USDA Maintains Stagnant Outlook for Milk Production and Prices in 2024
Source: The DairyNews
The USDA's recent World Ag Supply and Demand Estimates (WASDE) report, released on Jan. 12, revealed a downward adjustment in the 2024 milk production forecast.
This reduction, influenced by lower milk cow numbers and sluggish growth in milk per cow, reflects a challenging outlook. The 2023 production estimate was also revised downward to 226.6 billion pounds, a marginal change from the previous year.
Despite the adjustments in production, price projections face continued pressure, particularly from cheese and Class III milk. Year-end prices impacted averages, leading to a decrease in the 2023 Class III price to $17.02 per hundredweight (cwt), while the Class IV price saw a slight increase to $19.12 per cwt. The all-milk price for 2023 remained unchanged at $20.60 per cwt.
Looking ahead to 2024, the USDA projects a total milk production of 228.3 billion pounds, down by 700 million pounds from the previous month's estimate. This adjustment, if realized, would represent a modest 0.8% increase from 2023. However, price forecasts for 2024 present a mixed picture, with a lowered Class III milk price of $16.10 per cwt, an increased Class IV price of $19.35 per cwt, and a slightly reduced all-milk price of $20 per cwt.
The report suggests ongoing market incentives for "depooling" Class IV milk from Federal Milk Marketing Orders (FMMOs) due to the spread between Class III and Class IV milk prices. As the industry navigates these challenges, the USDA's forthcoming Cattle report on Jan. 31 will provide valuable insights into producer intentions regarding dairy heifer retention for herd expansion.
Despite the adjustments in production, price projections face continued pressure, particularly from cheese and Class III milk. Year-end prices impacted averages, leading to a decrease in the 2023 Class III price to $17.02 per hundredweight (cwt), while the Class IV price saw a slight increase to $19.12 per cwt. The all-milk price for 2023 remained unchanged at $20.60 per cwt.
Looking ahead to 2024, the USDA projects a total milk production of 228.3 billion pounds, down by 700 million pounds from the previous month's estimate. This adjustment, if realized, would represent a modest 0.8% increase from 2023. However, price forecasts for 2024 present a mixed picture, with a lowered Class III milk price of $16.10 per cwt, an increased Class IV price of $19.35 per cwt, and a slightly reduced all-milk price of $20 per cwt.
The report suggests ongoing market incentives for "depooling" Class IV milk from Federal Milk Marketing Orders (FMMOs) due to the spread between Class III and Class IV milk prices. As the industry navigates these challenges, the USDA's forthcoming Cattle report on Jan. 31 will provide valuable insights into producer intentions regarding dairy heifer retention for herd expansion.
