The Agriculture Department sees more milk ahead and raised its milk production forecasts in the latest World Agriculture Supply and Demand Estimates report (WASDE). The 2024 forecast was raised, based on higher expected milk cow numbers, says USDA. Ditto for 2025 as additional cows are expected to partially offset slower growth in milk per cow.

2024 production and marketings were projected at 226.3 and 225.3 billion pounds respectively, up 300 million pounds on both from last month’s estimate. If realized, both would be down 100 million pounds or 0.04% from 2023. 

2025 production and marketings were projected at 228 and 227 billion pounds respectively, up 300 million on both. If realized, both would be up 1.7 billion pounds or 0.75% from 2024. 

Cheese and butter price forecasts for 2024 were lowered, nonfat dry milk was unchanged, and whey was higher, based on recent prices. The Class III milk price average forecast was lowered, as lower expected cheese prices more than offset the higher expected whey price.

The Class III average for 2024 was estimated at $18.90 per cwt., down 15 cents from last month’s WASDE, and compares to $17.02 in 2023 and $21.96 in 2022. The 2025 average was projected at $18.80, down 50 cents from a month ago, due to lower cheese price forecasts.

The 2024 Class IV milk price was unchanged at $20.75 and compares to $19.12 in 2023 and $24.47 in 2022. The 2025 average was raised a dime to $20.40, with the higher nonfat dry milk price more than offsetting expected lower butter prices.

The lower prices for cheese and butter are expected to continue into 2025, according to the WASDE. The price forecast for nonfat dry milk and whey were increased on higher-than-previously expected demand, says the USDA.

The 2024 fat basis import forecast was lowered, based on recent trade data. Fat basis imports for 2025 were raised on imports of butter and cheese. The skim-solids import forecast was also lowered for 2024 and raised for 2025. The fat basis export forecasts were raised for both 2024 and 2025, based on higher shipments of butter and cheese. The skim-solids export forecasts were reduced for both 2024 and 2025 primarily on less competitive nonfat dry milk, says USDA.

Speaking in the Dec. 16 “Dairy Radio Now” broadcast, StoneX broker Dave Kurzawski said the WASDE had few surprises but cautioned that predicting milk production in 2025 “might be a fool’s errand,” as bird flu is still very much in the picture, especially in California.

The Agriculture Department’s Animal and Plant Health Inspection Service announced a National Milk Testing Strategy this week which “builds on measures taken by USDA and federal and state partners since the outbreak of the highly pathogenic avian influenza (HPAI) H5N1 in dairy cattle first detected in March.”

USDA issued a new Federal Order, as well as accompanying guidance, requiring that raw, unpasteurized milk samples nationwide be collected and tested. Testing will begin in processing plants in California, Oregon, Michigan, Mississippi, Colorado, and Pennsylvania.

The guidance was developed with input from state, veterinary and public health officials and will “give farmers and farmworkers better confidence in the safety of their animals and ability to protect themselves, and will put us on a path to quickly controlling and stopping the virus’ spread nationwide,” says Agriculture Secretary Tom Vilsack.

The December 9 Daily Dairy Report reminds us “While pasteurization kills the virus in milk and dairy products, a high viral load in raw milk can spread within a milking parlor via birds, mammals, farm equipment, and people carrying infectious material on their clothing. States regulate the sale of raw milk for human consumption, but the Food and Drug Administration prohibits the interstate sale of raw milk because it can contain illness causing bacteria. No one has contracted bird flu through consuming pasteurized milk,” the DDR stated.

Of course all U.S. milk is already tested for antibiotics before it’s unloaded at the processor as part of Pasteurized Milk Ordinance, and has been so for many years. This directive gives more transparency, according to Kurzawski, but the bottom line is that pasteurization protects the U.S. milk supply.

Cash dairy prices were mixed in the second week of December. The Cheddar blocks were trading Thursday morning at $1.7875 per pound, highest since Nov. 5, after closing the previous Friday at $1.70. The barrels were at $1.73 Thursday, highest since Nov. 18, after finishing Friday at $1.69.

U.S. cheese is the cheapest in the world, said HighGround Dairy’s Dec. 9 “Morning Huddle.” “When that occurs, exports tend to increase, pushing prices higher. That may be part of what is providing support to the market presently. 

