TAMPA, Fla. (WFLA) — Butter, cheese and cream could be more expensive in 2022 as inflation marches on and demand outpaces supply of milk in the United States. The United States Department of Agriculture’s most recent weekly report on the dairy market is predicting prices to rise as the country’s dairy cows can’t be milked fast enough to keep up with consumer demand.
Milk production forecasts are predicted to be lower than previous years heading into 2022. USDA already projected lower production of milk in 2021, now that trend is expected to continue.
While the USDA is expecting higher prices next year, the Bureau of Labor Statistics is showing a decrease in demand prices for raw milk, while the price of fresh produce is on the rise.
A combination of factors, such as lower dairy cow numbers and less milk per cow, are part of the supply problem, but weaker sales on groceries made with butterfat are also “weaker,” according to the USDA.
For December 2021, the USDA reported a half gallon of milk in the Southeast U.S. was $4.99 for its weighted average price. In December 2020, it was $3.50.
Forecasting the exports of products with a milk-fat basis, USDA’s weekly report is expecting stronger shipments of butterfat products, but higher prices on cheese and whey, meaning it’ll cost more cheddar for your cheddar and dry-milk goods, too.
“The 2021 Class III price forecast is raised on higher cheese and whey prices and the Class IV price forecast is raised on the higher butter price. The 2021 all milk price forecast is raised to $18.60 per cwt. For 2022, cheese, butter, NDM, and whey price forecasts are raised on lower expected milk supplies,” USDA reported. “The all milk price for 2022 is raised to $20.75 per cwt.”
For those of us who aren’t dairy farmers, CWT is dollars per hundredweight of milk. A hundredweight of milk is how much it costs for in dollars for 100 pounds of milk. The USDA says the average gallon of milk weighs 8.6 pounds, depending on how much fat is in the milk, from skim or no fat, to whole milk or full fat.
In 2022, the USDA is expecting 100 pounds of milk to cost $2.15 per cwt more than it does now.