Domestic demand and strong product prices support dairy prices

USDA yet again raised its 2020 and 2021 milk production estimates as farmers are expected to increase herd sizes and per cow production, and gave back price declines predicted last month.

In its January supply and demand report, USDA forecast 2021 cheese, butter, nonfat dry milk, and whey prices higher because of strong domestic demand. 

The 2021 Class III and Class IV prices were raised because of higher product prices.

The 2021 all milk price increased $1.05 to $17.65 per hundredweight, more in line with expectations in the agency’s November report.  

The 2020 fat basis export estimate was unchanged with the 2021 forecast increased on expectations for higher butterfat product exports.  The 2020 skim-solids basis export forecast was lowered based on recent trade data while the 2021 forecast was left unchanged.  

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