Source: USDA
Summary
The 2024 forecasts for the average number of milk cows, milk per cow, and total milk production are lowered to 9.335 million (- 5,000) head, 24,200 (-30) pounds, and 225.9 (-0.4) billion pounds, respectively. The downward revisions are in line with recent inventory and production data. With recent dairy price developments, the 2024 wholesale-price forecasts for all dairy products are raised. Overall, the 2024 forecast for the all-milk price is raised to $23.05 (+$0.75) per hundredweight (cwt). The 2025 forecast for milk production is revised downward, due to lower expected milk per cow. The projection for the average number of dairy cows is unchanged. The 2025 wholesale-price forecasts for all dairy
products are revised upward. The all-milk price for 2025 is now forecast at $23.45 per cwt, up $0.70 from last month’s forecast.
by: Angel Terán and Adriana Valcu-Lisman
Recent Developments in U.S. Dairy Product Wholesale Prices
From the week ending August 10 to the week ending September 7, 2024, all wholesale dairy product prices per pound reported in the USDA National Dairy Products Sales Report (NDPSR) increased. The price for 40-pound blocks of Cheddar cheese increased 16.26 cents, while the price for 500-pound Cheddar cheese barrels (adjusted to 38-percent moisture) rose by 25.94 cents. The butter price rose by 6.90 cents, dry whey price increased by 4.14 cents, and the nonfat dry milk (NDM) price rose by 4.45
cents per pound.
For the trading week3 ending September 13 at the Chicago Mercantile Exchange (CME), the average spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $2.3860 and $2.2890 per pound, respectively. CME spot prices for NDM, butter, and dry whey averaged $1.3920, $3.1510, and $0.5930 per pound, respectively.
According to USDA, Dairy Market News (DMN), most foreign dairy product export prices reported were mainly higher from July to August 2024. According to the most recent NDM international report, both Oceania and Europe are experiencing mixed trends in their dairy markets. In Oceania, increasing milk production is leading to higher butter and cheese production. Export demand for butter is softening, while export demand for SMP is growing. Despite strong export demand for butter in Europe, tight inventories and concerns about future milk availability are limiting sales.
Recent Dairy Supply and Use Data
According to the USDA’s National Agricultural Statistics Service (NASS), milk production in the United States totaled 18.915 billion pounds (610 million per day) in July 2024, 0.4 percent lower than July 2023. Milk cows on farms averaged 9.325 million head in July, down 43,000 head from July 2023 and 5,000 cows above the previous month. The average milk production per cow was 2,028 pounds in July 2024, up 1 pound from last year.
Milk-component percentages per milk volume continue to increase. According to NASS, milk-fat test rose to 4.07 percent in July, up from 3.99 percent in July 2023. Meanwhile, nonfat-solids test increased to 8.95 percent in July from 8.92 percent the previous year, as reported by AMS. While the daily production of milk and skim solids has been generally declining year over year since July 2023, the production of milk fat continued to increase.
In July, the Dairy Margin Coverage (DMC) program reported a farm-milk margin above feed costs of $12.33 per hundredweight (cwt), the highest of the year so far. July was the fifth consecutive month with a DMC margin exceeding the $9.50 per cwt Tier 1 coverage level. Compared to July 2023, the margin was $8.81 per cwt higher, driven by lower feed prices and higher all-milk prices.
According to the most recent NASS Agricultural Prices report, the prices for the main feed inputs were year-over-year lower in July. The corn price was $4.24 (-$1.98) per bushel and the alfalfa hay price was $183.00 (-$63) per short ton. The July soybean meal price (reported by USDA, Agricultural Marketing Service) averaged $364.3 (-$78.85 from July 2023) per short ton. The all-milk price in July averaged $22.80 per hundredweight (cwt), up $5.50 from July 2023. The milk-feed ratio reported by NASS was estimated at 2.50, up 1.13 points from last July.
U.S. dairy exports rose in July 2024. Total exports on a milk-equivalent skim-solids basis reached 4,306 million pounds, surpassing July 2023 by 331 million pounds. Similarly, milk-equivalent milk-fat exports totaled 1,055 million pounds, an increase of 80 million pounds from July 2023. This growth was primarily driven by increased shipments of cheese, skim milk products and dry whey products, which outpaced declines in lactose exports.
Imports of dairy products increased in July 2024 from the same month in 2023, mainly due to an increase in imports of butter, infant formula and casein. In July, imports on a milk-fat basis totaled 806 million pounds, 190 million higher than July 2023. On a skim-solids basis, July imports were 584 million pounds, 12 million higher than July 2023.
In July, on a skim-solids basis, domestic use was 15,093 million pounds, a decrease of 640 million compared to July 2023, while on a milk-fat basis totaled 18,977 million pounds, slightly above July 2023. Driven by lower milk production and higher dairy prices, domestic milk use from January to July 2024 declined marginally by 0.4 percent on a fat basis and 0.5 percent on a skim-solids basis, compared to the same period in 2023.
Despite some fluctuations, dairy product consumer price indexes (CPIs) have generally risen in 2024, contrasting with the broader decline in overall product and food CPIs.
