- Class III average milk price is predicted to be $17.30, similar to 2023.
- Class IV milk price could be closer to $21, over $2 more than 2023.
- On-farm feed prices are predicted to fall by 15% by 2024, potentially boosting Class II and Class I profits.
- Heifers and cheese are the most optimistic aspects of the forecast.
- Milk output in the second half of 2023 is expected to decrease by 0.6% from last year.
- Heifers are in short supply, with a projected 1.1% decrease in calving in 2024.
- New cheese production capacity is expected to increase cheese output by 5.5% between Q4 and mid-2025.
- Dry whey, whey protein concentrate, and whey protein isolate are expected to see considerable demand and prices rise.
- Butter is the most optimistic segment of the market, with domestic disappearance expected to rise by 8.8% in 2023 and production increased by 2.2%.
The Class III average milk price in 2024 is predicted to be approximately $17.30, comparable to 2023, which is bad news for producers. However, the Class IV milk price might be closer to $21, which is over $2 more than 2023. On-farm feed prices are predicted to fall by roughly 15% by 2024, which might boost Class II and Class I profits.
Heifers and cheese are the most optimistic aspects of the forecast, with milk output in the second half of 2023 down 0.6% from last year and a milking herd down 0.4%, or 39,000 head, from the previous year. Heifers are in short supply, with the USDA forecasting that the number of heifers projected to calve in 2024 would be 1.1% lower than in 2023. However, dairy cow slaughter is down more than 20% from last year, so producers are hanging onto cows for another lactation. Despite the scarcity of heifers, the herd may increase somewhat in 2024.
The bearish issue is increased demand and new cheese production capacity coming online. Domestic cheese disappearance is anticipated to increase by just 0.8%, while fluid milk is down 1.4% and nonfat dry milk (NFDM) is down 9.7%. Between the fourth quarter of 2024 and the middle of 2025, at least five new cheese factories or plant expansions are expected to come online, possibly generating an extra 800 million pounds of cheese, representing a 5.5% increase in cheese output.
Dry whey, whey protein concentrate (WPC), and whey protein isolate (WPI) have all seen considerable demand, and their prices have risen over the last six months. While there may be downward pressure on the whey complex once these new cheese facilities open, stocks are projected to remain light until then, and a relatively low dry whey price will support the Class III pricing somewhat.
Butter is the most optimistic segment of the market, with domestic disappearance expected to rise by 8.8% in 2023, while production increased by just 2.2%. With milk supply poor and new cheese facilities absorbing more milk, butter output in 2024 is likely to remain low, making it difficult to replenish supplies and keeping the market tight.
