Explore the current trends in the global dairy market for 2024. How are changes in production and consumption impacting the industry? Gain essential insights from the USDA report.

Imagine starting your day without your favorite coffee creamer because it’s missing from store shelves. This scenario highlights the turbulent changes the global dairy industry faces in 2024. The world is on the brink of a dairy shift, driven by market dynamics, environmental conditions, and strategic moves by critical regions. 

Join us as we analyse USDA’s Foreign Ag Service latest report and unpack the challenges confronting Argentina’s dairy industry, explore global milk production changes, and look at Australia’s booming cheese and skim milk powder markets. We also delve into Europe’s butter production hurdles and New Zealand’s focus on fresh dairy amid rising exports. These insights reveal why these shifts matter to producers, suppliers and consumers.

The Argentine Dairy Industry Faces Tumultuous Times in 2024 

The Argentine dairy industry faces tough challenges this year, with the country’s economic crisis hitting hard. Inflation and government foreign exchange controls have severely impacted milk production, export competitiveness, and domestic consumption. Heavy reliance on domestic inputs like feed and machinery has increased the financial strain on dairy farmers, causing many to cut production or seek capital, often operating at a loss. 

From January to June 2024, Argentina’s milk production fell by 13 percent compared to 2023. Forecasts suggest a 7 percent drop for the year, hitting 10.8 million tons. This decline in early 2024 has paradoxically led to a rise in milk prices, encouraging more production later in the year. Despite the long-term struggle with rising costs, a devalued peso has made Argentine dairy products more competitive globally, boosting export volumes by 10 percent in the first five months of 2024. Cheese exports, in particular, are expected to jump from 85,000 tons in 2023 to 100,000 tons in 2024. 

Domestically, the situation remains challenging, with higher production costs leading to increased prices for dairy products. Many families struggle to afford these basics due to inflation, resulting in a forecasted 7 percent decline in domestic fluid milk consumption to 1.6 million tons in 2024. The industry faces a critical decision: focus on lucrative export markets or serve a price-sensitive domestic market. 

In response, the Argentine government has introduced support measures, such as reopening agricultural export registrations and a blended exchange rate for exports, offering a more favorable rate for exporters. While these measures have been somewhat effective, the broader economic environment presents significant hurdles. Annualized inflation for food and non-alcoholic beverages, including milk, stands at nearly 300 percent, limiting growth in domestic dairy demand.

Shifting Paradigms in Global Milk Production: Australia’s Rise as Argentina and New Zealand Face Challenges

Argentina’s fluid milk production is forecast to decline by approximately 7 percent in 2024, hitting 10.8 million tons. This dip is due to macroeconomic challenges, such as a weakened peso and high inflation, leading to higher production costs. Reduced herd sizes and limited feed availability further worsened the situation. However, improvements are expected later in the year due to better margins from disinflation, improved weather, and temporary export restriction removals encouraging herd expansion. 

Meanwhile, the European Union’s milk production in 2024 remains unchanged primarily, as increased output per cow is offset by a declining dairy herd. The herd has now dropped below 20 million, driven by lower milk prices, high production costs, environmental regulations, and generational renewal issues. Although larger farms are better at maintaining herd sizes, smaller, less efficient farms exit the market, leading to milk production constraints. 

New Zealand’s fluid milk production is expected to decline by 0.7 percent to 21.1 million tons in 2024. A shrinking herd, the El Niño weather pattern, and high debt servicing costs are critical factors for the decline. Moreover, the sector faces challenges with softening revenue and high input costs. Despite this, investments in processing facilities are shifting focus from milk powder to value-added products like butter, cheese, and cream. With 95 percent of milk production exported, trade agreements bolster strong demand for New Zealand dairy products, especially with China.

Australia’s Booming Cheese Production: A Forecast for 2024

Australia’s cheese production is expected to hit 435,000 tons in 2024, thanks to higher milk supplies and strong profitability. Despite rising input costs, Australian dairy farmers continue to thrive through tech investments and efficient practices. Domestic consumption remains robust at 380,000 tons, with a strong preference for local cheese. The surplus of about 165,000 tons will be exported, primarily to Japan, China, and Southeast Asia. 

In the EU, cheese production is set to increase by nearly 1 percent to approximately 10.5 million tons in 2024. The boost comes from domestic solid consumption and steady export demand. The major contributors are Germany, France, Italy, the Netherlands, and Poland. EU cheese exports are expected to grow by 1 percent to 1.4 million tons, with key markets being the UK and the U.S. Domestic consumption is accelerating, driven by economic recovery and the tourism sector’s resurgence. Germany, France, Italy, Poland, and Spain are the leading cheese-consuming countries. 

