Dairy Outlook: March 2024


Source: USDA

Anticipated percent changes in 2024 red meat, poultry, and dairy exports compared with 2023

U.S. export forecasts for red meat, poultry, and dairy for 2024 compared to actual export data from 2023 are presented below in a percent-change format. In 2024, beef exports are expected to be about 8.3 percent lower than those of 2023 due to lower 2024 beef production from tightening cattle supplies, as well as from tougher global competition from such beef exporting countries as Australia. Pork exports are forecast to increase almost 4.6 percent over 2023 due to higher domestic production and less global competition from the European Union. Broiler exports in 2024 are expected to decline about 1.4 percent compared with last year, due to higher domestic prices and weak demand from China. Turkey is expected to be competitively priced in 2024, with exports forecast to be up 6.4 percent compared with 2023. Compared with 2023, dairy exports on a skim-solids milk-equivalent basis should increase slightly this year—about 0.2 percent. Relatively strong domestic demand for dairy products and limited growth in milk production will likely limit export growth.


Dairy: The forecasts for dairy herd size, milk per cow, and total milk production in 2024 have been lowered relative to the last month’s forecast to 9.335 million head, 24,345 pounds, and 227.3 billion pounds, respectively. With expectations of firm domestic demand and based on recent trade data, the 2024 dairy import forecasts have been revised upward, while U.S. dairy export forecasts have been revised downward. The 2024 average price forecasts for butter and Cheddar cheese have been revised upward, while the price forecasts for dry whey and nonfat dry milk have been revised downward. The 2024 forecast for the all-milk price has been increased to $21.25 per hundredweight, $0.30 higher than last month’s forecast.

by: Angel Terán and Adriana Valcu-Lisman

Recent Wholesale Dairy Product Prices

Most wholesale dairy product prices reported in the USDA National Dairy Products Sales Report (NDPSR) rose from the week ending February 3 to the week ending March 2. The price for 40- pound blocks of Cheddar cheese increased 6.78 cents per pound, while 500-pound barrels (adjusted to 38-percent moisture) increased 12.84 cents per pound. The price for butter increased 15.52 cents, while the of price dry whey rose by 5.14 cents per pound. The only decrease was for the price of nonfat dry milk (NDM) with a decline of 0.69 cents per pound.

For the trading week ending March 8 at the Chicago Mercantile Exchange (CME), the spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $1.5860 and $1.4920 per pound, respectively. CME spot prices for NDM, butter, and dry whey averaged $1.1670, $2.8115, and $0.4140 per pound, respectively.

From January to February 2024, the directions of changes in the Oceania and Europe average export prices4 were mixed for products reported by USDA Dairy Market News (DMN). As DMN reported, Oceania butter prices rose due to declining production and strong Asian demand.

Recent Dairy Supply and Use Data

Dairy herd size continued to shrink in January. According to the most recent Milk Production report published by the USDA, National Agricultural Statistics Service (NASS), in January 2024, estimated milk production in the United States was 19.090 billion pounds (616 million pounds per day), a reduction of 1.1 percent compared to January 2023. NASS estimated the number of dairy cows in January at 9.325 million head, 23,000 fewer head than the previous month and 76,000 fewer head than January 2023. The milk per cow estimate for January 2024 was 2,047 pounds, 7 pounds per cow less than in January 2023.

From April 2023 to January 2024, the dairy cow inventory shows an overall downward trend after reaching a 2023 peak of 9.433 million head in March.

The downward trend in feed prices continued in January. According to the most recent NASS Agricultural Prices report, in January, the corn price was $4.74 per bushel, down $1.89 from January 2023, while the alfalfa hay price was $202.00 per short ton, $61.00 lower than January 2023. The January soybean meal price (reported by USDA, Agricultural Marketing Service) averaged $378.4 per short ton, down $104.0 from January 2023. The all-milk price in January averaged $20.10 per hundredweight (cwt), down $3.00 from January 2023. The milk-feed ratio reported by NASS was estimated at 1.98 in January, up 0.25 points from January 2023.

In January, the farm milk margin above feed costs reported by the Dairy Margin Coverage program was estimated at $8.48 per cwt, $0.54 higher than last year.

Milk solids continue their upward trend; 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) in milk lead to more efficient dairy processing by reducing the amount of raw milk required.

In January 2024, dairy product exports were lower than the same month a year ago. On a milk- fat equivalent basis, they totaled 815 million pounds, 45 million lower than January 2023. On a skim-solids milk-equivalent basis, they totaled 3.781 billion pounds, 214 million lower than January 2023. Dairy products with a notable decrease in export volumes from January 2023 included Cheddar cheese, dry skim milk products, and lactose.

