In its November World Ag Supply and Demand Estimates (WASDE) report, the USDA lowered its milk production forecast for 2023 to 227.1 billion lbs., down 500 million lbs. from last month’s estimate. Lower cow numbers and slower output in milk per cow were the culprit behind this month’s lower predictions. The forecast for 2024 is also reduced as the lower forecasts of milk cows and milk per cow for late 2023 are carried into the next year.
Recent gains in butter prices have eroded more rapidly than previously expected and the butter price forecast for 2023 is reduced. Currently, butter stands at $2.64 per lb., down only 2 cents from the October forecast, yet 22 cents lower from the same period last year. Cheese prices remained unchanged at$1.70 per lb. and nonfat dry milk prices were raised 1 cent to $1.18 per lb. to reflect current prices.
Class III prices for 2023 saw a slight increase thanks to a higher whey price, but the Class IV price was lowered as a weaker butter price more than offsets slightly higher nonfat dry milk. Currently, the Class III price sits at $17.10 per cwt., up 5 cents from last month’s prediction. In contrast, Class IV prices sank 5 cents in the opposite direction to $19.25 per cow. The projected all-milk price for 2023 remained unchanged from last month and stands at $20.70 per cwt.
For 2024, the price forecast for butter was reduced as prices continue to soften from late-2023 levels. Next year’s price forecast for butter now sits at $2.59 per lb., down 6 cents from last month’s 2024 prediction. Cheese, nonfat dry milk and whey prices, however, were all raised as lower milk production constrains production of those products. Milk production for 2024 was estimated at 230 billion pounds, down 400 million pounds from a month earlier.
The Class III and Class IV price forecasts for 2024 both saw a nice boost thanks to higher cheese, nonfat dry milk and whey prices. Although the lower butter price does constrain the level of increase in the Class IV price. As of now, 2024 Class III price forecasts sit at $17.70, up 50 cents from October’s prediction. Similarly, the Class IV prediction now stands at $18.85, up 5 cents and the all-milk price was raised 10 cents to $20.80 per cwt.
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