New Zealand’s cheese production in 2024 is projected at 375,000 tons, thanks to recent investments in processing facilities. With modest domestic consumption at around 40,000 tons, most of their cheese—about 350,000 tons—is exported to markets like China, Japan, and Australia. The focus is on diversifying into soft cheese varieties like brie, blue cheese, and gouda. 

The U.S. cheese export outlook for 2024 is promising: it is anticipated at 466,000 tons, an 8 percent increase from 2023: new production capacities and firm performance in the year’s first half support this growth. However, the recent rise in U.S. cheese prices is forecasted at $1.97/lb. In Q3, it was $1.93/lb. In Q4, competitiveness might be challenged in the latter half of the year. Oceania cheese prices are also expected to moderate after hitting $1.97/lb in July.

European Union Butter Production: A Setback Amid Tightening Milk Supplies and Changing Consumer Preferences

Butter production in the European Union (EU) is set to drop by just over 1 percent in 2024. This decline is driven by limited milk supplies, prompting dairy processors to focus on more lucrative cheese production. Key EU butter producers like Germany, France, Ireland, Poland, and the Netherlands are all expected to decrease output. The trend of reduced butter production was evident early in the year, showing a 4-percent dip compared to the same period in 2023. 

EU domestic butter consumption is also on a downward trend. Health concerns and a shift towards plant-based spreads, especially in Mediterranean countries, are significant factors. This shift is expected to lead to a 3 percent reduction in butter consumption compared to 2023. 

Butter exports from the EU are forecasted to decline in 2024 due to reduced production and stiffer global competition. Early data indicates a 4 percent drop in exports through May, with the overall yearly forecast at 280,000 tons. Rising farm-gate milk prices are making EU butter less competitive, causing a contraction in export volumes. 

In contrast, New Zealand’s butter production is expected to rise slightly to 525,000 tons in 2024, bolstered by new processing facilities focused on high-value products like grass-fed butter. However, New Zealand’s butter exports are forecasted to decrease to 495,000 tons due to economic pressures like high debt servicing and fluctuating feed prices. 

Despite early declines, demand for New Zealand butter remains strong in key markets such as China and the United States. Anhydrous Milk Fat (AMF) exports from New Zealand are performing well, showing a 24 percent increase year-to-date, reflecting robust global demand for high-value dairy products. 

China’s butter imports are rising, driven by higher domestic consumption, especially in sectors like bakeries, yogurt, ice cream, and food services. The first half of 2024 saw a 10 percent increase in butter imports, mainly from New Zealand and the EU. Despite a slight uptick in domestic production, the quality is often insufficient for premium uses, maintaining China’s reliance on imports for high-end applications.

Australia’s Skim Milk Powder Production Soars Amid Global Shifts in 2024

In 2024, Australia’s skim milk powder (SMP) production is set to rise to 170,000 tons, a 17 percent increase from 2023. This growth is driven by higher milk production, which means processors need to manage larger milk volumes during peak periods. Additional SMP aligns with the increased milk supply. Exports are also expected to grow, reaching 160,000 tons, up 20 percent, with key markets being China, Indonesia, Vietnam, Thailand, Malaysia, and Saudi Arabia. 

Conversely, SMP production in the EU is forecast to decline slightly as dairy processors focus more on the higher returns from cheese production due to lower farm-gate milk prices and higher production costs. Furthermore, EU exports are expected to drop with increased global competition and enhanced local production in their key markets. 

The U.S. has faced challenges this year with SMP exports. They were down 11 percent through May, with forecasts indicating an over 8 percent drop to 741,000 tons. This decline is primarily attributed to weaker Southeast Asian demand and increased competition from countries like New Zealand. While U.S. SMP exports may improve in the latter half of 2024, they are unlikely to recover fully, given competitive pricing from Oceania.

New Zealand’s Strategic Shift in Whole Milk Powder Production for 2024: Embracing Fresh Dairy Products Amid Rising Exports

In 2024, New Zealand’s production of whole milk powder (WMP) is projected to decline slightly to 1.375 million tons. This decrease is attributed to a strategic shift by dairy processors towards producing fresh dairy products such as butter, cheese, and cream, which currently offer higher returns. The New Zealand dairy industry continues to invest in enhancing processing capacity for higher-value products to maximize returns in a competitive global market. 

