Weekly forecast – Jan. 19, 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.

Class III-Cheese-Whey:

  • No significant updates this week.
  • Reduced 1H 2024 WPC34 forecast due to lower NDM projections

Class IV-Butter-NDM:

  • No significant updates to butter. Increased FEB-MAR prices based on higher spot prices.
  • NDM reduced 1H forecast – flatlined price expectations.


Milk Market

This week, AMS released the February Advanced prices. February 2024 Class I will be $17.99/cwt, down 49¢ less than January. While butterfat prices were relatively stable, the skim price declined on a much lower Class III performance. Given current futures market forecasts, higher butterfat levels and somewhat stable prices may be likely through the spring. Presently, the Class III skim projection is elevated and, if past months are an indication, may not come to fruition, suggesting the Class I skim price could ease through the spring.

This week, severe winter weather disrupted the fluid milk and cream markets in the Midwest, causing issues for dairy processors, including transportation, curtailment, and frozen equipment, to name a few. Despite interruptions, bottlers reportedly took more milk to replenish store shelves due to winter storms driving additional demand. Milk headed to cheese plants was consistent with some reporting modest declines as processors have sufficient cheese to meet nearby demand. In Eastern states, milk production remains steady, with solid demand. USDA reported California milk production upticks due to ideal cow comfort. In the Mountain states, milk output was steady to higher this week. Throughout the United States, milk and cream are available, but storms could be influencing the supply chain and demand over the short run. Sub-zero temperatures could cause some issues for output-per-cow due to lower water intake.

Cheese Market

The CME spot Cheddar blocks market experienced a slight decrease this week, with prices averaging $1.4825/lb compared to $1.5280/lb the previous week. Block trading activity picked up to 21 loads, slightly lower than the 24 loads traded last week, despite having one fewer trading day. Concurrently, the Cheddar barrels market saw a marginal increase from $1.46/lb to $1.4613/lb during the same period. The weekly average block-barrel spread stood at 2.13 cents – less than in recent weeks on weaker blocks. Weather conditions and the availability of cheese may have contributed to lower milk intake. Still, reports indicate that spot milk sale discounts to cheese plants moderated.

In November 2023, the US cheese commercial disappearance was 1.13 billion pounds, 1.2% more than the previous year. YTD commercial disappearance is up 0.5% – a slim margin but one that helped to remove an additional 66.4 million pounds compared to the same period in 2022. Domestic commercial disappearance was 29 million pounds more than production, leaving markets relatively balanced. Most of the increases in November were from other than American-style cheese up 1.45%. Even American-style cheese was up 0.8%, but if the trends keep up, that was more than other American-style cheese than Cheddar cheese. It seems the 2023 story remains – Cheddar cheese imbalances affected the price trajectory.

Butter Market

The CME spot butter market witnessed a slight price increase for the week ending January 19, 2024, reaching $2.5644/lb compared up 0.49¢ from the previous week. Despite historically high prices for this time of year, concerns about future availability have prompted more buyers to store butter for use in the coming fall. Global dairy trade (GDT) reported an increase in butter and AMF prices on January 16, with a 5.8% and 4.3% rise, respectively, in comparison to the previous event. European butter prices are stabilizing – with similar sentiments, less availability could lead to higher prices later in the year. Cream is widely available and directed towards butter churns this week. The bulk of US butter stockpiling in January and February could mean a costly butter build. Futures are starting to respond, with most 2H 2024 prices now above $2.60/lb.

In November 2023, the US butter commercial disappearance was 197.2 million pounds and 2.3% less than the previous year. YTD commercial disappearance is up 7.2% – a sizeable recovery from the 2022 declines. Comparatively lower butter prices throughout much of the year likely helped demand recover. The YTD domestic commercial disappearance of 131 million pounds was more than last year – that compares to incremental production of up to 45.9 million pounds and likely explains higher prices throughout the year and at the beginning of this year. At the same time, $3/lb remains a price level that causes demand to pull back. In November, higher prices and consumption slowed as butter at retail was more expensive than in previous months.


The CME spot nonfat dry milk powder market experienced a slight decrease for the week ending January 19, 2024, with prices at $1.1869/lb down 0.41¢ the previous week. On the international front, GDT SMP and WMP prices increased on January 16, with a 1.2% and 1.7% rise, respectively. However, there are signs of decline in international prices, particularly in Europe, despite expectations of significant volumes moving to Algeria this spring. With the United States exporting a substantial portion of its nonfat dry milk powder, prices are unlikely to appreciate without a commensurate increase in international prices. That could make futures markets subject to revision lower this winter – that may help explain the midweek sell-off causing prices to drop 1-3 cents this week.

US November 2023 NDM/SMP commercial disappearance was 36.8 million pounds and 32% less than the previous year. YTD commercial disappearance is 8.3% less, meaning more production needs to move to overseas markets. So far this year, 70% of production has moved to export markets.

Whey & Lactose Products

The CME spot whey powder market saw a decrease in prices for the week ending January 19, 2024, with prices at $0.4131/lb compared to $0.4270/lb the previous week. Dairy Market News Central reports mostly prices at 41 cents, up by 0.25 cents/lb this week, while Western Mostly prices remained unchanged at 44 cents week-to-week. International prices held steady near 40 cents per pound. Despite weaker Chinese demand, the demand for WPC 80 and above continues to improve, pulling whey solids away from whey powder, which supports prices. Whey could remain steady through the spring with fewer implications for Class III values.

November 23 whey commercial disappearance (human consumption) totaled 39.1 million pounds – 65.1% more than in 2022. WPC commercial disappearance was 11.2 million pounds – 21.6% more than 2022. Lactose commercial disappearance totaled 12.9 million pounds – 4.6X the previous year. Lactose reflects a sizeable recovery from past periods. Overall, whey demand continues to improve. That could temper price decreases should demand from China remain lackluster this year.