Weekly Forecast – Sept. 22, 2023

Forecast updates

Weekly updates:

  • Updated markets for spot.
  • Increased butter price outlook through 1H 2024 – moved prices up.
    • Spot prices reached $3/lb – increased the price outlook through November.
    • Smaller increases forecast for DEC23 to MAR24.
  • No significant changes to cheese, NDM and whey.

Milk Market

AMS released the October 2023 Advanced prices – Class I will be $19.47/cwt – up 57¢ from September – skim increases contributed quite a bit to that month-to-month lift. Overall, the milk price forecast appears higher heading into the end of the year – especially Class IV milk as butter and NDM prices lift. This week, the big news was that US milk production in August remained below year-ago levels. Add to that news, New Zealand’s milk production also fell behind in August compare to last year.

US milk production in August 2023 was 0.2% lower than last year. Again, that was caused by fewer cows and lower output-per-cow as hot and humid weather impacted output. Milk production totaled 18.98 billion pounds. Year-to-date production was 0.4% more than a year ago. Milk production dropped from California to Texas, with most losses in the Southwest and Central states. Minnesota dropped behind last year’s pace for the second consecutive month. The US milking herd stood at 9.39 million cows – unchanged from July, but 16,000 head fewer than a year ago. Most of those cows are leaving New Mexico, Texas, Kansas, and Colorado. Florida and Virginia had fewer cows, but higher output-per-cow kept milk on the plus side in 2022. Production per cow was 2,021 pounds – with losses in Idaho, California, Arizona, New Mexico, and Colorado. That suggests, for some states, more cows offset losses. Mideast and East Coast milk continues to expand, driven by higher output-per-cow.

Cheese Market

Block and barrel prices dropped into the $1.70s and $1.50s this week for the first time since July. Markets were under pressure most of the week, with prices recovering on Friday. Barrels averaged $1.6310/lb, down 18.55¢ from last week, the largest weekly decline since April 14. Blocks were also under pressure this week. Prices averaged $1.822/lb, down 7.9¢ from the previous week. That caused the block-barrel spread to widen to 19.1¢ this week. Fundamentally, there was little change week-to-week, but offers seemed more aggressive than in recent weeks at the CME. With few bids throughout the week, sellers could walk markets lower. Keep in mind USDA incremental orders begin to ship on Oct. 1 – that will help reduce spot supplies. Presently, there are still worries about US Q4 export commitments that seem to be pressuring markets lower.

Most of the news this week was from overseas markets. New Zealand’s cheese exports were 23,989 MT (52.9 million pounds) in August – 29.6% less than July but 18.8% more than a year ago. Year-to-date exports are running 18.8% compared to last year. Exports to China were modestly lower, but volumes to Australia rocketed 54% higher than in 2022. Exports throughout Southeast Asia increased in August.

China’s cheese imports were 17,595 MT (38.8 million pounds) in August – that was 0.6% higher than in July on a daily average basis and 24.9% more than a year ago. That was also the most cheese imports for China on record. Through August 2023, imports are 18.7% compared to last year. Imports from New Zealand increased by 39.3%. Imports from the United States increased by 111%. Australia declined, as did Italy.

Butter Market

For the first time this year, CME spot butter reached $3/lb –a 29.25¢ from the previous Friday. CME butter averaged $2.875/lb, up 14.8¢ compared to last week. 23 loads changed hands this week, less than the previous week. Butter markets seem to get surprised easily by data that has been suggesting for weeks that spot butter could be tight. Cream demand is elevated, keeping churns in the hunt for products and causing many to rely heavily on micro-fixing. While trading volumes have been high, the buyers may finally have exhausted some of the supply, causing markets to lift. USDA reported butter on ad this week was $3.68/lb, – down from $4.28/lb last week – that could spark a new round of consumer demand.

Like cheese – most of this week’s news came from overseas. Global Dairy Trade (GDT) butter and AMF prices increased. GDT butter was $4,723/MT ($2.09/lb on an 80% equivalent) – 3.8% more than the previous event. AMF was $4,787/MT ($1.754/lb on an 80% equivalent) and 5.3% higher than the prior auction. hina’s butterfat imports increased in August compared to the previous year. Imports totaled 14,205 MT (31.3MM pounds) – 22% more than the previous year. YTD exports are 9.8% less than last year, but the YoY gap continues to reduce. Exports from New Zealand increased 24% vs. last year. China imported much more butterfat from Europe – led by France and the Netherlands. New Zealand butterfat exports increased in August compared to the previous year, reaching 25,240 MT (55.6MM pounds) – 24.5% more than the previous year. YTD exports are running 10% more than last year. Exports to China increased 54% compared to last year. Volumes to the Philippines and Saudi Arabia were each three times higher than a year ago.


NDM spot prices started the week slowly, but prices started to climb by Thursday. CME NDM averaged $1.138/lb, up 3.05¢ from the previous week, with prices setting a three consecutive week increase. The GDT SMP was 5.4% higher than the previous auction – $1.088/lb; WMP increased 4.6% to $1.269/lb. US prices are rising faster than domestic prices, but international prices are also rising. It is likely slowing milk from California, and USDA reporting balanced supplies and those on a seasonal decline. Additionally, anecdotal reports suggest that cheese manufacturers are buying more NDM for vats as milk supplies are limited and expensive compared to spot NDM prices. That may cause prices to lift – especially if international markets trend higher also. Futures were slow to respond to higher spot markets initially.

China’s WMP imports in August totaled 28.819 MT (63.5MM pounds) – 3.8% less than a year ago. YTD China’s WMP exports are running 38.1% behind the previous year. Most of that volume decline would come from New Zealand. China’s SMP imports in August totaled 21,083 MT (46.5MM pounds) – 36% less than a year ago. YTD China’s SMP imports are running 13% ahead of the previous year. Imports from the United States, Australia, and Belarus were less than a year ago. Imports from New Zealand were slightly lower.

New Zealand’s WMP exports in August totaled 48,361 MT (106.6MM pounds) – 29.3% less than a year ago. YTD New Zealand’s WMP exports are running 0.6% ahead of the previous year. Exports to China and Algeria fell, but that was partially offset by improvements from Bangladesh & Sri Lanka. New Zealand SMP exports in August totaled 16,720 MT (36.9MM pounds) – 71.2% more than a year ago. YTD, New Zealand SMP exports are running 44% ahead of the previous year. Exports to China were up 136% vs. last year. There were sizeable gains for SEA and Spain, which is unusual.

Whey & Lactose Products

CME whey prices had a lower performance – but trading remains in a similar range to previous weeks. CME whey averaged 29¢, down 0.75¢ from the previous week. DMN Central mostly whey averaged 29¢, unchanged from the previous week. Western mostly whey averaged 32.5¢, unchanged from the previous week. Lactose was also stable this week, unchanged at 24.5¢. EU whey prices are reportedly steady. While WPC news remains positive, lagging sweet whey powder exports appear to be an anchor.

China’s August 2023 whey imports were 109.6 million pounds and 20.9% less than a year ago. Imports from the United States fell by 45% vs. last year. That was partially offset by higher imports from Belarus and the Netherlands – likely a price issue.