The Agriculture Department again lowered its 2024 and 2025 milk production forecasts in the latest World Agriculture Supply and Demand Estimates report, citing smaller forecast cow inventories and a slower growth rate of milk per cow for the remainder of the year.

The slower growth in milk per cow is expected to carry into 2025.

2024 production and marketings were projected at 225.9 billion and 224.9 billion pounds, respectively, down 400 million pounds on both from last month’s estimate.

If realized, both would be down 500 million pounds, or 0.02%, from 2023.

2025 production and marketings were projected at 227.9 billion and 226.9 billion pounds, respectively, down 300 million pounds on both.

If realized, both would be up 2 billion pounds, or 0.9%, from 2024.

Price forecasts for 2024 cheese, butter, nonfat dry milk (NDM) and whey were raised, based on strong recent prices and lower milk production.

The 2024 Class III milk price was projected to average $19.45 per cwt., up $1.05 from last month’s estimate, and compares to $17.02 in 2023 and $21.96 in 2022.

The 2025 average was estimated at $19.60, up 95 cents from a month ago.

The Class IV price average for 2024 was estimated at $21.00, up 20 cents from last month’s estimate, and compares to $19.12 in 2023 and $24.47 in 2022.

The 2025 average was projected at $21.20, up 25 cents from a month ago.

The U.S. corn outlook called for smaller supplies and a modest decline in ending stocks. The accompanying Crop Production report forecast corn production at 15.2 billion bushels, up less than 1% from the previous forecast but down 1% from 2023.

Corn yields are expected to average a record 183.6 bushels per acre, up 0.5 bushel from the previous forecast and up 6.3 bushels from last year. Area harvested was forecast at 82.7 million acres, unchanged from the previous forecast but down 4% from the previous year.

The season-average corn price was lowered 10 cents to $4.10 per bushel.

The soybean outlook included lower beginning stocks, production and ending stocks. Production was forecast at a record 4.59 billion bushels, down slightly from the previous forecast but up 10% from 2023.

Soybean yields are expected to average a record 53.2 bushels per acre, unchanged from the previous forecast but up 2.6 bushels from 2023. Area harvested was forecast at 86.3 million acres, unchanged from the previous forecast, but up 5% from 2023.

The U.S. season-average soybean price forecast was unchanged at $10.80 per bushel.

Record barrel price

After gaining 23.25 cents the previous two weeks, the Cheddar blocks reached $2.3150 per pound last Wednesday, highest since May 24, 2022, but closed Friday the 13th at $2.2750, up a half-cent on the week and 39.50 cents above a year ago.

The highest block price ever was $3.00 per pound on July 13, 2020, with barrels topping out at $2.53 on Nov. 2, 2020.

The barrels saw daily gains last week and closed Friday at $2.4850, 21 cents higher on the week and 67.50 cents above a year ago.

There were 9 sales of block and 3 of barrel on the week.

The blocks ticked up 2.50 cents Monday on a sale but were offered 2.25 cents lower Tuesday, slipping back to $2.2775, as traders weighed the morning’s GDT and anticipated Friday afternoon’s August Milk Production report.

The barrels were bid up a half-cent Monday and jumped 7.50 cents Tuesday on 8 trades, hitting $2.5650, the highest CME price ever, and 28.75 cents above the blocks. 

Dairy Market News reports that cheese demand is steady to strong, according to Central region processors.

Milk has continued to tighten since the Labor Day holiday as Class I needs are pulling milk from cheese plants to refill school pipelines.

Class III milk demand remains strong from cheesemakers in the West but bottling continues to pull milk away. Butter market price strength is also attractively drawing milk fats away from cheese. Cheese production is generally steady. Domestic demand is steady to moderate while export demand is mixed.

Cash butter fell to $3.0850 per pound last Thursday but closed Friday at $3.13, down 4.50 cents on the week while 41.25 cents above a year ago, on 12 sales.

Monday’s butter dropped 6 cents, on 3 trades, but regained 1.50 cents Tuesday on 5 sales, climbing back to $3.0850.

