Weekly forecast update – Dec. 8, 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.

This week did little to significantly change the 2024 price outlook outside of some recalibration for spot markets.

Class III-Cheese-Whey:

  • All of the changes this week were to Western Mostly whey – lifted through 1H 2024.
  • Increased the WPC forecast through Q1 2024

Class IV-Butter-NDM:

  • Raised the Central and Western Mostly buttermilk averages.

Class I-II:

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

Milk Market

Some plants are still having trouble with start-ups displacing some central milk. Bottling picked up this week as processors make the final push before schools let out for the holidays. After next week, more milk will flow to manufacturing, and that will likely cause discounts to return. However, many expect because milk is below last year’s levels in large swaths of the country, discounts will be less than a year ago, and the system will easily handle more milk.

China’s milk production was modestly ahead of last year in November, up 0.3% compared to the previous year. That was a contraction relative to the more than 4% increase in October. China’s milk price continues to drift lower but at a slower pace. YTD, China’s milk production is 3.5% ahead of last year – the slowest growth rate since 2019.

Cheese Market

CME cheese markets appeared to find some support at the beginning of the week, but, like most weeks, prices were headed lower by Friday. After a good-sized increase in nearby futures, prices pulled back once again. This year CME cheese prices have struggled to find support above the mid-$160s. That has put the United States at an advantage for 2024 exports, but for now, it leaves milk and cheese prices lower than typical for this time of year. In the end, blocks averaged $1.5975/lb, up 2.75¢ this week. Barrels averaged $1.5780, up 9.55¢ this week. Reports of tight barrels resurfaced this week. Anecdotal reports suggest that pre-holiday shipments are positive and that the year is ending on a positive note. Overall, it appears domestic sales have been more than a year ago, but may have fallen short of expectations. It seems that a modest amount of shift in export volume put additional pressure on prices.

There was a lot of US data released this week. US cheese production increased in October. USDA released the October 2023 total cheese production at 1.19 billion pounds – 0.83% more than a year ago. That put YTD output up 0.26%. All reporting states, except Minnesota, produced more cheese compared to last year. Minnesota cheese production was down 4.25% vs. last year. New York pushed output up 6.72% – the biggest percentage gain. American cheese production was 474.1 million pounds and 0.28% less than a year ago. YTD production was up 1.8% vs. last year. With Cheddar cheese output down 2.5% – that implies more other American-style cheese production in October. Mozzarella cheese production totaled 399.4 million pounds 2.3% more than a year ago. Given the higher output compared to last year, the stock build doesn’t seem to reflect an unusually high build for that month.

US October cheese exports totaled 79.1 million pounds, 4.3% less than a year ago. YTD exports are 4.74% less than a year ago but that was a record-setting pace – and volumes are falling just behind a year with considerable overseas competition – that may mean that US cheese is in good shape for a new push into 2024. Exports to Mexico were up 48% compared to last year. But that was not enough to offset losses to South Korea, Japan, and Australia – places where New Zealand replaced US cheese. US October cheese imports totaled 43.8 million pounds, 9.3% more than a year ago. YTD imports are 9.3% more than a year ago with imports expanding compared to last year – indicating a switch as prices moderate. Imports from European nations were higher across the board.

Butter Market

After an increase on Monday followed by a decrease on Tuesday, CME butter sat unchanged for the remainder of the week. CME butter averaged $2.6725/lb, up 7.25¢ compared to the previous week. US prices appeared to have run out of steam this week. While anecdotal reports suggested that cream demand picked up this week, most expect the final two weeks of the year butter churns to be seasonally busy with excess cream headed to butter that will move to cold storage. Butter futures pulled back throughout the week with sizeable drops on Friday. Still, 2024 prices are finding some support in the mid-$250s as hedgers look to secure coverage/protection as prices are expected to remain elevated and poised to climb even more if more butterfat heads to cheese and ice cream as it did this year and last year.

