Editorial Comment Publisher/Editor

 

 

Production-Wise, 2022 Shaping Up As A Mighty Interesting Year

Dick Groves
Publisher/Editor
Cheese Reporter

November 19, 2021


USDA last week released its monthly supply-demand projections for dairy and other ag commodities and, as reported on our back page last week, the agency has reduced its forecast not only for 2021 milk production, but also for 2022 milk production.

And this isn’t just a small “tweak” in its 2022 milk production forecast; USDA lowered its 2022 forecast by 1.6 billion pounds from last month.
And it reduced its milk production forecast for this year by 600 million pounds, meaning the agency, in just one month, reduced its production expectations for the two years combined by over 2.0 billion pounds.

It’s worth remembering, if not emphasizing, that USDA still expects milk production to increase next year, by 1.7 billion pounds, to be exact. That would be on top of this year’s forecast milk production increase of 3.2 billion pounds.

It wasn’t all that long ago that US milk production was posting milk production increases of less than 1.0 billion pounds per year. In 2019, for example, US milk production of 218.4 billion pounds was up less than 900 million pounds from 2018.

And back in the early years of the 21st century, milk production increased from 170.06 billion pounds in 2002 to 170.35 billion pounds in 2003 and then 170.8 billion pounds in 2004, meaning that production actually increased less than 800 million pounds over a two-year period.

But in some recent years, milk production increases have been pretty impressive. For example, 2020 milk production of 223.2 billion pounds was up 4.8 billion pounds from 2019, and 2016 milk production of 212.5 billion pounds was up 3.9 billion pounds from 2015.

So the milk production increase projected for 2022 would be on the lower end of production increases in recent years. That alone is noteworthy.

Another thing that’s noteworthy about USDA’s latest forecast for 2022 milk production is how much it has dropped in recent months. Back in May, when USDA released its initial projections for next year, the agency projected that 2022 milk production would reach a record 230.3 billion pounds.

USDA actually raised its 2022 milk production forecasts over the next two months. In its June supply-demand estimates, the agency projected that 2022 milk production would reach 231.1 billion pounds, up 800 million pounds from its May forecast. And then in July, USDA projected that 2022 milk production would reach 231.6 billion pounds, up 500 million pounds from its June forecast.

Thus, in just the first two months after it released initial 2022 projections, USDA boosted its 2022 milk production forecast by 1.3 billion pounds. The agency also raised its 2021 milk production forecast in June by 600 million pounds, although it reduced that forecast in July by 300 million pounds.

It’s also worth noting that, in both the June and July supply-demand reports, USDA cited higher forecast milk cow numbers as a reason why it was raising its production forecasts (in the July report, the agency lowered its production forecast for 2021 as slower-expected growth in milk per cow more than offset higher forecast cow numbers).

Those June and July reports were released during a period when milk cow numbers were still increasing. It wasn’t until USDA’s July “Milk Production” report was released on July 22 (10 days after the July supply-demand estimates were released) that cow numbers started to decline (June cow numbers in the 24 reporting states were down 1,000 head from May, according to that report).

Things have snowballed since then. Milk cow numbers, both in the 24 reporting states and for the US as a whole, have declined every month since May, and those declines have been particularly notable in the last three months.

Reflecting that, USDA has reduced its forecast for 2022 milk production for four consecutive months, including reductions of 400 million pounds in its August supply-demand report, 600 million pounds in its September report, 900 million pounds in its October report and, as noted earlier, 1.6 billion pounds in its November report.

And with milk cow numbers falling again in October (for more details, please see the milk production story on our front page this week), it’s a pretty safe bet that, in its December supply-demand report, USDA will again lower its 2022 milk production projection.

At this rate, about the only reason USDA is projecting a milk production increase in 2022 is because it keeps reducing its forecast for 2021 milk production. In fact, USDA back in August lowered its projection for 2021 milk production by 100 million pounds, to 228.1 billion pounds, which is exactly what the agency is now projecting for 2022 milk production.

There are at least two caveats to keep in mind when looking at these milk production forecasts. First, as the above statistics indicate, USDA’s projections can and do turn around quickly and significantly. Sometime in the not-too-distant future, USDA could stop reducing its 2022 production forecast and start increasing it.

Second, the two most recent years in which milk production grew by less than 1 billion pounds (2019 and 2013), it expanded significantly the following year (by 4.8 billion pounds in both 2020 and 2014).

So the US might be looking at tight milk supply conditions in 2022, followed by a significantly larger volume of milk in 2023.

 

Dick Groves

Dick Groves has been publisher/editor of Cheese Reporter since 1989. He has over 45 years experience covering the dairy industry. His weekly editorial is read and referenced throughout the world.
For more information, call 608-316-3791 dgroves@cheesereporter.com
https://twitter.com/cheesereporter.


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