Insights into the 2024 Outlook for the U.S. Dairy Sector

U.S. Department of Agriculture (USDA) economists offer their annual Outlook on milk, butter, and cheese as the U.S. dairy industry preps for the year ahead.

Amid anticipation and optimism, the U.S. dairy industry is also bracing for challenges and opportunities in the year ahead. According to experts at the U.S. Department of Agriculture (USDA), while overall industry growth is on the horizon, it may not reach the heights witnessed in recent years.

USDA Economist Michael McConnell offered an analysis of the dairy sector, shedding light on the dynamics of various dairy products. Despite expectations that butter and non-fat dry milk prices won’t soar as high as in previous years, McConnell underscored resilience, with butter prices showing robust seasonal fluctuations and dry milk prices showing steady improvement.

However, not all dairy products are set to thrive in the coming year. McConnell cautioned that cheese prices are likely to remain subdued compared to the previous year, though he anticipates a rebound from recent lows. Factors such as higher butter and dry milk values, along with stronger cheese and whey prices, are expected to bolster overall dairy prices.

In terms of class prices, McConnell foresees Class 4 prices outpacing Class 3 prices, reflecting the relative strength of butter and dry milk over cheese and whey. Despite this, McConnell projects an all-milk price of $20.95 per hundredweight in 2024, signaling an improvement from the previous year but falling short of the peak witnessed in 2022.

While the prospect of improved margins due to favorable prices and lower feed costs offers some relief to dairy producers, McConnell cautioned against undue optimism. He emphasized that factors beyond price dynamics are likely to shape the market.

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