The recent decline in the food service sector, particularly restaurants, may be also underlying the decline in the domestic consumption of dairy products. The National Restaurant Association’s Restaurant Performance Index (RPI) has been consistently lower in 2024 compared to the previous year, suggesting that restaurants are facing challenges such as reduced consumer spending, rising costs, and shifts in consumer preferences, all of which are likely impacting demand for dairy products from the foodservice sector.
Dairy Forecasts for 2024
Based on recent data from the USDA, NASS Milk Production report, the 2024 forecast for the dairy herd is lowered by 5,000 head to 9.335 million head. Similarly, the forecast for milk yield is reduced to 24,200 pounds per cow, 30 pounds less than the previous forecast, due to a slower expected growth in milk per cow. Consequently, the milk production forecast for 2024 is lowered by 0.4 billion pounds to 225.9 billion pounds.
Following the most recent trade data, the projection for 2024 U.S. dairy products imports on a milk-fat basis is raised to 9.0 (+0.3) billion pounds. On a skim-solids basis, the projection is 6.9 billion pounds, unchanged from last month. Higher expected imports of butter and butter products more than offset lower expected imports of cheese and other dairy products.
With recent data showing strong exports, the projections of 2024 exports of dairy products are revised upward from last month’s forecast. Projections for 2024 exports on a milk-fat basis are increased to 11.6 (+0.1) billion pounds, while exports on a skim-solids basis are forecast at 48.9 (+0.1) billion pounds. Higher expected exports of nonfat dry milk, casein and lactose more than offset lower expected exports of other dairy products.
Based on recent domestic use data, tighter domestic milk supplies, and higher expected prices for the main dairy products—the domestic use forecasts for 2024 are revised downward from the previous forecast. On a milk-fat basis 2024 domestic use is forecast at 222.6 (-0.2) billion pounds. On a skim- solids basis, it is forecast at 183.1 (-0.6) billion pounds.
Based on recent dairy price developments, the 2024 wholesale prices for all dairy products are revised upward. The new forecasts are as follows: Cheddar cheese $1.930 (+10.50 cents), dry whey $0.475 (+0.50 cents), butter $3.000 (+1.00 cents), and NDM $1.220 (+2.50 cents) per pound.
With higher prices across dairy products, the Class III and IV milk price forecasts are also raised from last month. The new forecast for Class III milk is $19.45 per cwt, $1.05 higher than the previous forecast. The Class IV price forecast is raised to $21.00 per cwt, $0.20 higher than the previous projection. The all-milk price for 2024 is now forecast at $23.05 per cwt, up $0.75 from last month’s forecast.
Dairy Forecasts for 2025
The improved dairy margins through 2024 are likely to create incentives for farmers to increase their dairy herds in 2025. However, the tight supply of dairy heifers will moderate growth expectations in the first half of the year. Relative to last month, the forecast for the U.S. dairy herd size in 2025 is unchanged at 9.360 million head. With lower 2024 forecasts for milk per cow and expected steady increases in milk solids components, the 2025 forecast for yield per cow is lowered by 30 pounds to 24,345 pounds. U.S. milk production for 2025 is projected at 227.9 billion pounds, 0.3 billion pounds lower than last month’s forecast.
With lower milk production and higher domestic dairy product prices, the projections for 2025 imports of dairy products are revised upward from last forecast. On a milk-fat basis, imports in 2025 are forecast at 8.6 (+0.3) billion pounds, while on a skim-solids basis, imports are forecast at 7.1 (+0.1) billion pounds. Higher expected imports of cheese, butter and butterfat products, milk proteins, and other dairy products are driven by strong demand from U.S. buyers and higher expected prices on domestic dairy products.
With higher expected prices for dairy products, some U.S. products are expected to become less competitive in the international market. On a skim-solids basis, the 2025 dairy exports are forecast at 49.8 billion pounds, 0.4 billion pounds lower than last month’s forecast. However, on a milk-fat basis, dairy exports are projected at 11.3 billion pounds, unchanged from the previous forecast.
Domestic use forecasts for 2025 are revised from last month. On a milk-fat basis, domestic use for 2025 is forecast at 224.4 billion pounds, 0.1 billion pounds below last month’s forecast. Conversely, with expected strong demand for high protein whey products, on a skim-solids basis, domestic use forecast is raised to 184.0 billion pounds, 0.1 billion pounds above the previous forecasts.
With tighter domestic milk supplies in 2025, the wholesale dairy products price forecasts for Cheddar cheese and whey are adjusted upward as follows: Cheddar cheese $1.940 (+8.00 cents) and whey $0.485 (+3.50 cents) per pound, respectively. The 2025 projections for butter and NDM are also revised upward as follows: butter $3.005 (+2.00 cents) and NDM $1.235 (+1.50 cents) per pound, respectively.
With higher prices forecast across all dairy products, the 2025 forecasts for Class III and Class IV milk
prices are revised upward to $19.60 (+$0.95) and $21.20(+$0.25) per cwt, respectively. The all-milk
price for 2025 is now forecast at $23.45 per cwt, up $0.70 from last month’s forecast.
3 While the end of each week for USDA, National Dairy Products Sales Report average prices fall on a Saturday, the trading week for the Chicago Mercantile Exchange usually ends on a Friday.