Despite this decline, exports are set to rise to 1.45 million tons, driven by strong demand from Southeast Asia and the UAE. Additionally, the first quarter of 2024 witnessed a 32-percent export increase, boosted by recovering global dairy trade prices. This growth reflects New Zealand’s strategic investment in high-value dairy products, aiming for sustainable profitability in a competitive market. 

China’s WMP production is also expected to increase due to surplus raw milk being diverted for powder production. Yet, profitability remains challenging, prompting processors to minimize raw milk purchases for WMP. Provincial subsidies are helping, but the overall growth will be modest compared to previous years as pandemic-driven consumption levels wane. 

Improving domestic quality reduces China’s reliance on imports, pushing down demand for foreign WMP. Enhanced production capabilities and significant carryover stocks further diminish the need for imports, reflecting shifting dynamics in China’s dairy market.

The Bottom Line

The global dairy industry in 2024 faces both challenges and opportunities. Due to economic pressures, smaller herds, and lower feed availability, Argentina’s milk production declines. In contrast, Australia experiences a boom in cheese and skim milk powder production, driven by a stable currency and improved farming practices. The European Union grapples with tighter milk supplies and changing consumer preferences, impacting butter production. New Zealand shifts towards fresh dairy products amid a shrinking herd and external pressures. These trends underline the interconnectedness of global dairy markets. Australia’s resilience contrasts with Argentina’s vulnerabilities, while the EU’s situation highlights the balance needed between environmental goals and economic viability. New Zealand’s pivot shows the importance of adaptation for a competitive edge. The ongoing changes affect global supply chains and prices, making it essential for farmers, analysts, and policymakers to stay informed and adaptable.

Key Takeaways:

• Argentina’s dairy industry faces significant challenges in 2024 due to economic instability and reduced herd sizes.
• Australia is experiencing a resurgence in milk production, supported by efficient farming practices and technological investments.
• Cheese consumption and production are on the rise globally, particularly in Australia, driven by increased incomes and recovery in tourism.
• EU butter production is projected to decline due to tight milk supplies and shifting consumer preferences.
• Australia’s skim milk powder production is set to increase, reflecting broader changes in the global dairy market.
• New Zealand is pivoting towards producing fresh dairy products, while its milk production is forecasted to decline.

Summary:

The global dairy industry faces challenges in 2024 due to market dynamics, environmental conditions, and strategic moves. Argentina’s dairy industry faces an economic crisis, inflation, and government foreign exchange controls, leading to a 13% drop in milk production. However, a devalued peso has made Argentine dairy products more competitive globally, boosting export volumes by 10%. Domestically, higher production costs have led to increased prices for dairy products, resulting in a 7% decline in domestic fluid milk consumption to 1.6 million tons. The Argentine government has introduced support measures to help exporters. Australia’s fluid milk production is projected to reach 8.8 million tons, a 3.5% increase from 2023, due to favorable weather and improved pasture availability. Argentina’s production is forecast to decline by approximately 7%, reaching 10.8 million tons.

Learn more:

• Global Dairy Trade: Key Insights Every Dairy Farmer Should Know
• Is 2024 Shaping Up to Be a Disappointing Year for Dairy Exports and Milk Yields?
• How Cheese Exports and China’s Demand are Powering the US Dairy Economy in 2024

Learn about the 2024 dairy market outlook: Will more cows and higher prices affect your business? Check out the updated forecasts and price trends now.

The 2024 forecast for the average number of milk cows has been revised upward to 9.350 million head, based on recent inventory data and improved margins. However, the projections for milk per cow and total milk production have been lowered to 24,265 pounds and 226.9 billion pounds, respectively. Wholesale dairy product price forecasts for 2024 have seen an increase: Cheddar cheese is now $1.820 (+3 cents), dry whey is $0.440 (+0.5 cents), butter is $3.005 (+3.5 cents), and nonfat dry milk is $1.185 (+1.0 cents) per pound. The all-milk price for 2024 is now expected to be $22.25 per hundredweight (cwt), up $0.65 from last month’s forecast. 

Looking ahead, the 2025 forecast for the dairy herd size has also been revised upward due to higher expected farm margins. Conversely, the projections for yield per cow and total milk production have been adjusted downward. Additionally, wholesale prices for the main dairy products for 2025 have been revised upward. The all-milk price for 2025 is now projected to be $22.50 per cwt, marking an increase of $1.00 from last month’s forecast.

See the latest Livestock, Dairy, and Poultry Outlook report.

Discover the latest trends in CME cash dairy prices with gains in whey, cheese, and butter. Curious about the market shifts? Read on for detailed insights.

