As reported last week, the USDA has again lowered its 2024 and 2025 milk production forecasts in its World Agriculture Supply and Demand Estimates report, citing slightly less growth in milk per cow. 

Class III and IV milk prices were also lowered, based on the latest dairy product price projections. Cheese was projected to average $1.8850 per pound for 2024, down 4.50 cents from last month’s estimate, and compares to $1.7593 in 2023 and $2.1122 in 2022. The 2025 average was lowered 6 cents to $1.88.

The 2024 butter average was lowered 7.50 cents, to $2.9250 per pound, and compares to $2.6170 in 2023 and $2.8665 in 2022. The 2025 average was projected at $2.7850, down 22 cents from last month.

NFDM is expected to average $1.23 per pound in 2024, up a penny from a month ago, and compares to $1.1856 in 2023 and $1.6851 in 2022. The 2025 average was projected at $1.25, up 1.50 cents.

Dry whey was projected to average 48 cents per pound in 2024, up a half-cent from last month’s estimate, and compares to 36.18 cents in 2023 and 60.57 cents in 2022. The 2025 average was estimated at 49 cents per pound, up a half.

The 2024 Class III milk price was projected to average $19.05 per cwt., down 40 cents from last month’s estimate, and compares to $17.02 in 2023 and $21.96 in 2022. The 2025 average was estimated at $18.95, down 65 cents.

The Class IV price average for 2024 was estimated at $20.80, down 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 $20.35, down 85 cents from a month ago.

This month’s U.S. corn outlook calls for smaller supplies, larger exports, and reduced ending stocks. Projected beginning stocks were 52 million bushels lower. Corn production was forecast at a near record 15.2 billion bushels, up 17 million from last month on a 0.2-bushel increase in yield to 183.8 bushels per acre, but down 1 percent from a year ago. Harvested area was unchanged at 82.7 million acres. Total use was raised to 15 billion bushels reflecting greater exports. Ending stocks were cut 58 million bushels to 2 billion. The season-average corn price was unchanged at $4.10 per bushel.

Soybean production was forecast at a record 4.6 billion bushels, down 4 million on lower yields but up 10 percent from 2023. Harvested area was unchanged at 86.3 million acres, up 5 percent from 2023.

Dairy demand looked stronger in August, based on the USDA’s latest Supply and Demand Utilization data. Total cheese disappearance was up 1.2 percent, up 1.3 percent domestically while exports were up 14.8 percent. HighGround Dairy points out that “CME spot Cheddar prices continued to climb throughout August as months of limited production finally collided with rising domestic demand.”

Butter was up 9.3 percent, most of it in domestic utilization which totaled 196.4 million pounds, up 9.1 percent. Exports were up 17.3 percent but only amounted to 6.1 million. HGD says, “For the second month in a row, stateside usage grew year-over-year, and exports logged their third month of an increase.”

Nonfat dry milk and skim milk powder utilization was still dragging, the seventh time in eight months, totaling just 176 million pounds, down 7.2 percent from a year ago. Domestic use was down 31.3 percent while exports were down 1.1 percent.

Dry whey usage was down 15.5 percent. Domestic disappearance was down 33.5 percent while exports were up 14.1 percent. HGD says USDA revised July’s total whey use down 15.1 percent year over year. Total disappearance then sank 15.5 percent and ended up being the lowest monthly volume since April 2023. HighGround says plant outages in August limited production and supported CME prices near 60 cents per pound.

Fluid milk sales may have turned the corner after decades of decline, as sales have topped those of a year ago in six out of 2024’s first eight months. The USDA’s latest data shows August packaged sales totaled 3.6 billion pounds, up 1.6 percent from August 2023. Conventional product sales totaled 3.4 billion pounds, up 1.3 percent from a year ago. Organic products, at 261 million pounds, were up 5.5 percent, and represented 7.2 percent of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, up 1.5 percent from a year ago, and up 2.4 percent year to date, and represented 35.8 percent of total sales for the month.

Skim milk sales, at 160 million pounds, were down 5.1 percent from a year ago and down 11.5 percent YTD.

Packaged fluid sales in the eight-month period totaled 28.3 billion pounds, up 1.2 percent from 2023. Conventional product sales totaled 26.3 billion pounds, up 0.8 percent from a year ago. Organic products, at 2.0 billion pounds, were up 6.6 percent, and represented 7.1 percent of total milk sales in the eight months. The figures represent consumption in Federal market order, which account for about 92 percent of total fluid sales in the U.S.

The Oct. 14 Daily Dairy Report adds that “Fluid milk sales also climbed in 2020 when the government distributed food donation boxes that included milk. With that exception, this year marked the first increase in milk demand since 2009. The dairy industry has worked hard to promote milk’s nutritional benefits. At the same time, consumers have grown increasingly focused on health and wellness.”

More milk going into the bottle means less milk going to vats, churns, and dryers, and more cash in farm milk checks. The uncertainty of the U.S. milk supply is very real, as Avian influenza continues to take a toll on California herds. Ninety two cases have been detected in the past month, according to USDA’s Animal and Plant Health Inspection Service. HighGround Dairy says that brings the state’s total to 100, out of about 1,100 in the nation’s no 1 milk producer.

The Los Angeles Times reports that some cows have died but there’s also been heat waves the past six weeks in the Central Valley and temperatures have exceeded 100 degrees, “further compounding the impacts.”

“Veterinarians familiar with the cases noted that HPAI is not the direct cause of death, according to HGD, “But pneumonia and bloat, occurring secondarily to the disease, are responsible.”

Speaking in the Oct. 21 “Dairy Radio Now” broadcast, StoneX broker Dave Kurzawski said they expect September output, which will be announced Oct 21, to be down 0.3 percent, largely driven by what’s happening in California where about 20 percent of U.S. milk is produced. They expect an even bigger impact in October.

The rest of the U.S. is doing well, he said. Herd size is looking better and milk per cow is improving. When asked about rising milk components, Kurzawski admitted they are up but, “If you look at the past five-seven years, they’ve been up about 2 percent. They’re now running about 1.5 percent. The genetics changes the last decade or two, the feed changes, cow comfort, all the things that dairy producers do day in and day out to make high quality milk, make a difference. Components are helping,” he concluded, but “Doubtful it erases headline milk output which is still negative.”