Weekly forecast – Jan. 12, 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.

No significant changes – updates for spot markets across all products.

Milk Market

This week, severe winter weather affected milk shipments from farms to plants in western and Southwestern states. The adverse weather conditions likely led to power outages for some cheese processors, disrupting their operations and necessitating milk dumping. Other unplanned downtime further compounded challenges in the dairy supply chain. The cascading impact of these events on the market is evident, influencing the weekly spot milk price discounts, which are returning in some markets. Less milk processed could affect dairy prices in a few weeks should the downtime result in tighter markets.  Severe winter weather and snow storms are spreading across the country this week, with sub-zero temperatures in the forecast that could bring distress to animals and more issues for farms as operations contend with the Arctic blast and snow. In the long term, the severe weather may lead to stress and mastitis, translating into herd health issues, higher mortality rates, and unplanned slaughter, all factors that could, at the least, support milk prices later this year.

Severe weather conditions can impact bottled milk consumption in the United States. Historically, ahead of storms, consumers often engage in pre-storm shopping, including buying essentials like milk. This can lead to a temporary increase in bottled milk consumption as people prepare for potential disruptions. Widespread winter storms can also disrupt transportation and distribution networks, affecting the ability to move milk from farms to plants to consumers. Power outages during severe weather can impact plant and farm operations. The impact on US milk varies significantly on the localization of the storms. This weekend, storms are forecasted in several dairy states, suggesting a more significant effect on short-term milk production.

Cheese Market

CME spot Cheddar blocks markets increased 7.18¢ this week, with the weekly average price reaching $1.5280/lb. However, the 2024 prices remain nearly 50 cents lower than last year. For the same week, the CME spot Cheddar barrels experienced a rise, settling at $1.46/lb, up from the previous week’s $1.42/lb. The weekly average block-barrel spread was 6.8 cents. Unfavorable weather conditions may have contributed to power outages for some cheese processors and resulted in dumped milk. Additionally, anecdotal reports suggest greater interest in US cheese for export. Those factors could support prices headed into the Super Bowl. Offsetting those increases, retailers still have private-label cheese promotion dialed down – which may be negatively impacting demand. These factors can influence pricing, especially those with short-term supply chain impacts. Futures still expect higher prices as Q2 2024 approaches –providing tremendous carry for those looking to age cheese. For buyers, 2024 futures are still pricing cheese at $1.768/lb as of Friday’s close and below the five-year average.

This week, US trade data was on tap. In November 2023, US cheese exports totaled 85.6 million pounds – 3.6% more than in 2022. YTD exports were running 3.9% less than the same period in 2022. That performance was 11.8% higher than the previous year. Cheddar cheese exports were still down 46.8%. Exports to Mexico were up 42% compared to last year – that may reflect much lower costs in 2023 vs. 2022. Exports to Australia, South Korea, and Japan were still lower – likely due to lower Cheddar volumes. Exports to China were up nearly 4X compared to last year. While a solid improvement – lagging Cheddar exports continue to weigh on spot markets.

In November 2023, US cheese imports were 41.3 million pounds, 1.5% more than in 2022. YTD imports were 1.3% more than the previous year – again likely on lower prices, providing opportunities for specialty cheeses this year. Imports from Italy and France were lower, but they were still the top two trade partners. Imports from the Netherlands, Spain, Ireland, and Argentina drove the increases.

Butter Market

In the week ending January 12, 2024, the CME spot butter market experienced a decrease, with the weekly average price at $2.5595/lb, compared to the previous week’s $2.6488/lb, signifying a price decline of 8.93¢. Despite this dip, it’s crucial to note that 2024 prices remain elevated, standing 15 to 20 cents higher than in 2023. As stocks build, processors would prefer to store butter at lower prices. Still, buyers caught short on physical products last fall may be more willing to hold products to mitigate potential deficits later this year. This week’s simultaneous downward trend in international prices suggests a nuanced market environment. Buyers and retailers may need to navigate and respond to these dynamic pricing dynamics as the Easter build is underway – suggesting prices may remain elevated compared to last year. It is possible prices do not trend lower until after that holiday as there will be a more significant gap between Easter and ice cream season this year. Further, buyers and sellers will need to consider more butterfat moving to American-style cheese this year and the impact that may have on this year’s build and butter/cream availability later this year. Cream is available this week, and the MLK holiday will likely slow bottling a bit. Still, USDA reported cream multipliers rebounding in western states, suggesting better demand prospects this week.

Over the years, the United States has exhibited fluctuating patterns in butterfat exports, with notable variations from 2005 to the present. Export volumes have experienced significant changes, influenced by domestic and international factors – namely, US prices compared to international costs and periods of tight supplies. November 2023 data suggests that butterfat exports in 2023 have shown a downward trend compared to the preceding years. In November 2023, butterfat exports totaled 4.4 million pounds, down 78.9% compared to 2022. Year to date, US butterfat exports were down nearly 56% compared to the prior year. While less than in the past two years, US exports are still higher than in 2019 and 2020.

US butterfat imports in November 2023 were 16.8 million pounds, 3.6% more than the previous year. YTD was up 12.3% compared to the same period in 2022. Imports from Ireland, New Zealand, and Mexico were higher than the previous year. Imports from India continue to lag – likely due to export prohibitions to retain butterfat for its domestic market.


In the week ending January 12, 2024, the CME spot nonfat dry milk (NDM) powder market saw a slight increase, with the weekly average price reaching $1.1910/lb, compared to the previous week, indicating a marginal change of 1.47 cents. Notably, 2024 prices remain comparable to those observed in 2023. However, international prices exhibit signs of decline, particularly in the latest Global Dairy Trade Pulse Auction, where prices of whole milk powder (WMP) and skim milk (SMP) were eased. Given that the United States exports a substantial portion of its nonfat dry milk powder, these international price movements have implications for the export competitiveness of U.S. dairy products. However, reports for the latest Algerian tender place SMP March to May delivery awards near $3,050/MT cost and freight or $1.38/lt delivered Algeria for 22,000 to 25,000 metric tons. That would suggest the current CME futures curve remains cost-competitive if those prices are an indication.

US NDM/SMP exports were 148.8 million pounds in November 2023 – 6.4% less than 2022, but 7.9% more than in October 2023 on a daily average basis. Exports to Mexico, China, Indonesia, and Vietnam collapsed.  There were also losses in Central America and the Caribbean. Higher volumes in SEA were unable to offset the significant declines elsewhere. Some reports suggested that these regions purchased more products from New Zealand, and some may have been working down inventories of lower-cost products built earlier in the year.

Whey & Lactose Products

The CME spot whey powder market increased, with the weekly average price rising to $0.4270/lb compared to the previous week’s $0.4013/lb, up 2.57 cents. Notably, 2024 prices stand higher by 8 to 10 cents per pound than last year. According to Dairy Market News, Central Mostly prices reached 40.75 cents, up 0.75 cents/lb, while Western Mostly prices were 44 cents, remaining unchanged week to week. International prices held steady near 40 cents per pound, and headwinds for U.S. whey exports may reflect that CME spot prices could be out-of-step with global prices or those needed to keep US whey costs competitive. In light of the latest U.S. export data suggesting a slowdown in volume to China, any indication of price weakness from WPC/WPI could have implications for whey prices this spring. For now, WPC demand appears to be moving along. That also suggests current whey provides a better return as WPC or WPI compared to sweet whey powder.