Cash dairy prices were mostly higher Monday on the Chicago Mercantile Exchange. Here’s a quick snapshot of the day’s market movements: 

• Dry Whey: Up $0.0075 at $0.5250. No sales were recorded.
• Forty-pound Cheese Blocks: Up $0.01 at $1.8750. Four sales were recorded, ranging from $1.8625 to $1.8750.
• Cheese Barrels: Up $0.0125 at $1.9250. Two sales were recorded at $1.92 and $1.9250.
• Butter: Unchanged at $3.0750. Six sales were recorded, ranging from $3.0725 to $3.0750.
• Nonfat Dry Milk: Unchanged at $1.1975. No sales were recorded.

Explore the newest shifts in dairy pricing with significant gains in cheese and AMF at the Global Dairy Trade Event 360. What do these fluctuations mean for the market? Dive in to learn more.

The latest Global Dairy Trade Event 360 has brought some positive news for the dairy industry, with a modest rise in the GDT Price Index by 0.4%. Key product indexes showcased varied trends, highlighting the dynamic nature of the global dairy market. 

Amid these fluctuations, Anhydrous Milk Fat (AMF) stood out with a significant index increase of 4.0%. The average price for AMF reached US$6,764/MT (€6,201/MT), indicative of rising demand and market strength.  The upward movement in AMF prices reflects strong market fundamentals and an uptick in global demand.

Butter, another product of interest, also saw its index climb by 0.8%, with an average price of US$6,606/MT (€6,056/MT). This moderate improvement points towards stable consumption patterns. 

However, not all categories followed this positive trend: 

• Cheddar (CHED) index surged by a remarkable 6.2%, reaching an average price of US$4,217/MT (€3,866/MT).
• Lactose (LAC) decreased slightly by 0.6%, with an average price of US$792/MT (€726/MT).
• Mozzarella (MOZZ) decreased by 0.8%, landing at an average price of US$4,225/MT (€3,873/MT).
• Skim Milk Powder (SMP) dropped by 1.1%, averaging US$2,566/MT (€2,353/MT).
• Whole Milk Powder (WMP) fell by 1.6%, at an average price of US$3,142/MT (€2,881/MT).

Interestingly, the Butter Milk Powder (BMP) index data was unavailable for this event, leaving a gap in the overall product trend analysis.

Discover how June FMMO milk prices surged to new highs. What factors drove Class II, III, and IV prices up? Stay informed on dairy market trends and future outlook.

Dairy producers can look forward to healthier June milk checks, driven by the latest Federal Milk Marketing Order (FMMO) milk class prices. As announced on July 3, FMMO Class II, III, and IV prices increased from the previous month, buoyed by higher butterfat and protein values. Notably, the Class III-IV price gap continues to narrow. 

Upcoming June 2024 FMMO pooling estimates, uniform prices, and producer price differentials (PPDs) will be announced from July 11 to 14 and summarized on July 15. Stay tuned to Progressive Dairy’s website for the latest updates. 

June class prices 

Here’s a snapshot of the class prices announced on July 3: 

• At $21.60 per hundredweight (cwt), the June Class II milk price is up 10 cents from May and $2.77 higher than June 2023. This is the highest it has been since October 2023.
• The Class III milk price, at $19.87 per cwt, surged another $1.32 from May, reaching an 18-month high and standing $4.96 higher than June 2023.
• At $21.08 per cwt, the June 2024 Class IV milk price increased 58 cents from May and $2.82 more than June 2023. This is also the highest price since October 2023.

Considering potential FMMO pooling impacts, the June 2024 Class IV milk price is $1.21 more than the Class III milk price for the month, down from $1.95 in May. This marks the narrowest spread since September 2023. 

Further strengthening prices, the advanced Class I base price was announced at $20.08 per cwt, an increase of $1.62 from May 2024 and $2.07 higher year-over-year. This is the highest Class I base price since February 2023. 

Butterfat protein values move higher. 

Elevated butterfat and protein values have significantly influenced June’s milk class price calculations. The value of butterfat climbed about 8 cents from May, reaching around $3.54 per pound. Milk protein saw an even more notable increase, rising nearly 32 cents to $2.05 per pound, the highest value since September 2023. 

The value of nonfat solids increased by approximately 3.5 cents to 99.9 cents per pound, while the value of other solids increased by about 1.5 cents to 23.3 cents per pound. 

Looking ahead 

Given FMMO advanced prices and current futures prices, the outlook for July milk prices is mixed but generally looking stronger. 

The July 2024 advanced Class I base price has already been announced at $21.11 per cwt, a $1.03 increase from June 2024 and $3.79 higher than a year ago. This makes it the highest since January 2023. 

