Weekly forecast – Dec. 29, 2023

Forecast updates

It should be noted 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.

Holiday markets were somewhat quiet – although there was quite a bit of spot CME barrel trading. There were no significant changes to the overall forecast – updated with December actuals where available.

Class III-Cheese-Whey:

  • No changes this week to the outlook.

Class IV-Butter-NDM:

  • Increased the FEB24 butter price outlook, reduced MAR24 and APR24. Easter is early this year – that could cause the build to be stunted at that time of year, but the build could resume after the early holiday causing prices to ease a bit.
    • International butter prices are elevated and more US cream could move to other uses that could cause prices to remain supported.
  • No change to NDM this week.

Class I-II:

  • No significant changes to Class I or II milk prices this week.

Milk Market

As schools return from the holidays, more milk should flow away from churns, vats, and driers and return to bottling, providing some relief. There were reports of good-sized discounts for those needing to make spot sales. But, compared to last year, most processors were better balanced and able to manage the seasonal uptick.

New Zealand reported November milk production was down 0.5% compared to last year, but components in the milk were up 0.8%. Given higher components and New Zealand’s product mix, that would be considered an increase. Additionally, New Zealand appears to be making strides at increasing output-per-cow and higher components – two things that would allow the nation to produce similar quantities with less milk and fewer cows.

Cheese Market

CME Cheddar markets were erratic during the shortened holiday week trading. For a day, barrels maintained a 5.5¢ premium to blocks, and by Friday, blocks were again premium to barrels by 7¢. Trading was also active, with blocks trading with 35 loads changing hands and barrels trading 40 times. CME blocks averaged 1.4263/lb, down 0.18¢; barrels averaged 1.4313/lb, up 4.68¢. That closed the block-barrel spread to -0.7¢ with barrels premium to blocks. The number of bids left each day for barrels suggests additional interest. The volumes have been extensive, suggesting there is plenty of cheese and a good amount of interest at current price levels. Presently, US spot cheese and futures are lower than European and Oceania cheese prices, which should help with competitiveness in overseas markets. Less than the five-year average first half of 2024 pricing may encourage cheese use and promotion this year.

USDA reported US cheese stocks at 1.43 billion pounds and 0.19% more than last year, but 1.7% less than October. The MTM stock change was down 25 million pounds, consistent with the five-year average pace. American cheese stocks were 826 million pounds, 1.2% more than last year. That indicates that other cheese holdings dropped more than American cheese stocks. The November American cheese stock decline was consistent with the five-year average. Cheese, excluding American and Swiss, was 587 million pounds and down 0.93% compared to last year – that may reflect relatively more frozen Mozzarella moving from stocks.

Butter Market

While the butter demand season is over and butter is headed to the warehouse, spot prices increase throughout the week. At the same time, anecdotal reports indicated that a lot of cream moved to churns – confirmed with USDA reporting spot cream multipliers sub-1.0 for Central and Western sales – which is very low, suggesting more cream availability. Still, international prices are elevated – which could support higher than average US prices. But, costs in the mid-to-upper 2.60s could run into some resistance. CME butter averaged $2.6225/lb, up 4.3¢ compared to the previous week.

USDA reported US butter stocks at 215.5 million pounds, 7.85% more than last year, but 10.3% less than in October. The MTM stock change was down 25 million pounds but slower than the five-year average pace of 57.5 million pounds between October and November. That was the slowest MTM decline over the past eight years and may reflect slack demand caused by higher prices. November reflected the largest YoY gap since May and a sizeable recovery from the summer months. Despite the higher stocks compared to last year, prices continued to increase during the holiday trading week.


Spot CME NDM markets were quiet this week. CME averaged $1.165/lb, up 0.45¢. The gap between the CME and NDPSR/DMN price series remained large. More milk moved to driers over the past two weeks, which is expected to subside. Seasonally, more milk will continue to move to driers – but that will depend on cheese capacity and whether that continues to increase in the Southwest. New Zealand’s export data may suggest that global markets could absorb current milk supplies.

New Zealand’s November WMP exports totaled 405.8 million pounds, 32.4% more than last year and a recovery to trend. That put YTD exports up 3.6% compared to the previous year. At the current pace, that reflects an improvement and may reflect more ability to absorb the current milk production and support modestly higher prices. Exports to China increased by 12.7%, reflecting nearly one-third of the volumes. The most significant decline was to Algeria, down 73.8% – that may indicate a willingness to back away and replacement with EU milk powder or the impact of lower oil prices and buying power. Exports everywhere else were substantially higher, with most up in triple digits.

New Zealand’s November SMP exports totaled 113.8 million pounds, 8.5% more than last year. That put YTD imports at 38.3% more than a year ago. November reflected the highest exports since 2015 for that month. Exports to China fell 16.9% behind last year’s pace. Higher volumes throughout MENA and SEA offset that decline. Algeria again reflected a sizeable decline – until there is new information from Europe, it is difficult to tell whether this was a demand decline or New Zealand opted to sell products to higher paying regions, which would be a sign of price support/strength.

Whey & Lactose Products

Whey markets declined throughout the week on a single trade. Given the holiday schedule, that may not reflect current markets, and that next week may be a better indication as more people return to the office. CME whey averaged 38.35¢, down 1.15¢ compared to last week. European prices were not reported this week due to holiday schedules. The midpoint of the Central DMN was 39.75¢, unchanged from the previous week. The midpoint of the Western DMN was 43.5¢, unchanged from the last week.

New Zealand’s whey and WPC/WPI exports continue to expand as the nation focuses on more cheese production. In November, New Zealand exported 4.6 million pounds of WPC/WPI, up 31.8% more than the previous year. New Zealand exported 3.5 million pounds of whey, up 105.3% compared to last year.