Dairy Outlook: April 2024


Source: USDA


The 2024 milk production forecast has been lowered to 226.3 (-1.0) billion pounds due to slower anticipated milk yield per cow, with cow numbers remaining unchanged. Dairy product price forecasts show mixed changes from last month’s forecasts with Cheddar cheese at $1.620 (-9.0 cents), dry whey at $0.425 (-2.5 cents), butter at $2.925 (+12.5 cents), and nonfat dry milk (NDM) at $1.180 (-3.0 cents) per pound. The Class III milk forecast is now $16.20 per hundredweight (cwt), down $0.95 due to lower cheese and dry whey prices. Despite lower NDM price forecast, the Class IV price forecast has risen to $20.40 per cwt, up $0.30 due to higher butter prices. The all-milk price for 2024 is projected at $20.90 per cwt, down $0.35 from the previous month’s forecast.

by: Adriana Valcu-Lisman and Angel Terán

Recent Wholesale Dairy Product Prices

Most wholesale dairy product prices reported in the USDA National Dairy Products Sales Report (NDPSR) decreased from the week ending March 9th to the week ending April 6th. The prices for 40-pound blocks of Cheddar cheese, 500-pound barrels (adjusted to 38-percent moisture), nonfat dry milk (NDM), and dry whey decreased by 11.34, 16.60, 2.22, and 3.66 cents per pound, respectively. Conversely, the price for butter increased 4.05 cents per pound.

For the trading week ending April 12th at the Chicago Mercantile Exchange (CME), the spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $1.5620 and $1.5470 per pound, respectively. CME spot prices for butter, NDM, and dry whey averaged $2.9365, $1.1420, and $0.3665 per pound, respectively.

According to USDA, Dairy Market News (DMN), the Oceania and Europe export prices for most of the dairy commodities surveyed in the report decreased from February to March. These decreases ranged from 1.1 cents per pound for Cheddar cheese (Oceania) to 8.3 cents per pound for skim milk powder (Oceania). Among the selected dairy products, butter (Western Europe) was the only one showing a month-over-month increase (15.9 cents per pound).

The Global Dairy Trade (GDT) Price Index for the trading event of April 16 was up 0.1 percent from the GDT event of April 2. On April 16, average GDT prices for anhydrous milk fat and whole milk powder were up from the previous event, while the prices of butter, Cheddar cheese, and lactose were down. Skim milk powder remained unchanged.

Recent Dairy Supply and Use Data

According to the USDA, National Agricultural Statistics Service (NASS) Milk Production report, the milking cow herd was estimated at 9.33 million head in February, down 89,000 head from February 2023. While on a year-over-year basis the dairy herd continued to shrink for the 9th consecutive month, the dairy herd added 10,000 head relative to the previous month. The average milk production per cow was 1,941 pounds in February. After adjusting for the extra day in the month due to leap year, the yield was about 0.4 percent year-over-year lower. As a result of both a lower milking herd and yield and after adjusting for the extra day, February milk production was about 1.3 percent lower than last year.

Over the past 8 months, both dairy herd inventories and milk production decreased on a year- over-year basis in every month, with the reductions in milk production outpacing the reductions in herd size in 6 months. Over the same period, both the milk-fat test and nonfat solids test increased substantially year over year. Higher concentrations of fat, protein, and other solids (lactose and minerals), all else being equal, should reduce the amount of raw milk required for comparable amounts of dairy products.

In February, the farm milk margin above feed costs reported by the Dairy Margin Coverage program was estimated at $9.44 per cwt, still under the $9.50 per cwt maximum Tier 1 coverage level. The margin was $3.25 per cwt higher than February 2023 and $0.96 per cwt higher than the previous month. The year-over-year increase was due to lower feed prices that offset the lower all-milk prices used in the margin’s calculation. The month-over-month increase was due to lower feed costs for corn and soybean meal and higher all-milk prices that more than offset a small increase in the price of premium alfalfa.

Feed prices for corn, soybean, and alfalfa hay were year-over-year lower in February, while the all-milk price was higher, resulting in a higher milk-feed ratio. According to the most recent NASS Agricultural Prices report, in February, the corn price was $4.36 per bushel and the alfalfa hay price was $200.00 per short ton. Th soybean meal price (reported by USDA, Agricultural Marketing Service) averaged $363.63 per short ton. The all-milk price in February averaged $20.60 per hundredweight (cwt), down $1.00 from February 2023. The milk-feed ratio reported by NASS was estimated at 2.13, up 0.54 points from last February.

