From this week's USDA World Ag Supply and Demand Estimates (WASDE) and Crop Production reports to Rabobank's quarterly Global Dairy update, Progressive Dairy summarizes factors potentially impacting dairy producer income:

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U.S. 2023-24 milk production forecasts cut

The USDA’s monthly WASDE report was released Sept. 12. Milk production forecasts for 2023 and 2024 were again reduced, with cow numbers lowered through the end of 2023 and the first half of 2024. Output per cow was reduced for 2023 but unchanged for 2024. The slowdown in production growth added support for an improving price outlook.

  • At 227.5 billion pounds, the 2023 production forecast was cut 400 million pounds from last month’s estimate. If realized, 2023 production would be up just 0.4% from 2022.

For 2023, forecasts for cheese, butter and whey prices were raised on current price strength, but the price forecast for nonfat dried milk (NDM) was lowered. Both Class III and Class IV prices are raised, reflecting changes in their component values. The projected 2023 Class III price was raised 45 cents to $17.35 per hundredweight (cwt). The 2023 Class IV price forecast was raised a dime to $18.60 per cwt. The projected all-milk price for 2023 was raised 55 cents to $20.40 per cwt.

  • In its forecast for 2024, the USDA estimated milk production at 230.4 billion pounds, down 100 million pounds from a month earlier. If realized, 2024 production would be up about 1.3% from 2023. There’s an additional milking day in leap year.

For 2024, price forecasts for cheese, butter and whey were raised from last month based on lowered milk production and continued firm demand; NDM price forecasts were lowered.

Milk price projections for 2024 moved closer to 2023 averages. The projected Class III milk price was raised $1 to $17.55 per cwt, the Class IV price was raised 20 cents to $18 per cwt, and the all-milk price was raised 95 cents to $20.30 per cwt.


Beyond milk, the WASDE report lowered the 2023 beef production forecast based on a slower pace of marketings in the third quarter. That decline is only partly offset by higher expected carcass weights and higher expected cow slaughter in the third and fourth quarters. Potentially affecting cull cow prices, fed cattle price forecasts for 2023 and 2024 were unchanged from last month’s forecast. The fed cattle price forecast for 2023 was estimated at $178.50 per cwt, with prices reaching $190 per cwt in the fourth quarter. The early forecast for 2024 was $186 per cwt.

The USDA’s Crop Production and WASDE reports also provided potential insights into dairy feedstuff supplies and prices:

  • Corn: This month’s WASDE 2023-24 U.S. corn outlook called for slightly larger supplies and ending stocks. U.S. corn production is forecast at 15.1 billion bushels, up less than 1% from the previous forecast and up 10% from 2022. Area harvested for grain is forecast at 87.1 million acres, also up 1% from the previous forecast and up 10% from the previous year. Based on conditions as of Sept. 1, yields are expected to average 173.8 bushels per harvested acre, down 1.3 bushels from the previous forecast but up 0.5 bushel from last year. At $4.90 per bushel, the projected season-average corn price received by producers was unchanged from the August forecast but was down $1.70 (26%) from the 2022-23 average of $6.60 per bushel.
  • Soybeans: The 2023-24 U.S. soybean outlook included lower beginning stocks, production, crush, exports and ending stocks. U.S. soybean production is forecast at 4.15 billion bushels, down 1% from the previous forecast and down 3% from 2022. Based on conditions as of Sept. 1, yields are expected to average 50.1 bushels per acre, down 0.8 bushel from the previous forecast but up 0.6 bushel from 2022. Area harvested is forecast at 82.8 million acres, up less than 1% from the previous forecast but down 4% from 2022. The 2023-24 U.S. season-average soybean price received by producers was forecast at $12.90 per bushel, up 20 cents from last month’s forecast. It compares with an average price of $14.20 per bushel in 2022-23. Soybean meal prices were forecast to average $380 per ton, unchanged from last month’s forecast but $75 (16%) less than the 2022-23 average of $455 per ton.
  • Dry hay: The September crop production report did not include updates for alfalfa and other dry hay.
  • Cottonseed: As a predictor of cottonseed availability, all cotton production is forecast at 13.1 million 480-pound bales, down 6% from the previous forecast and down 9% from 2022. All cotton area harvested is forecast at 8.02 million acres, down 7% from the previous forecast but up 10% from 2022.

Rabobank: Progressing past the pain

Low prices in most key global dairy regions have slowed milk production growth in recent months, pressuring supplies closer to tepid demand growth. While the delicate balance of global milk supply and demand persists, there are signs of optimism for the remainder of 2023 and into 2024, according to Rabobank’s Global Dairy Sector Team.

Rabobank’s latest quarterly report, “Progressing past the pain,” reviews production and demand factors in seven major dairy exporting regions: the U.S., European Union, New Zealand, Australia, Brazil, Argentina and Uruguay. Staff dairy analysts lowered 2023 and 2024 milk production growth in those regions to 0.3% and 0.4%, respectively. That’s well below the 1.6% annual average gain seen from 2010 to 2020.

While a complete market rebalance is not expected until late 2024 or early 2025, a demand resurgence could come first. That could create a “whiplash effect” months before global milk output can recover, noted Lucas Fuess, Rabobank’s senior dairy analyst.

“If buyer confidence increases and consumers flock back to procure products en masse, the world may be short of milk, providing a firmly bullish runway into 2024,” he said. “There is reason for optimism in the coming months, but only after dairy farmers manage through the current financial pain.”

Questions surrounding the outlook remain. Among them, low milk prices, El Nino weather patterns, higher oil prices and interest rates, and macroeconomic impacts on demand.

GDT index increases

Here’s something we haven’t seen in a while: A measure of world dairy prices, the Global Dairy Trade (GDT) index, increased in an auction held Sept. 5. It was the first increase since early May. Despite the overall increase, prices in individual product categories were mixed:

  • Skim milk powder (SMP) was down 1.6% to $2,286 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was up 5.3% to $2,702 per MT.
  • Anhydrous milkfat was up 2.7% to $4,561 per MT.
  • Butter was up 1.1% to $4,588 per MT.
  • Cheddar cheese was down 0.6% to $4,102 per MT.

The GDT platform offers dairy products from several global companies: Fonterra (New Zealand); Darigold, Valley Milk and Dairy America (U.S.); Amul (India); Arla (Denmark); Arla Foods Ingredients (Denmark); and Polish Dairy (Poland). The next GDT auction is Sept. 19.

Global dairy product prices declined in August

The average global cost of dairy products paid by consumers declined 4% in August and was 32% lower than a year earlier, according to the latest United Nations’ Food and Agriculture Organization (FAO) food price index. International prices for all major dairy products (butter, cheese, skim milk and whole milk powders) declined, with whole milk powder prices falling the most. The overall FAO food price index, covering a basket of five food commodities – cereal, vegetable oil, dairy, meat and sugar – was down 2% in August, with lower prices across all categories except sugar.