The all-milk price in the United States is predicted to reach $20.60 per cwt in 2023, the fourth time in the last 20 years. However, the inflation-adjusted milk price has resulted in historically low milk-to-feed margins and significant dairy margin coverage (DMC) payments. The cull cow market has been a bright light in 2023, with prices exceeding $100 per cwt. Dairy farmers will make a profit per cow on average in 2023.
Dairy producers are predicted to have 9.35 million head in 2024, a tiny decrease from 2023 but around 300 pounds more milk per cow. According to the USDA’s January dairy projection, the all-milk price average for the year will be $20 per cwt, somewhat lower than in 2023. The cull cow and bull calf markets should remain robust, with average fed cattle market values expected to be 2% higher in 2024 than in 2023. Feed prices are also expected to be reduced in 2024, resulting in smaller DMC payments. The milk-to-feed margin in 2024 is expected to be $10.70 per cwt, at least two months lower than the $9.50 margin.
Despite the unpredictable nature of the milk and feed markets, some farmers may find 2024 to be a low-margin year. Domestic dairy consumption, especially butter consumption, is likely to rise, with the forecast Class IV milk price exceeding Class III. The all-milk price is determined by the produced commodities of Class III and Class IV milk, with Class IV milk accounting for roughly 23% of the total milk price.
The export market is predicted to expand in 2024, with increased production of cheese, butterfat products, and whey products. Total exports are forecast to increase by 0.7% over 2023, with only the United States and Australia likely to witness rise in exports. Argentina, New Zealand, and the European Union’s total milk output are all predicted to fall.
Even with somewhat reduced milk prices in 2024, there are still chances for dairy farm profitability. Using marketing methods to ensure reduced feed costs for bought feeds, as well as lucrative Class III or Class IV milk futures, will help safeguard milk checks. Class IV milk futures are expected to climb by more than $3 per cwt by the fourth quarter of 2024.
