2024 Dairy Sector Insights From The Agricultural Outlook Forum
The U.S. dairy sector enters 2024 facing lower feed prices and a smaller dairy herd, but broadly strengthening prices for both dairy products and fluid milk production, according to Michael McConnell, livestock, dairy and poultry analyst for USDA’s World Agricultural Outlook Board. McConnell shared his “Outlook for U.S. Dairy” during USDA’s annual Agricultural Outlook Forum on February 16.
Highlights From The 100th Annual Agricultural Outlook Forum
USDA hosted the 100th Annual Agricultural Outlook Forum, the department’s largest and premier annual gathering, Feb. 15-16. The breadth and timeliness of the Agricultural Outlook Forum’s programs consistently have drawn a diverse group of farmers and ranchers, food and ag industry representatives, policymakers, government officials and non-governmental organizations, and this year was no different with 1,700 attendees in person and thousands more online.
The 2024 forum included speakers and topics spanning the agricultural industry, from climate-smart agriculture to Indigenous food practices to innovative farming practices and more.
Dairy Herd And Milk Production Trends In 2024
According to McConnell, Jan. 1 dairy cow inventories in 2024 were 41,000 head lower than the previous year, at 9.357 million head. Additionally, there were about 14,000 fewer dairy replacement heifers in the herd. Cow numbers in milk production are expected to stabilize in 2024, ending the year at about the same level as the beginning of the year. The expected number of cows combined with milk per cow is expected to continue growing but at a slower rate than historical averages, as well as one additional milk day, resulting in milk production in 2024 growing at an annual rate of 0.7%, he says.
Rising Milk Prices Amidst Robust Demand
Milk prices are expected to be higher in 2024, as modest increases in production, coupled with robust demand for dairy products from both domestic and global markets, support the values of most dairy products, McConnell says. Tighter supplies from major dairy exporters will support global and U.S. prices, as well. Strong rates of usage and tighter stocks of fat and skim-solids basis are projected to underpin Class III and Class IV milk prices and, in turn, raise the all milk price from 2023 levels.
Global Dairy Markets And The U.S. Agricultural Outlook
Global dairy markets are expected to be an influential factor in the U.S. dairy outlook for 2024, he notes. Overall, global dairy trade is expected to be constrained by lower milk production in several key exporters — notably the European Union and New Zealand. Lower milk production in these markets is expected to translate into lower exports of several dairy products, in particular butter and nonfat dry milk (NDM). This is expected to help support global dairy prices in 2023. The reduced production in Europe and Oceania would provide opportunities for other dairy exporters to meet global demand, with the United States well positioned to ship product to key markets, McConnell says.
The Dynamics Of Dairy Trade And Domestic Usage
Exports are projected to grow at a faster rate than imports, on both a fat and skim-solids basis, as tight supplies in global dairy markets make U.S. prices relatively more competitive for international consumers, he adds. Domestic use is projected to increase on a fat basis but decline slightly on a skim-solids basis as domestic users compete for products that have strong export value. Stocks are projected to tighten further, both on a fat and skim-solids basis, due to the continued pace of usage and milk production.
Price Competitiveness And Trade In 2023
U.S. price competitiveness was an important factor in trade in 2023, McConnell notes. High domestic prices for cheese and butter resulted in higher imports and lower exports than in 2022 on a fats basis. Likewise, weaker foreign demand for skim products resulted in low international prices. Skim-solids basis exports in 2023 were lower than the record amount shipped in 2022.
Projections For Dairy Exports And Cheese Prices In 2024
For 2024, fat basis exports are projected to grow at a higher rate than imports, at 10% and 1%, respectively. This reflects improved price competitiveness for U.S. products given relatively tight supplies among competing exporters. Skim-solids exports in 2024 also are projected to be 4% higher than 2023, although international demand is expected to compete with U.S. domestic use.
McConnell notes cheese prices fell nearly 17% in 2023, to $1.76 per pound. The United States has seen a dramatic increase in cheese production since 2018 as additional production capacity has been added. American-style cheese exports fell in 2023, after a substantial increase in 2022. As a result, inventories of American-style cheeses were larger than the previous year heading into 2024. This is expected to put downward pressure on domestic prices. For 2024, cheese prices are projected at $1.69 per pound, a 4% decline from 2023.
To view the full agricultural outlook, visit www.usda.gov/sites/default/files/documents/2024AOF-dairy-outlook.pdf.
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Source: Cheese Market News