Calendar 2022 began with an aura of fear and panic among buyers trying to navigate the dairy market and rapidly escalating prices. The market has witnessed a bull rally the likes of which has not been seen in years as prices of all classes of milk surged to new highs in late 2021. That euphoria spilled over into 2022, with the first few weeks seeing continued feverish activity as panicked buyers bid prices higher to try to limit exposure.
Class IV milk advanced to nearly $25 per cwt, with products like butter testing $2.55 per lb and NFDM rising to $1.80 per lb. Likewise, cheese prices (Class III) sailed through $2.00 per lb and peaked just shy of $2.15 per lb before profit-taking kicked in, sending prices back below $2.00 per lb.
Pricing for whey powder, a byproduct of cheese manufacturing, exploded 50 percent higher in Q4, testing $0.75 per lb, a price not seen since 2007. With a USDA milk production report due this week, there’s a growing sense that dairy prices have reached unsustainable levels as these higher prices should arrest culling and encourage herd growth in 2022.
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