With a projected increase in milk production driven by enhancements in dairy herd productivity and expansions, the industry is navigating through various market adjustments, including fluctuations in dairy product prices and trade activities.
U.S. milk production in 2024 is expected to increase, leading to higher domestic use and changes in pricing for various dairy products.
In 2025, milk production is forecast to grow further, driving down prices for major dairy products due to increased supplies, with exports expected to rise and imports to fall.
The forecast for 2024 indicates an upward revision in milk production due to an increase in dairy cows and a faster growth rate in milk output per cow. This surge in production is expected to impact various facets of the market. Imports on both a fat and skim-solids basis are projected to rise, while exports are anticipated to decline. Domestic use is set to increase, reflecting a growing demand for dairy products. Price forecasts show mixed trends; the cheese price is expected to rise, benefiting from robust domestic demand, but whey prices are projected to drop. Conversely, butter prices are predicted to rise, whereas nonfat dry milk (NDM) prices may see a reduction. The overall impact on pricing leads to a higher Class III price, driven mainly by the increase in cheese prices, and a lower Class IV price, influenced by the dip in NDM prices. The all milk price for 2024 is raised to $21.20 per cwt.
For 2025, milk production is forecast to continue its upward trajectory, supported by higher milk output per cow and an expanding dairy herd. This increase in supply is expected to lead to lower prices for cheese, butter, NDM, and whey, as the market adjusts to the heightened availability of milk. Despite the projected price declines, commercial exports are anticipated to grow on both a fat and skim-solids basis, attributed to competitive pricing and increased production. Imports are forecast to be lower, reflecting a stronger domestic supply reducing the need for foreign dairy products. Domestic usage is also expected to rise, driven by the increased availability and potentially lower prices of dairy products. Stock levels are projected to decrease, indicating a balanced market absorption of the increased production. The all milk price is anticipated to decrease to $20.90 per cwt due to the pressure from larger milk supplies.
For stakeholders looking to navigate the volatility in the dairy market, Hedgify offers strategic risk management solutions that can help stabilize pricing and supply chain fluctuations.
The information provided in this market insight is for general informational purposes and should not be considered financial advice. It is not intended to offer any financial recommendations or endorsements. Any decisions made based on the content are the sole responsibility of the reader.
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