Weekly forecast update – Nov. 10, 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, it seems unlikely that there would be any impact in 2024.

This week did little to significant change the forecast outside of some recalibration for spot markets.

Class III-Cheese-Whey:

  • Right now there is discussion that retailers are working down inventories ahead of year-end. While scan data continues to perform well, this slowdown in reordering caused cheese to back up to manufacturing.
    • Overall the mass-balance is little changed, but who holds stocks this year is different – likely adding the bearish sentiment in recent weeks.
    • Additionally, YoY data through September looks remarkably balanced and little changed to last year – but a year ago cheese prices were above $2/lb and presently prices are struggling to retain $1.70/lb.
      • There are a few differences between this year and last year that may explain the significant price gaps.
        • Through November – nearly double the Cheddar blocks and barrels have traded at the CME compared to last year – the highest since 2019.
        • Pizza sales growth is returning to trend. While overseas demand continues to rise, domestic demand is flat to slightly lower based on Dominos and Pizza Hut Q3 2023 same store sales data relative to a year ago.
      • Those modest change are significant to keep cheese prices well below expectations on fundamental data that appears similar to one year ago.
    • As a result, Ceres raised the Q2 2024 cheese price expections modestly.
      • Restocking will likely begin in Q1, that could cause cheese to shift where it is sitting in the supply chain resulting in stocks that feel tighter compared to this year.
    • Reduced 2H 2024 whey and lactose forecasts.
      • Flatlines prices near current levels. Higher stocks and faltering Chinese demand could keep those product prices under pressure.
      • Recent reports suggest a new, albeit modest, wave of African Swine Fever (ASF) is running through market.
      • China’s economy was adversely impacted by plummeting pork margins – something that could reduce spending power and number of animals headed into next year.

Class IV-Butter-NDM:

  • No significant changes to the butter-NDM forecast. Some Q4 2023 butter adjustments based on spot market declines this week

Class I-II:

  • This forecast keeps Class II the highest milk price next year and a candidate for de-pooling in most FMMOs.
  • Class I appears to be similar to this year (assuming no FMMO impact).

Milk Market

There are a few changes in the spot milk market. Reports of half-pint school milk packaging shortages are rolling through the system, with the impact reaching the Midwest and the East. That could slow production on half-pint lines, pushing some additional milk to manufacturing. Seasonally, milk production is rising, but there are some reports that components are recovering at a slower pace. Reports are picking up that replacement heifers are harder to come by – that could slow replacements moving into the herd. Additionally, the value of cull cows is high, creating an economic incentive to reduce herd should margins decay.

Corn prices continue to moderate, but soybean meal prices after the seasonal low. There should be some margin relief as corn and alfalfa remain the most significant contributors to the dairy cow’s ration. Additionally, current corn prices will likely establish the value of the 2024 silage.

Cheese Market

CME spot block markets continued to slide throughout the week, with prices dropping below barrels by Thursday and remaining there for Friday. CME blocks averaged $1.6525/lb, down 3.65¢ from last week; barrels averaged $1.6090/lb, down 4.9¢ vs. the prior week. Spot trading volumes were comparable to the previous week. There are some reports that retailers may be slowing purchases to manage cheese stocks headed into the end of the year. That may explain some subtle differences compared to last year. While market data reveals similar market data and balance, block prices this year barely hold in the $1.60s compared to the previous year when cheese prices exceeded $2/lb at this time of year. Although total stock levels are nearly unchanged, it may be where they are held this year versus last year – more stocks reside with processors, making inventories seem higher for that section of the supply chain. While that is causing reported slower orders and some cancellations when restocking happens next year that could support prices at a time when price tend to decline seasonally.

US September cheese imports totaled 37.7 million pounds – 2.3% less than a year ago. That was due to fewer imports from France during the month. US September cheese exports totaled 82.3 million pounds – 5% more than a year ago on substantially higher volumes to Mexico. Higher exports to Mexico offset declines to South Korea, Australia, and Saudi Arabia. Exports to Mexico were up 29% vs. last year. US exports to China increased 302% vs. last year – a strong indication of rising cheese demand.

