Monthly Forecast – January 2024

Forecast updates

It should be noted that Ceres has not yet incorporated FMMO changes into the 2025-2026 forecast. Given the current pace of the hearing, there seems unlikely to be any impact in 2024.

With the beginning of the new year, markets look very different compared to a year ago. In 2023, global dairy markets had to absorb 500 million pounds of lost whole milk powder (WMP) demand from China, which depressed markets for a time and was similar to the issues that plagued Europe when it lost similar exports to Russia. Within months, markets had to redeploy milk supplies to alternate products and other nations to offset the lost demand. What was different last year compared to 2014 is that the global milk supply remains similar to 2022 levels, whereas 2014 milk supplies surged.

CME Cheddar blocks markets are starting the year in the $1.40s/lb compared to over $2/lb last year. That could profoundly impact US cheese exports and potentially domestic demand. Butter began January in the $2.50s/$2.60s compared to $2.30s the previous year – again, a sizeable shift that could impact the outlook for butterfat this year. Interestingly, NDM and whey are very similar to last year.

Class III-Cheese-Whey:


  • There are few changes to the whey outlook. The news remains the same, suggesting that prices could hover in a similar range for most of 2024.
  • WPC80 prices remain elevated due to increased demand; however, new capacity is expected to ramp up throughout this year. While it may not be a top-tiered product initially, it still provides additional supply – that could cause prices to moderate.
  • China remains the largest feed outlet for US whey products, but with poor pork margins and seasonally high African swine fever (ASF) outbreaks – demand is somewhat limited. Throughout much of this year, China shifted imports to Belarus and Poland to manage costs, which remains a possibility this year and could temper price runs.


  • Reduced the cheese price outlook for Q1 2024. Retail promotion is still lackluster, and with the end of the demand season (Super Bowl) fast approaching, that may not mean lower prices, but it could result in stagnant prices.
  • Cheddar cheese remains the issue and is where the imbalance sits today.
    • Throughout this year, more American-style cheese, especially Cheddar cheese, will come into the market as new capacity continues to ramp up.
    • The 2022 per capita slide for Cheddar cheese consumption and fewer Cheddar cheese exports may have put pressure on prices, resulting in more products that moved to the CME.
      • The forecast considers that while there is more capacity this year, the current futures value of US cheese makes it a cost-effective alternative for international buyers. That could help move more cheese overseas.
      • Additionally, a lower start to futures markets may make domestic promotion more attractive. Consider that while spot markets declined, if retailers and other cheese users hedged in early 2023, cheese prices would be closer to $1.95/lb. Today, the 2024 cash-settled cheese futures average $1.77/lb – a sizeable difference vs. last year. Absent promotion may explain why cheese demand remained stationary for most of last year.
    • Stronger Cheddar exports tend to lead to higher prices as less cheese moves to spot markets. But it could take until Q2 to determine whether US cheese exports are up. Anecdotal reports suggest a good amount of interest in US cheese, but markets must confirm higher export volumes before they are likely to react.

That suggests that Class III could be less than Class IV throughout 2024. The Q1 Class III price may be in the $15/cwt range – which may impact farm margins and cause the slaughter rate to rise.

Class IV-Butter-NDM:


  • Butter prices and futures markets are off to a strong start to the year – even higher than last year. That suggests that, given current data, 2024 could be the third consecutive year where fall butter prices eclipse $3/lb.
    • More milk moving to American-style cheese could limit the amount of butterfat headed to butter churns.
    • Higher butterfat in milk could offset some of those reductions, but the cheese pull could mask those improvements. Additionally, that could take more expensive feed, something that current milk prices may not merit in some parts of the country.
    • Certainly, commercial disappearance slows when CME butter prices move over the $3/lb mark – but more groups may look to hedge their exposure given two back-to-back years of higher prices.
  • This year’s US butter trade patterns may likely remain similar to last year – therefore, no impact on domestic markets.


  • NDM markets are similar to last year – the difference in the market is beyond the latest China demand bust, which means that prices could increase this year.
    • More milk moving to American-style cheese could limit the amount of skim headed to driers – something that could support higher prices later this year.
    • China’s milk price is continuing to decline, which means that there is little incentive to increase output – that could bode well for exporters as China may need some supplemental WMP/SMP should demand begin to recover.
    • The rest of the world has absorbed lost demand from China, and more milk is moving to cheese. rising cheese demand could keep NDM/SMP/WMP somewhat limited and similar to last year – which could help lift prices.
    • Stocks did not rise substantially which means if milk production remains in check prices are more likely to increase.

All of that could keep Class IV prices between $19 and $20/cwt this year and a premium to Class III prices for another year. Since November 2021, Class III has been higher than Class IV only three times.