July Class II, III, and IV milk prices will be released on July 31. According to trading on July 2, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $19.42 per cwt for July, showing a 45-cent drop from the June price. Meanwhile, the Class IV milk futures price closed at $21.41 per cwt for July, reflecting a 33-cent rise from June. Should these futures prices persist, the July Class III-IV milk price gap will widen to $1.99 per cwt, incentivizing some Class IV deploying.

Find out why milk prices are staying the same as cheese prices go up and butter prices go down. How will these changes affect the dairy market? Get the latest updates now.

On the eve of July 4th, spot cheese prices made a modest recovery, reaching $1.90 and positioning the barrel marginally higher than the block by a quarter of a cent. While futures showed a hint of optimism, they largely remained static as we approach Q4. Butter, meanwhile, lost some momentum in the spot market, witnessing a minor dip, and its futures presented a mixed picture amidst low trading volumes. We must look to Friday’s trading session for more precise directional signals. 

May proved to be another robust month for U.S. cheese exports, which surged to 106 million pounds—a 4% increase from April and a stunning 47% rise from last year. A remarkable highlight was the record-breaking cheese export to Mexico, with our southern neighbors purchasing an unprecedented 40 million pounds, marking a 62% year-over-year increase. On the import side, the U.S. hit a record by bringing in 13 million pounds of butter in May, reflecting a monthly increase of 13% and a 24% rise for the year. 

Blocks held steady at $1.9000 per pound, with three lots traded. Conversely, Barrels experienced a notable increase to $1.9025 per pound, up by $0.0225, with two loads sold. Concurrently, butter prices dipped slightly to $3.1350 per pound, down by $0.0025, with three lots exchanged. 

Discover the latest on CME cash dairy prices: Cheese barrels see a slight rise, while other products hold steady. Curious about the market trends? Read more now.

Cash dairy prices were mostly steady Tuesday on the Chicago Mercantile Exchange. 

Here’s a quick summary of the latest prices: 

• Dry Whey: Remained unchanged at $0.49. One sale was recorded at that price.
• Forty-pound Cheese Blocks: Held steady at $1.90. One sale was recorded at $1.9025.
• Cheese Barrels: Increased by $0.0275 to $1.88. Ten sales were logged, all at that price.
• Butter: Unchanged at $3.1375. No sales were recorded.
• Nonfat Dry Milk: Declined by $0.01 to $1.17. Three sales were recorded, ranging from $1.17 to $1.1725.

Learn why the Global Dairy Trade Index dropped 6.9%. What led to the steep falls in milk fat, butter, and cheese prices? Get the details and understand what this means.

The Global Dairy Trade index saw a notable decline of 6.9% during Tuesday’s trading session. In contrast, only lactose managed a slight price increase, while all other dairy products experienced a decrease in value. In total, 113 winning bidders acquired 24,138 metric tons of dairy products over 16 rounds of bidding. Notably, anhydrous milk fat prices dropped 10.7% to $6,517 per metric ton, equivalent to $2.95 per pound. 

• Butter: fell 10.2% to $6,546 per metric ton or $2.96 per pound.
• Cheddar Cheese: decreased 6.9% to $3,980 per metric ton or $1.80 per pound.
• Butter Milk Powder: dipped 5.1% to $2,672 per metric ton or $1.23 per pound.
• Skim Milk Powder: fell 6.1% to $2,586 per metric ton or $1.17 per pound.
• Whole Milk Powder: declined 4.3% to $3,218 per metric ton or $1.45 per pound.
• Lactose: prices edged up six-tenths of a percent to $804 per metric ton or $0.36 per pound.

Discover the latest CME cash dairy price shifts: butter and block cheese rise while barrels and nonfat dry milk dip. How will these changes impact your market strategy?

This Thursday, cash dairy prices presented a mixed picture on the Chicago Mercantile Exchange. Monitoring these daily fluctuations is essential, as they can impact everything from production costs to consumer prices at the grocery store. Let’s break down the latest movements in the cash dairy market. 

Here’s a quick summary of the day’s changes: 

• Dry whey maintained stability for a third consecutive day at $0.4850, with no sales recorded.
• Block cheese prices made gains, surpassing barrel cheese prices:
• Cheese barrels experienced a slight dip, dropping by $0.02 to $1.88, with one sale recorded.
• Butter prices increased by $0.0175 to $3.1075, bolstered by two sales recorded at $3.0950 and $3.1075.
• Nonfat dry milk prices decreased marginally by $0.0050 to $1.18, supported by eight sales ranging from $1.1725 to $1.18.