However, new cheese production has started in the Plains States, with more slated to begin in 2025. The increased supplies could offset the supply-demand balance and weigh down prices in the New Year as well, or at least prevent a material rally. European cheese prices are in decline and domestic demand has also been fairly soft into the end of the calendar year,” HGD warned.

Midwest cheesemakers had positive demand notes this week, says Dairy Market News, although some said demand has been somewhat sluggish the past few weeks. Cheese is readily available. Barrel makers in the region share they have had some extra loads for sale on the spot market, but not at a concerning level. Milk availability has begun to tick higher in the region. Some sub-Class spot milk prices were reported due to unexpected plant downtime, but other cheesemakers say they’re not getting many offers. Milk, in their location, is somewhat snug. 

Cheese production is generally steady in the West. Milk demand from cheese makers is mixed. Class III spot loads remain tighter in the southwest part of the region than elsewhere. Domestic cheese demand from spot load buyers is mixed and steady from contractual buyers, says DMN, while export demand is steady.

Cash butter fell to $2.5250 per pound Thursday, after closing Friday at $2.5450.

Central butter makers say demand is less than robust but steady or only slightly down compared to a year ago. Inventories are in good shape. Some say their spring churning was very strong. Cream remains abundant. Churning is busy, but butter makers are paring schedules to alleviate stock overgrowth, according to DMN. Most contacts expect cream to remain readily accessible for the rest of the year, and perhaps deep into first quarter 2025.

Grade A nonfat dry milk was trading at $1.3775 per pound, Thursday. It closed Friday at $1.39.

Dry whey hit 76.75 cents per pound Thursday, highest CME price since Feb. 25, 2022, after closing the previous Friday at 71 cents per pound.

“Record prices in the whey protein isolate market have provided lift across the complex, pushing all markets higher,” says HighGround Dairy. “More people are taking weight-loss drugs, and the prescribed diet is one of low calories, but nutrient-dense foods, like high-protein dairy. Industry contacts believe that the increased use of these medications is driving the rise in demand. In addition, small, short-term supply hiccups on dry whey production side have also provided an immediate boost to spot and futures prices,” according to HGD.

Checking demand, the USDA’s latest Dairy Supply and Utilization report shows October total cheese demand hit 1.3 billion pounds, up 0.9% from October 2023.

Domestic demand was up just 0.2%, while exports were up12.4%, up for the tenth month in a row, according to HighGround Dairy.

In politics, the International Dairy Foods Association (IDFA) shared its federal policy priorities Monday with President-Elect Trump’s transition team. IDFA President and CEO Michael Dykes, D.V.M., said “IDFA and its more than 300 members are looking to the new administration to help U.S. dairy drive innovation, reduce barriers to business efficiency, and open new market access for healthy, nutritious U.S. dairy products around the world.”

 Dykes said “U.S. dairy is the most productive in the world, but workforce challenges, dwindling export market opportunities, and burdensome regulations are creating uncertainty for our industry. By presenting these policy priorities, we are looking for areas of collaboration with the Trump administration so U.S. dairy farmers and processors can usher in a new golden age in healthy, high-quality, U.S. dairy nutrition.”

“NMPF also thanks the committee for acknowledging that dairy is an equitable option that provides accessible and affordable sources of essential nutrients to everyone, and that lactose-free and lactose-reduced dairy foods can provide those same nutrients for people who may not be able to tolerate regular dairy.

“We are disappointed that the committee only recommends consumption of unflavored milk, especially as they acknowledged that flavored milk contains beneficial nutrients and did not explicitly conclude any connection between flavored milk consumption and obesity risk.”

“It is reassuring that the committee came to multiple conclusions supporting dairy that are backed by decades of scientific evidence. We encourage the agencies to look further into recent science supporting the benefits of whole milk in the diet. The committee found evidence that substituting higher-fat dairy with lower-fat dairy showed no association with cardiovascular disease morbidity, and it also found evidence of positive benefits for growth and bone health specifically related to whole milk consumption by young children. We see these conclusions as positive steps. We will continue to advocate for consideration of full-fat dairy in the final dietary guidelines expected to be released next year,” NMPF stated.