under 296 million pounds of the January total, down 0.6% from December but 3.2% above a year ago. California produced 204 million pounds, down 2.4% from December and 2.3% less than a year ago. New Mexico added 95.5 million pounds, up 14.5% from December and 13.6% above a year ago. Idaho, at 90.9 million, was up 4.7% from December and 3.9% above 2022.Italian cheese totaled 501.4 million pounds, down 1.3% from December and 0.4% less than a year ago. American cheese hit 501 million pounds, up 3.8% from December, and 6.2% above a year ago. Mozzarella slipped to 394.7 million pounds, down 1.3% from December, but virtually unchanged from a year ago.Cheddar production hit a record 356.1 million pounds, up 16.1 million or 4.7% from December’s count, which was revised up 1.5 million pounds, and was up an eye catching 23.6 million pounds or 7.1%, from January 2022.Butter output jumped to 201.4 million pounds, up 13.6 million pounds or 7.3% from December and 7.4 million pounds or 3.8% above a year ago.Yogurt production totaled 395.7 million pounds, up 6.1% from a year ago.Dry whey output, at 77.9 million pounds, was up 3.1 million pounds or 4.1% from December’s total, which was revised down 1.2 million pounds, and was 2.5 million pounds or 3.1% below a year ago.Stocks fell to 69.9 million pounds, down 600,000 pounds or 0.8% from December, but up 13.3 million pounds or 23.5% from a year ago.Nonfat dry milk output climbed to 177 million pounds, up 9.4 million pounds or 5.6% from December’s total which was revised down 11.4 million pounds. Output was up 6.7 million pounds or 4.0% from January 2022.Stocks jumped 16.5 million pounds, to 271.7 million, up 6.5% from December and 10.1 million or 3.9% more than a year ago.Skim milk powder production totaled 42.8 million pounds, down 12.2 million or 22.2% from December’s total which was revised up 6.1 million pounds and was 600,000 pounds or 1.5% below that of a year ago.Thankfully, U.S. dairy exports remain strong. January cheese climbed to 75 million pounds, up 15.6% from January 2022, and an all-time high for the month, according to HighGround Dairy (HGD). Lots of it was shipped to Mexico and “kicked off the calendar year at a record pace,” says HGD. Shipments fell to South Korea, the second largest destination, but strengthened to Japan, Bahrain, and Australia “helping offset losses elsewhere.”HGD adds that cheddar sales totaled 16.7 million pounds, up 37.5%, despite discounted European cheese, driven by larger sales to Japan and Australia.Nonfat dry milk exports totaled 150.4 million pounds, up 14.8%. Mexico's market share reached 53.5%, highest since August 2019, says HGD, “Maintaining similar strong volumes throughout second half 2022, the U.S. reported the strongest January shipments to Mexico on record,” with notable gains made to Thailand and Colombia.“Total dairy exports to China expanded over prior year for the eighth consecutive month,” says HGD, “which also marked the third month in a row that achieved monthly highs. Much of the growth continues in the form of dry whey which totaled 29 million pounds, up 8.6% from a year ago.Some are skeptical U.S. dairy exports will be able to remain that strong in 2023. StoneX broker Dave Kurzawski is not one of them. Speaking in the March 13 Dairy Radio Now broadcast, he said he’s seeing strong cheese exports out into April and May so they won’t “shrivel up and die.” “We’re a bigger player in the world market than we’ve ever been,” he said, “I think that’s going to continue, but it does ebb and flow.” He also said current beef prices are a powerful incentive for dairy farmers to “make some decisions” regarding their operations for this year.In other trade news, the Global Dairy Trade auction is limping again. The March 7 weighted average slipped 0.7%, after dropping 1.5% on February 21 and jumping 3.2% on February 7. Traders brought 59 million pounds of product to market, down from 67.7 million on February 21 and the average metric ton price slipped to $3,403 U.S., down from $3,414 on February 21.GDT cheddar led the declines, plunging 10.2%, after rising 1.5% on February 21. Buttermilk powder was down 4.5%. Anhydrous milkfat was down 1.8%, following a 2.6% drop on February 21, and butter was off 0.3% after rising 3.8%. Lactose inched 0.3% higher. Whole milk powder was up 0.2%, following a 2.0% drop on February 21, but skim milk powder was down 1.1% after dropping 2.4% on February 21.StoneX says GDT 80% butterfat butter price equates to $2.1678 per pound U.S., down a penny after gaining 7.8 cents on February 21. CME butter closed Friday at $2.3325. GDT cheddar, at $2.0452, was down a whopping 26.2 cents, after gaining 4.8 cents last time and compares to Friday’s CME block cheddar at $1.78. GDT skim milk powder averaged $1.2424 per pound, down from $1.2559 and whole milk powder averaged $1.4865 per pound, up from $1.4806. CME nonfat dry milk closed Friday at $1.1750.With less volume available for purchase, many regional purchases were lower than the last GDT, says Dustin Winston, however “North Asian purchases, which