The Sept. 10 Daily Dairy Report said that “the United States has increased butter production on a year-over-year basis in every month this year, and set a new monthly record high in July of 162 million pounds. Yet, cold storage inventories dropped by more than 23 million pounds from June to July, their largest drawdown between these two months since 2013.”

The DDR added: “European butter prices, which have topped $4 per pound, are even higher as milk production and components fall due to blue tongue disease.”

Butter churning was still active in the Midwest but rates have decreased since the previous week when some were running full bore. Cream availability has begun to wrench back.

Butter demand is strong and strengthening. A number of Central butter suppliers say inventories are tight or spoken for, according to DMN.

Butter production is strong to steady in the West. Manufacturers are working to build inventory to cover anticipated fourth-quarter demand and planned maintenance.

Inventories are “comfortable.” Cream volumes have tightened somewhat and demand is steady from butter manufacturers. Domestic butter demand is strong to steady.

Grade A nonfat dry milk climbed to $1.3975 per pound last Wednesday, highest since Nov. 22, 2022, but saw its Friday finish at $1.3925, 2.75 cents higher on the week and 28 cents above a year ago. Sales totaled 31 loads for the week. The highest powder price ever was $2.16 per pound on Dec. 5, 2007.

The powder was down a quarter-cent Monday, with 5 loads traded, then regained it Tuesday, returning to $1.3925 on 2 trades.

Dry whey inched a quarter-cent higher last Monday and stayed put until Friday when it gained 1.50 cents and closed at 60.50 cents per pound, up 1.75 cents, highest since Aug. 5, 2024, and 30.50 cents above a year ago. There were 9 sales reported.

The whey lost 1.50 cents Monday on 2 trades but regained a half-cent Tuesday, closing at 59.50 cents per pound, with 2 sales on the day.

Fewer buyers

StoneX broker Dave Kurzawski credited the lack of milk and Cheddar cheese for the soaring prices in the Sept. 16 “Dairy Radio Now” broadcast.

“We’re entering the good demand time of the year,” he said, “And there’s not an overhang of cheese in the market.”

But there are fewer buyers with prices in this “rarified air,” he warned, “so setbacks are expected.”

CME butter, though weaker, remains strong. He pointed out that Europe has seen $4 per pound prices, while the U.S. has been in a 5 cent range around $3.17 for over a month. He believes there’s plenty of butter available in the U.S., but as global prices rise and the U.S. price doesn’t, you wonder why.

As to the strong powder prices, Kurzawski again pointed to the constraint on milk supply and says there’s a bigger demand for protein on the nonfat side but he believes we may be getting a little ahead of ourselves at $1.40 per pound.

GDT up 0.8%

The weighted average in Tuesday’s Global Dairy Trade was up 0.8%, following its 0.4% slip on Sept. 3. Volume climbed to 85.6 million pounds, up from 84.5 million, and the average metric ton price inched up to $3,883 U.S., from $3,833.

The rise was led by Mozzarella cheese, up 4.5%, following a 7% rise last time. Cheddar was up 2.9%, after a 0.9% advance. Lactose, up 3.5%, after dropping 8.9%.

Skim milk powder was up 2.2%, following a 4.5% rise, and whole milk powder was up 1.5%, after dropping 2.5%.

Butter was down 1.7%, after slipping 0.9%, and anhydrous milkfat was down 1.2%, following a 0.7% rise last time.

StoneX says the GDT 80% butterfat butter price equates to $2.8969 per pound U.S., down 5.7 cents from Sept. 3, and compares to CME butter which closed Tuesday at $3.0850.

GDT Cheddar, at $2.0145, was up 5.3 cents, and compares to Tuesday’s CME block Cheddar at $2.2775. GDT skim milk powder averaged $1.2740 per pound, up from $1.2486, and whole milk powder averaged $1.5640 per pound, up from $1.5404.

CME Grade A nonfat dry milk closed Tuesday at $1.3925 per pound.