February dairy exports showed a year-over-year uptick for the first time since the beginning of 2023. Dairy exports on a milk-fat milk-equivalent basis totaled 925 million pounds, 104 million higher than February 2023. On a skim-solids milk-equivalent basis, February exports totaled 4.177 billion pounds, 260 million pounds higher than February 2023. Higher year-over-year shipments of cheese, nonfat dry milk, and whey protein concentrate more than offset lower shipments of butter, lactose, and whey products.

On a milk-fat basis, February U.S. dairy imports totaled 660 million pounds, 112 million higher than February 2023. On a skim-solids basis, February imports totaled 486 million pounds, 118 million lower than January and 79 million lower than last February. The year-over-year decrease in dairy imports on a skim-solids basis was mostly due to lower imports of milk protein products (casein and milk protein concentrates).

The Consumer Price Indexes for the selected dairy products were year-over-year lower in March, while the indexes for overall prices and food prices show that the inflationary pressures are lingering. Of note, the Consumer Price Index for all dairy products has been year-over-year lower since September of last year.

For December through February, domestic use on a milk-fat basis was about 1.0 percent year- over-year higher. On a skim-solids basis, for the same period, domestic use was about 0.8 percent year-over-year higher. Over these 3 months, domestic use of butter, Other-than- American cheese, dry whey, whey protein concentrate, and lactose was year-over-year higher, while the domestic use for American cheese and dry skim milk was year-over-year lower.

Highly Pathogenic Avian Influenza Detected in Dairy Herds

On March 29, the USDA Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) confirmed the detection of highly pathogenic avian influenza (HPAI) in two dairy herds in Texas and two in Kansas. The announcement followed previous investigations of reported illnesses in dairy cows. These illnesses were characterized by decreased lactation, low appetite, and other symptoms. As of April 16, more cases had been reported in dairy cows in Michigan, New Mexico, Ohio, Idaho, South Dakota, and North Carolina. Unlike the HPAI cases in poultry operations where the disease is fatal in birds, the cows or dairy cattle affected do not require liquidation and return to production after several weeks of isolation and recovery.

FDA recommends discarding the raw milk produced by cows showing any signs of illness or cows that were exposed to those infected with avian influenza. Currently, there are no concerns about the safety of the commercial milk supply since the milk subject to interstate commerce is required to be pasteurized. For more information, see the USDA, Animal and Plant Health Inspection Service (APHIS) web page entitled “Highly Pathogenic Avian Influenza (HPAI) Detections in Livestock.

Dairy Forecasts for 2024

The 2024 dairy herd size forecast is 9,355 thousand head, unchanged from the previous month. Anticipated lower yield per cow throughout the year has led to a reduction of 100 pounds per head, now forecast at 24,245 pounds. Consequently, the revised milk production forecast for 2024 is 226.3 billion pounds, a decrease of 1.0 billion from the previous month’s estimate.

Dairy imports were adjusted upward from last month’s forecast. On a milk-fat basis, dairy import projections in 2024 were raised to 8.0 billion pounds (+0.3 billion), while on a skim solids basis imports were raised to 6.8 billion pounds (+0.1 billion). Higher import volumes of products such as cheese, butter, infant formula, yogurt, dry whey products, and canned milk are anticipated for 2024.

The 2024 dairy export forecast on a milk-fat basis has been raised 0.2 billion pounds to 11.3 billion based on expected strong international demand. The export forecast on a skim-solids basis is lowered to 49.7 billion pounds (-0.3 billion). In 2024, export shipments of skim milk powder, cheese, and butter are expected to increase, while those of dry whey products and lactose are anticipated to decrease.

The 2024 forecast for domestic disappearance has been lowered from last month’s projection. On a milk-fat basis, domestic use decreased by 1.7 billion pounds, bringing the total to 223.0 billion pounds. On a skim-solids basis, the domestic use forecast declined by 0.5 billion pounds, totaling 182.9 billion pounds.

Based on recent mixed price trends, the adjusted forecasts, in dollars per pound for dairy products, are as follows: Cheddar cheese $1.620 (-9.0 cents), dry whey $0.425 (-2.50 cents), butter $2.925 (+12.5 cents), and NDM $1.180 (-3.0 cents).

With lower cheese and dry whey prices, the new forecast for Class III milk is $16.20 per cwt, $0.95 lower than the previous forecast. With higher butter price projections more than offsetting lower NDM prices, the Class IV price forecast has been raised to $20.40 per cwt, $0.30 higher than the previous projection. The all-milk price for 2024 is now forecast at $20.90 per cwt, down $0.35 from last month’s forecast.