Butter Market

As expected CME spot butter prices started to decline faster as more cream heads to churns and short-term spot availability resolves itself. CME butter averaged As expected CME spot butter prices started to decline faster as more cream heads to churns and short-term spot availability resolves itself. CME butter averaged $2.801/lb, down 38.9¢ this week compared to last week. Trading picked up with 31 loads changing hands this week. Even if spot CME butter prices stabilize at Friday’s $2.60/lb close – markets will give up another 20¢ this week. While there are still two weeks to supply retail shelves ahead of the Thanksgiving holiday, the end of the butter season is fast approaching. Should bulk butter churns start sending more product to warehouses that could cause price to tumble anew. That said, strengthening world prices and rumors of tigher butterfat stocks in India could abruptly hault declines.

US September butterfat imports slowed to 11.7 million pounds – 0.2% less than a year ago. YTD imports are still higher than last year by 14.7% due to much higher volumes in Q1. Imports from Ireland were comparable; imports from New Zealand were higher. Imports from India were lower – likely due to government prohibition due to tight supplies that could worsen by the year’s end. US September butterfat exports were 5.2 million pounds – 58.4% less than a year ago, consistent with 2020 and 2021 levels. Again, last year was a high export year compared to this year, creating the YoY gains. YTD exports are running 49% below the previous year. Exports throughout North America was lower compared to last year.


Spot NDM prices picked up heading into the end of the week. That was followed by some $1.40/lb call purchases in the 2H 2024 this week. The Global Dairy Trade (GDT) auction on Nov. 7 resulted in higher SMP prices – $2,724/MT ($1.235/lb), up 2.3%; WMP prices dropped 2.7%, bringing the WMP price recovery to an end with prices at $2,971/MT ($1.347/lb). European prices were mostly higher this week – although increases were modest compared to last week. Generally, there are still concerns that demand is relatively stable and that stronger cheese demand on flat milk production could cause milk powder availability to tighten by mid-year next year. Seasonally, milk off the farm will begin to rise and the holidays will reduce plant operating schedules causing more milk to head to driers. That could alleviate some short-term tightness.

US NDM/SMP exports totaled 117.7 million pounds, 20% less than a year ago – the widest YoY shortfall this year. YTD that put US NDM/SMP exports 1.9% behind the previous year. Exports to Mexico fell 17.3% behind the previous year – that could be a function of buying ahead earlier this year when prices were low. Volumes to the Philippines were 50% less than last year – a sizeable shortfall. China and Saudi Arabia followed with lost volume compared to last year.

Whey & Lactose Products

CME spot whey prices moved up this week despite news that seems to be somewhat bearish whey markets. CME whey averaged 39.1¢, up 1.85¢ compared to last week on 12 trades – fewer than the previous week. European prices pulled back again this week. News of slowing demand from China seems to be unsettling markets despite reports of WPC80 demand that remains elevated. Dairy Market News (DMN) western mostly was up 1¢ to 40¢ this week. Central mostly was 39¢, unchanged from the prior week. Lactose was 25.5¢, unchanged from the previous week. WPC was up again, +1¢ to 89¢ this week. Whey above 40¢ would cause the Class I and III prices to rise next year – but it seems prices may be running in a bit of a headwind and futures seem to reflect lower price expectations – but still higher than earlier this year.

US whey exports suffered a blow in September. US whey exports totaled 34.3 million pounds – 31.2% less than a year ago; exports to China were nearly 54% less than a year ago. That is likely on news of lower pork margins and higher culling, reducing the need for additional whey, lactose, and permeate. Additionally, some reports of higher African Swine Fever (ASF) is floating around the markets currently.

US WPC (<80% protein) exports totaled 23.9 million pounds in September – 29.1% less than a year ago. US September WPC/WPI exports totaled 16.3 million pounds – 38.5% more than a year ago. While markets are struggling with whey and lactose demand, WPC80 needs continue to increase.