The Agriculture Department raised its milk production forecast for 2023 but left the 2024 estimate unchanged in the latest World Agriculture Supply and Demand Estimates report, based on “slightly more rapid growth in milk per cow.”

2023 production and marketings were estimated at 227.6 and 226.6 billion pounds respectively, up 100 million pounds on both from a month ago. If realized, both would be up 1.1 billion pounds or 0.5 percent from 2022.

2024 production and marketings were projected at 230.4 and 229.4 billion pounds respectively, unchanged on both. If realized, 2024 production and marketings would be up 2.8 billion pounds or 1.2 percent from 2023.

Fat basis imports for 2023 were unchanged from last month. Higher expected imports of butter in 2024 support a higher fat-basis import forecast although cheese imports were forecast lower. Skim-solids basis imports were raised for 2023, reflecting higher imports of milk proteins. Lower cheese and milk protein imports in 2024 will result in lower skim-solids imports. Exports in 2023 were reduced on a fat and a skim-solids basis with lower expected sales of butter, nonfat dry milk, and dry whey. Weaker expected sales of butter and dry whey in 2024 were reflected in lower fat basis and skim-solids basis export forecasts.

Recent strength in butter prices and expectations of continued firm demand supported an increase in the butter price forecast for 2023, now projected to average $2.66 per pound, up 12 cents from last month’s estimate, and compares to $2.8665 in 2022, and $1.7325 in 2021. Butter is expected to average $2.6550 in 2024, up 10.50 cents from last month’s estimate.

Cheese was reduced, based on current prices and continued large stocks and is projected to average $1.77 per pound in 2023, down 4 cents from last month’s estimate, and compares to $2.1122 in 2022 and $1.6755 in 2021. The 2024 average was projected at $1.8050, down 4 cents from a month ago.

Nonfat dry milk was raised on current prices and was projected to average $1.17.50 in 2023 and $1.13 in 2024. The 2023 whey price forecast was unchanged at 34.50 cents per pound. The 2024 average was left at 31.50 cents per pound.

The Class III milk price average was reduced, reflecting the lowered cheese price forecasts. The 2023 average was put at $17.05 per hundredweight, down 30 cents from a month ago, and compares to $21.96 in 2022 and $17.08 in 2021. The 2024 average was projected at $17.20, down 35 cents from last month’s estimate.

The Class IV price average was raised on stronger butter and NDM prices. It was projected at $19.25 for 2023, up 65 cents from last month’s estimate, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 average is expected to hit $18.80, up 80 cents from last month’s estimate.

The week ending Sept. 30 saw 56,600 dairy cows go to slaughter, down 2,200 from the previous week and 4,600 or 7.5 percent below a year ago, biggest year-over-year decline since June 2022. Year to date, 2,378,100 head have been culled, up 96,800 or 4.2 percent from a year ago, a percentage difference that has been averaging 5-6 percent the past four months.

Checking dairy demand, using last week’s Dairy Products report, StoneX calculates August total cheese disappearance was down 3 percent year over year but added, “We’re lapping over a very strong August last year, up 2.8 percent.

“The weaker disappearance was likely due to blocks being in the $2 range during that time frame as the U.S. lost exports. Spot milk is reported as somewhat snug, but production has been a bit stronger than anticipated and the slowdown in dairy cow slaughter has helped keep milk production strong as well. Class I intake is helping balance the milk availability in check for processing.”

CME Cheddar block cheese closed Friday the 13th at $1.70 per pound, down a quarter-cent on the week, sixth week in a row of decline, and 35 cents below a year ago. The barrels finished at $1.6450, up 6.75 cents on the week but 48 cents below a year ago, and 5.50 cents below the blocks. The week saw just two loads of block and three of barrel find new homes.

StoneX says “Cheese demand is stable but also rather quiet for the season. Few buyers are worried or have to stretch to get something bought at the exchange, especially with some anecdotal reports of some loads transacting in the $1.60s.”

Midwest cheesemakers reported similar prices on the spot milk market to previous weeks, according to Dairy Market News, and at mid-week were at or near $1 above Class III. Milk offers were still somewhat quiet despite growing farm milk production and component levels. Cheese production is steady to lower in the region, as a few plants were down for scheduled maintenance. Others are running full. Milk is not as available as it was earlier in the year or at this time last year, when prices ranged $1 under to 25 cents over Class.

Cheese demand is healthy in the Midwest. Buyers are viewing the steadying markets with interest. Cheese inventories are in similar shape to previous weeks. With milk prices remaining over Class and limits in production schedules throughout the region at the plant level, cheese stocks are not expected to ramp up near-term, says DMN. Barrel suppliers say any extra loads are generally spoken for ahead of completion, but there is near-term concern about excess inventory.

Domestic cheese demand for retail and food service is steady in the West. Reports are that domestic demand was stronger compared to export demand over the first three quarters of 2023. “Although some stakeholders express sentiments that domestic prices are currently more competitive to attract international purchasers, domestic demand has started out stronger than export demand during fourth quarter,” says DMN. Export demand is moderate. Class III milk demand is strong. However, some manufacturers indicate available extra spot milk is limited.

Cash butter, after five consecutive weeks of gain and achieving an all-time high $3.5025 per pound on Oct. 6, began its expected descent this week, closing Friday at $3.36, down 14.25 cents on the week but still 18.50 cents above a year ago. There were eight loads that exchanged hands this week.

The day-to-day butter plant dynamic is generally unchanged despite prices at record highs, says DMN. Cream remains somewhat snug but cream offers were reportedly growing toward the middle of the week and for weekend shipments. Near-term butter demand is still somewhat steady. There is concern that orders will soon slow, not solely because of the price, but because holiday pipelines are closer to being filled. Buyers do not want to get caught holding inventories at $3.50 per pound. Some are more willing to pay closer to $3.20, but loads changing hands at the market are for immediate needs.

Western cream availability for spot purchasing remains a little more available throughout the region and comparatively more available in the northern parts of the region, says DMN. Some butter manufacturers indicate additional cream purchases are being limited given current prices. Butter production is mixed amongst those with currently active churns. Production for retail purposes is strong to steady as schedules anticipate upcoming holiday demand.