US Dairy Outlook: Adjustments in Milk Production and Trade Dynamics

On the import front, fat basis imports for 2023 remain unchanged, with lower-than-expected third-quarter imports offset by anticipated higher imports of butter and butter fat in the fourth quarter. The fat basis import forecast for 2024 is higher due to expected increases in butter and cheese imports. Skim-solids basis imports for 2023 are lowered, reflecting decreased imports of milk proteins. However, the forecast for skim-solids basis imports in 2024 remains unchanged.

Exports in 2023 are reduced on a fat basis, primarily due to lower expected sales of butter, milkfats, whole milk powder, and whey. Nonetheless, a higher skim-solids export forecast is driven by increased lactose shipments. For 2024, a decrease in butter sales is the main factor leading to a reduction in the fat basis export forecast. However, higher exports of nonfat dry milk (NDM) and cheese contribute to a higher skim-solids export forecast.

Changes in pricing reflect the evolving market dynamics. The butter price forecast for 2023 is reduced due to more rapid erosion than initially expected. In contrast, a stronger demand for whey supports a higher price forecast for that category. Cheese prices remain unchanged, and the NDM price is adjusted to reflect current market conditions.

Class III prices are raised based on a higher whey price, while Class IV prices are lowered due to a weaker butter price, despite slightly higher NDM prices. Looking ahead to 2024, the butter price forecast is reduced further as prices continue to soften. However, increases in cheese, NDM, and whey prices contribute to higher Class III and Class IV price forecasts. The 2023 all milk price forecast remains unchanged at $20.70 per cwt, while the 2024 all milk price is raised to $20.80 per cwt.