In January 2024, dairy product imports totaled 659 million pounds on a milk-fat basis, 68 million higher than January 2023. On a skim-solids basis, January imports totaled 605 million pounds, 74 million below January 2023. From January 2023 to January 2024, dairy products with a notable increase in import volumes were butter and infant formula. In the same period, dairy products with a notable decrease in import volumes were casein and milk protein concentrate.

Domestic demand for dairy products has been strengthening in recent months. From November to January, domestic use totaled 55.601 billion pounds on a milk-fat basis, 723 million pounds above the same period a year ago. Meanwhile, on a skim-solids basis, domestic use from November to January totaled 45.915 billion pounds, 608 million higher than the same period a year ago. Dairy product stocks (expressed in milk equivalents) have been tightening since mid- 2023 relative to 2022, with strong demand outpacing lower production, as shown in the graphs below.

Dairy Margin Coverage Update

Dairy producers may enroll in the 2024 Dairy Margin Coverage (DMC) program until April 29, 2024. DMC offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer. Depending upon the level of protection chosen, a participating dairy operation may receive payments triggered retroactively in January 2024. USDA Farm Service Agency (FSA) has revised the regulations for DMC to allow eligible dairy operations to make a one-time adjustment to established production history. For more information, see the USDA, FSA web page for the Dairy Margin Coverage Program.

Dairy Forecasts for 2024

The expectations for the average size of the U.S. dairy herd, milk per cow, and consequently, total milk production in 2024 have all been lowered relative to the last’s month forecast. Several factors, such as a smaller-than-expected milking herd in January, additional downward revisions in the number of cows for 2023, and a counter-seasonal year-over-year decline in January milk per cow, contributed to these new projections.5 As a result, the 2024 forecast for the size of the dairy herd has been lowered to 9.335 million (-20,000) head, the forecast for milk per cow has been reduced to 24,345 (-50) pounds, and total milk production is now projected to 227.3 (-0.9) billion pounds. Milk production usually responds to prices with a lag of several months. While the lower-than-year-earlier number of milk cows in the first half of 2024 largely reflects the impact of feed costs and milk prices that occurred in the second half of 2023, the dairy herd is projected to expand in the second half of this year as the outlook for dairy farm margins is expected to improve.

Lowered prospects for milk production coupled with an overall steady demand for dairy products, offer support for higher price forecasts for Cheddar cheese and butter; in turn, they will support a higher all-milk price forecast and further improved outlook for milk-feed price ratios. However, the higher expected prices will impact the competitiveness of U.S. dairy products in the international markets and dampen the expectations for dairy exports.

Following the recent trade data and increased forecasts for butter and cheese prices, the forecast for 2024 dairy exports on a milk-fat basis has been lowered 0.6 billion to 11.1 billion. On a skim-solids basis, the 2024 dairy export forecast has also been revised downward to 50 billion pounds, 1.9 billion pounds less than the previous forecast. Overall, lack of price competitiveness for some U.S. dairy products in international markets and a weaker-than- expected international demand for dairy products support lower expectations for 2024 U.S. exports across most dairy products.

With stronger-than-expected import data in January and expected continued firm domestic demand, the forecasts for 2024 dairy imports have been increased from the previous month’s forecast to 7.7 (+0.3) billion pounds on a milk-fat basis and to 6.7 (+0.3) billion pounds on a skim-solids basis.

Measured as the 3-month rolling average, domestic use for most dairy products was year-over- year steady-to-higher. The forecast for 2024 domestic use on a milk-fat basis is 224.7 billion pounds, unchanged from last month’s forecast. On a skim-solids basis, the forecast for domestic use is increased to 183.4 billion pounds, 1.4 billion higher than last month’s forecast. Strong demand for dry whey and whey protein concentrate products support the upward revised forecast.

Recent data for dairy product stocks suggests that stocks’ tightness will likely increase through the year, driven by expectations of lower production and relatively strong domestic demand. The forecasts for 2024 ending stocks have been lowered to 11.9 (-0.1) billion pounds on a milk-fat basis and to 9.4 (-0.1) billion pounds on a skim-solids basis.

Based on recent strength in price data for butter and cheese, the 2024 price forecasts for butter and Cheddar cheese have been raised to $2.800 per pound (+3.0 cents) and $1.710 per pound (+2 cents), respectively. However, the price forecasts for NDM and dry whey have been decreased to $1.210 (-2.5 cents) and $0.450 (-3.0 cents) per pound, respectively, on weaker international demand.

The lower NDM price forecasts offset the higher butter price forecasts. Consequently, the Class IV milk price forecast for 2024 has been lowered by $0.10 to $20.10 per cwt. Conversely, the Class III milk price projection for 2024 has been raised by $0.05 to $17.15 per cwt, as the higher Cheddar cheese price forecasts more than offset the lower whey price forecasts. The all-milk price forecast for 2024 has been increased to $21.25 per cwt, $0.30 higher than the previous forecast.

5 As reported in the February Milk Production report published by USDA, National Agriculture Statistics Agency.