US butter production totaled 160.6 million pounds in October, down 0.93% compared to last year. YTD butter production is up 2.97% vs. last year. This may be the first-month reflecting apple-to-apples or butter-to-butter comparison. It is more likely US butter output continues to remain closer to unchanged, even a bit behind last year given more cheese production and less milk. Central states production slowed 2.8% vs. last year – likely reflecting more butterfat headed to cheese this year. Atlantic states increased by 1.9% – a region with milk production growth – that seems to follow milk production growth.

US butterfat exports were minor and not impactful to October markets. US October butterfat imports totaled 14.9 million pounds, 6.8% less than a year ago. YTD imports are still 12% more than a year ago but have moderated since mid-year. Imports were modestly higher from Mexico.


Spot NDM prices broke out of the recent range with prices falling to $1.16/lb on Friday. CME NDM averaged $1.1705/lb, down 1.55¢ compared to the previous week. After a noticeable drop in weekly NDPSR volumes, reporting recovered this week. Despite the CME declines, Global Dairy Trade (GDT) WMP and SMP increased this week, up 1.2% and 2.1%, respectively. That puts global prices in the $1.20s for now which should support mid to upper teens for the United States. There are still hallmarks of supply concerns in 2024 as milk slows and trade remains stable. But, with holidays nearly complete, buyers expect more milk to head to driers – that may provide a temporary price reprieve, allowing for more “deals” to be booked. While milk supply remains a concern so does the impact of higher prices on global consumers. While US consumers continue to spend internationally, higher prices could affect dairy demand.

US October NDM production totaled 127.4 million pounds – 1.25% less than a year ago. That put YTD output down 1.3% vs. the last year. SMP output was 42.5 million pounds and nearly 35% less than a year ago. That put YTD output down 18.8% less than a year ago.  For reporting states, California was up 5.3%; Wisconsin was up 71%, and Pennsylvania was down 12.6%.

US October manufacturers’ NDM stocks totaled 223.7 million pounds and 10.8% less than a year ago. That reflected a 17 million pounds MTM decline, consistent with the past five years. Ceres estimates that there is 54 days of production on hand – and 6 days of production less than a year ago. Stocks have been less than last year since May.

US October SMP/NDM exports totaled 142.5 million pounds, 11% less than a year ago and the second consecutive month with YoY declines. YTD imports are 2.8% less than a year ago – a figure that can be absorbed presently as output is less than a year ago. But, continued lower YoY exports are concerning headed into next year. Exports to Mexico were 4.9% – that may support the theory that the more extensive purchase volumes earlier in the year were groups buying ahead and value, resulting in less need at the end of the year. That also indicates that restocking in early 2024 will be necessary.

Whey & Lactose Products

CME spot whey prices eased a bit this week as exports confirmed lackluster Chinese demand. CME whey averaged 39.85¢, up 0.5¢ compared to last week on four trades. European prices were unchanged this week on a lower euro. News remains the same China’s whey demand is lower due to poor pork/hog market margins and WPC80 demand continues to climb on higher domestic use and exports to Japan and Brazil. With new capacity months away – that could continue to support WPC/WPI prices and draw whey solids.

US October whey production totaled 75.6 million pounds and 0.4% more than a year ago. YTD output is up nearly 3%. Despite slowing production, US October manufacturers’ stocks of whey totaled 76.4 million pounds and 11.7% more than a year ago suggesting demand is falling faster.

US October WPC (25-49.9%) production totaled 12.4 million pounds and 11.6% less than a year ago. YTD output is up over 10%. US October manufacturers’ stocks of WPC (25-49.9%) totaled 27.3 million pounds and 6.8% more than a year ago. Stocks are trending lower – while more than last year – the gaps are closing.

US October WPC (50-89.9%) production totaled 27.9 million pounds and 10.3% more than a year ago. YTD output is up nearly 12%.US October WPI production totaled 10.4 million pounds and 3.8% more than a year ago. YTD output is still down 16.3%. US October manufacturers’ stocks of WPC (25-49.9%) totaled 27.3 million pounds and 6.8% more than a year ago. Stocks are trending lower – suggesting demand is outpacing supply. That is even more evident for WPC (50-89.9%) where stocks totaled 35.5 million pounds and 27.6% less than a year ago.