includes China, were higher than last year as the region continues to stay above 50% market share since returning to this trend in February. Middle East and European purchases were also larger than last year.”Cheese prices converged the first full week of March with the cheddar blocks falling to $1.78 per pound, down 17 cents on the week, lowest CME price since September 6, 2022 and 41 cents below a year ago.The barrels climbed to a Friday finish at $1.77, up 19.50 cents on the week, highest since January 11, 2023, 24 cents below a year ago and just a penny below the blocks.Sales for the week totaled four cars of block and 50 of barrel.Milk remains readily available for Midwest cheesemakers, says Dairy Market News (DMN) and spot milk prices reached a recent low, as $11 under class III spots were reported. Milk offers are reportedly abundant and cheese production is as full as plant managers can make it. Cheese demand is reportedly fair in the region and stores are not getting ahead of processors. A number of varietal cheesemakers say orders are keeping storage at light to medium capacity.Domestic cheese demand is strong to steady by Western retail and food service purchasers and a steady pace continues for finishing second quarter bookings. Some report sold out inventories for contract sales into June. Export demand remains mixed, with strong Asian demand, while others note soft demand. Barrel sales continue to outpace blocks however barrel inventories remain heavier. Cheese production is strong as plenty of milk continues to be available, though more milk is shifting into hard Italian type and aged cheese schedules.Cash butter closed Friday at $2.3325 per pound, down 1.25 cents on the week and 37.75 cents below a year ago. There were three sales reported for the week.Central butter makers say cream remains ample but slightly lower than previous weeks. Cream cheese processors are pulling slightly on the stores of cream, but regional churns are finding cream locally and from the near Western states. Spring holiday demand has picked up, as some plants relay food service and retail demand is meeting expectations. Market tones are “unassured,” says DMN.Cream is plentiful in the West but balanced to ample for needs. Butter production is steady. Retail demand is light to weak. Some say below forecast sales for the upcoming spring holiday season are contributing to inventories remaining heavy.CME nonfat dry milk fell to $1.1650 per pound Tuesday, lowest since March 24, but closed Friday at $1.1750, down 0.25 cents on the week and 66.50 cents below a year ago, on 11 sales.Dry whey finished Friday at 44.25 cents per pound, 0.25 cents lower and 31.50 cents below a year ago, with three sales reported for the week at the CME.Cooperatives Working Together (CWT) members accepted 14 offers of export assistance this week on 181,000 pounds of American type cheese, 333,000 pounds of butter and 679,000 pounds of cream cheese. The product is going to customers in Asia, Central America and the Caribbean, through June and puts CWT 2023 exports at 10.9 million pounds of American type cheeses, 383,000 pounds of butter, 17.8 million pounds of whole milk powder and 2.0 million pounds of cream cheese. The products are going to 16 countries and the equivalent of 254.2 million pounds of milk on a milkfat basis.In politics, the National Milk Producers Federation, Consortium for Common Food Names, U.S. Dairy Export Council and a coalition of others prevailed in an ongoing battle to protect the right of producers to use generic names in the U.S.The U.S. Court of Appeals for the Fourth Circuit upheld prior decisions of the U.S. District Court for the Eastern District of Virginia and of the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board in finding “gruyere” to be a generic term for a variety of cheese.Meanwhile, “The U.S. Food and Drug Administration’s unwillingness to limit dairy terms to true dairy products makes passage of the Dairy Pride Act more necessary than ever,” says Sen. Tammy Baldwin, D-WI, in a podcast this week.“They're going to continue to allow mislabeled imitation products to be on the market,” Baldwin said. “Wisconsin farmers work so hard to meet the FDA standards of nutrition and quality. They can't put the word ‘milk’ on the side of a carton of milk unless they meet those standards. It is not fair for plant-based products to be able to say they're milk when they don't meet those standards.”Also, a bipartisan group of seven Senators and 28 Representatives called on the USDA to abandon a proposal to reduce the amount of milk and dairy provided to mothers and children enrolled in the Special Supplemental Nutrition Program for Women, Infants and Children or WIC. The USDA’s proposal would eliminate as much as three gallons or more of milk per month for WIC mothers and their children, a cut that members of Congress say will have “unintended and significant negative effects.”Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine,” and his column appears in agricultural papers across the U.S. Contact him at