USDA Projects Growth in Milk Production and Prices Over the Next Decade
Source: DairyNews.today
The U.S. Department of Agriculture (USDA) has released its ten-year baseline projections, forecasting growth in milk production, cow numbers, and dairy prices through 2034.
Despite a slower-than-expected rebound in milk production this fall, the USDA's long-term outlook remains positive, with significant increases projected in milk output and per-cow yields.
Milk production has faced challenges this year, as demand has not fully recovered, leaving butter and cheese markets under pressure. While cheese prices have dropped to their lowest levels since April and butter prices have remained stagnant since October, nonfat dry milk and dry whey prices have seen upward momentum. The Grade A nonfat dry milk price has reached its highest level since November 2022, and dry whey prices have climbed to levels not seen since April 2022.
Despite these market fluctuations, milk production has remained resilient. Production per cow has improved, and while concerns over a tight heifer supply had initially raised doubts, the rate of culling slowed, and overall milk production continued to rise. In August and September, milk production exceeded year-ago levels, despite a reduction in herd numbers.
Looking ahead, the USDA’s projections suggest steady growth in milk production and dairy cow numbers. By 2034, the U.S. dairy herd is expected to reach 9.5 million cows, with total milk production increasing to 253.1 billion pounds from 225.8 billion pounds in 2023. This growth is anticipated to be driven by higher milk yields per cow, rising from 24,195 pounds in 2023 to 26,630 pounds by 2034.
The USDA also forecasts an increase in dairy prices over the next decade. The All-Milk price is projected to average $25.58 per cwt in 2034, setting a new record for milk prices. Among individual dairy products, cheddar cheese is expected to see the most significant price growth, rising from $1.88 per pound in 2023 to $2.14 per pound by 2034. Dry whey prices are also expected to climb, with an average increase of 6 cents per pound to reach 54 cents per pound by 2034.
However, butter prices are projected to remain relatively flat, with the average price expected to fall by 5 cents to $2.87 per pound in 2034. Nonfat dry milk is anticipated to see a moderate gain, with prices rising 4 cents to $1.27 per pound by 2034.
Despite these optimistic projections, the USDA acknowledged the volatility in dairy markets, influenced by domestic and global supply and demand dynamics, as well as political and economic factors. As such, dairy farmers will need to stay agile and prepared to navigate market fluctuations and capitalize on profitable pricing opportunities to strengthen their operations over the next decade.
Robin Schmahl, a commodity broker with AgDairy, highlighted the importance of being ready to adapt to market changes. “Farmers must be prepared to take advantage of volatility as it unfolds,” Schmahl said, emphasizing the need for proactive strategies to protect farm profitability and build long-term equity.
The USDA’s projections offer a cautiously optimistic view of the dairy industry’s trajectory, but uncertainties remain, and future market conditions will likely continue to fluctuate.
Milk production has faced challenges this year, as demand has not fully recovered, leaving butter and cheese markets under pressure. While cheese prices have dropped to their lowest levels since April and butter prices have remained stagnant since October, nonfat dry milk and dry whey prices have seen upward momentum. The Grade A nonfat dry milk price has reached its highest level since November 2022, and dry whey prices have climbed to levels not seen since April 2022.
Despite these market fluctuations, milk production has remained resilient. Production per cow has improved, and while concerns over a tight heifer supply had initially raised doubts, the rate of culling slowed, and overall milk production continued to rise. In August and September, milk production exceeded year-ago levels, despite a reduction in herd numbers.
Looking ahead, the USDA’s projections suggest steady growth in milk production and dairy cow numbers. By 2034, the U.S. dairy herd is expected to reach 9.5 million cows, with total milk production increasing to 253.1 billion pounds from 225.8 billion pounds in 2023. This growth is anticipated to be driven by higher milk yields per cow, rising from 24,195 pounds in 2023 to 26,630 pounds by 2034.
The USDA also forecasts an increase in dairy prices over the next decade. The All-Milk price is projected to average $25.58 per cwt in 2034, setting a new record for milk prices. Among individual dairy products, cheddar cheese is expected to see the most significant price growth, rising from $1.88 per pound in 2023 to $2.14 per pound by 2034. Dry whey prices are also expected to climb, with an average increase of 6 cents per pound to reach 54 cents per pound by 2034.
However, butter prices are projected to remain relatively flat, with the average price expected to fall by 5 cents to $2.87 per pound in 2034. Nonfat dry milk is anticipated to see a moderate gain, with prices rising 4 cents to $1.27 per pound by 2034.
Despite these optimistic projections, the USDA acknowledged the volatility in dairy markets, influenced by domestic and global supply and demand dynamics, as well as political and economic factors. As such, dairy farmers will need to stay agile and prepared to navigate market fluctuations and capitalize on profitable pricing opportunities to strengthen their operations over the next decade.
Robin Schmahl, a commodity broker with AgDairy, highlighted the importance of being ready to adapt to market changes. “Farmers must be prepared to take advantage of volatility as it unfolds,” Schmahl said, emphasizing the need for proactive strategies to protect farm profitability and build long-term equity.
The USDA’s projections offer a cautiously optimistic view of the dairy industry’s trajectory, but uncertainties remain, and future market conditions will likely continue to fluctuate.
