FAPRI-MU’s Agricultural Market Outlook Report
The Food & Agricultural Policy Research Institute at the University of Missouri (FAPRI-MU) released its annual U.S. Agricultural Market Outlook report, which summarizes baseline projections for agricultural and biofuel markets using market data available as of January 2024. FAPRI-MU also is celebrating its 40th year in 2024.
“FAPRI’s spring baseline and subsequent updates offer an understanding of the challenges and opportunities facing agricultural markets,” says FAPRI director Pat Westhoff. “As producers and policymakers evaluate volatile market conditions, the analyses and projections we’ve shared can aid in risk mitigation.”
Projected Trends: Declining Farm Income And Tighter Finances
In its report, FAPRI notes prices for many farm commodities have fallen sharply from their 2022 peaks, contributing to lower farm income and slower food price inflation. While market uncertainty persists, projected prices decline further for crops harvested in 2024, and net farm income falls to the lowest level since 2020.
“Despite a $30 billion drop in net farm income from 2022 to 2023, and another large projected decline in 2024, net farm income remains above annual levels from 2015 to 2020,” Westhoff says. “Still, there’s no question that farm finances are much tighter now.”
Price Projections: Dairy Product Trends from FAPRI’s Report
This year’s report includes projections out to 2033 for the dairy sector.
According to the Agricultural Market Outlook report, even with the all milk price averaging above $20 per hundredweight in 2023, the Dairy Margin Coverage (DMC) program paid out more than $1 billion on payments last year as feed costs remained well above average.
Though little change is expected for milk prices in the next couple of years, declining feed expenses will allow finances to improve for many operations, FAPRI notes. The report projects the all milk price to average $20.21 per hundredweight in 2024 and rise to $20.43 in 2025 before declining over the next several years and averaging $19.23 in 2033.
FAPRI notes other dairy product prices fell in 2023 from the lofty levels of the previous year as domestic demand weakened and exports declined for most products.
Butter prices are expected to remain well above most historical years as strong domestic demand remains a key driver, FAPRI says. Spot butter on the Chicago Mercantile Exchange (CME) is projected to average $2.52 per pound this year, down from $2.59 in 2023 but higher than the average prices projected through 2033, though prices will remain above $2 per pound throughout the projection period.
Nonfat dry milk (NDM) prices should see continued recovery as international demand improves following a lull in 2023, the report says. NDM is projected to increase in 2024 to $1.26 per pound and to $1.34 in 2024 before declining to $1.23 by 2033.
Cheese prices could struggle to grow much as increased cheese production capacity may be outpacing domestic demand growth, FAPRI notes. CME cheese is projected to average $1.74 per pound in 2024, even with 2023, and rise to $1.79 in 2025 before slowly declining to $1.75 in 2031 before rising to $1.77 in 2033.
Monthly U.S. dairy cow inventories posted their third-lowest level since the spring of 2016 to begin 2024, the report says. Even as profitability improves with declining feed costs this year, it is expected to take a little time for producers to again increase the milk cow herd. Milk production is expected to grow at an average rate of 1.5% for the next few years, which will require export growth to resume and some domestic demand expansion to keep milk prices at projected levels, the report adds.
Access The Full Report: FAPRI-MU’s Comprehensive Agricultural Market Outlook
To view the full report, click here.
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Source: Cheese Market News
