Monthly forecast – September 2023

Forecast updates

Weekly updates:

  • Added 2026 forecast for all products
  • Cheese
    • Maintained SEP23 price levels near current.
    • US prices continue to maintain a premium to EU and NZ prices – that could be problematic for Q4 2023 exports; however, the gaps are minimal compared to the spring suggesting that US may be capable of regaining some share in SEA.
    • Mexico and stronger domestic demand could keep prices elevated this fall as reports suggest some cheese plants are running below capacity.
    • That could keep cheese headed to Chicago, IL limited this fall.
  • Whey
    • Whey prices are lifting as domestic production of WPC80 tumbles seasonally due to 1) new capacity start-up being postponed and 2) less milk intake.
    • Similar reports from Europe, WPC80 stocks are depleted, lifting whey prices.
    • Reports from EU indicate whey prices contracted in Q1 2024, approaching 35 cents.
    • Given lower WPC80 stocks and production that could support prices.
    • The offset that could cap runs – widely available permeate and Chinese whey demand is so-so.
    • Overall, that could lift the price outlook into 2024 for whey and derivatives – WPC34 less so as that is interchangeable, in some uses, with NDM/SMP.
  • Butter
    • USDA revealed retail ads this week at $3.30/lb – 90 cents less than two weeks ago.
    • YoY butter production will likely slow into 2H as cream demand remains positive and some cream is moving into cheese production vs. last year.
    • So far, butter demand remains elevated and could surpass last year.
    • Given anecdotal reports of microfixing that could cause butter stocks to deplete, supporting higher prices, but less than a year ago.
  • NDM/SMP
    • Fonterra (NZ) releasing data that is is more optimistic about demand prospects later in the year.
    • Milk is slowing.
    • Lower milk in California and Southwest this summer likely resulted in lower milk powder production.
    • Given slowing Chinese milk production that could increase imports relative to last year. Rabobank stated that Chinese milk could grow at a slower pace 1.5% vs. 7% through the end of the decade.
  • As a result of those conditions, we increased the whey forecast, moderated the SEP/OCT NDM forecast, and made very few changes to butter and cheese.