Milk Production Forecasts Cut Amid Lower Cow Inventories and Sluggish Growth

The USDA’s upcoming Cattle report may provide crucial insights into whether dairy heifer retention efforts will help rebuild the milking herd, a key factor in shaping long-term production trends.
Imports and Exports: Shifting Trade Dynamics
Trade flows are playing an increasingly significant role in the dairy market’s landscape. On a fat-basis, imports for 2024 have been revised upward due to increased cheese and butter imports. Skim-solids imports, however, remain unchanged. Looking ahead to 2025, fat-basis imports are forecasted to rise further, underpinned by sustained demand for cheese and butter. Conversely, skim-solids imports are expected to decline, reflecting reduced imports of casein and milk protein concentrates.
On the export side, U.S. butter and cheese continue to gain traction globally, with competitive pricing bolstering fat-basis export forecasts for both 2024 and 2025. However, the outlook for skim-solids exports is less optimistic. Nonfat dry milk (NDM) and whey face stiff competition in international markets, leading to a downward revision in export expectations for these products.
Price Projections: Mixed Signals for Producers
Price forecasts paint a complex picture for dairy producers. The all-milk price for 2024 has been adjusted downward to $22.60 per hundredweight (cwt), reflecting current market pressures. However, 2025 offers a brighter horizon, with the all-milk price projected to increase to $23.05 per cwt. This anticipated rise is supported by higher expected prices for key dairy commodities, including cheese, butter, NDM, and whey, driven by tighter milk supplies and robust demand.
Both Class III and Class IV milk prices are forecasted to climb in 2025, bolstered by strengthening cheese, whey, butter, and NDM prices. For dairy producers navigating an evolving market, these price trends offer a mix of challenges and opportunities as they plan for the years ahead.
Outlook and Implications
The latest revisions to milk production and trade forecasts underscore the complex dynamics at play in the global dairy market. Lower cow inventories and slower output growth per cow highlight the need for strategic adjustments by producers. At the same time, shifting trade patterns and competitive global markets will likely shape the trajectory of U.S. dairy exports.
As the USDA’s forthcoming reports provide further clarity, stakeholders across the dairy supply chain will closely monitor developments to navigate these evolving market conditions.