Weekly forecast update – Nov. 17, 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 significantly change the forecast outside of some recalibration for spot markets.

Class III-Cheese-Whey:

  • No significant changes – some adjustments lower for blocks and barrels based on spot markets

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

Reports indicate milk remains tight in the Southwest and Texas and that some base programs have been relaxed to allow for more milk production growth. Next year, a lot of new capacity comes online at the end of the year – which could create a lot of competition for milk – especially in that market. More milk will move to manufacturing next week during the Thanksgiving holiday. That could increase discounts and some milk could travel to find processing. Lack of school milk packaging remains an issue at year-end.

From overseas, European milk production stalled out in September. EU-27 September milk production totaled 23.4 billion pounds – 2.6% less than last year with Sweden yet to report. While Germany was still on the plus side of 2022 by 0.2% – the YoY growth rate slowed as production began to lap last year’s expansionary period. French production was down 4.8% compared to the previous year, followed by declines from Italy and Ireland. That may concern fears that Irish milk production could continue to slow to meet new Common Agricultural Policy (CAP) requirements come January 1. Poland was the one nation decisively on the plus side of markets – up 1.5%. Smaller gains came from several other nations.

Cheese Market

Anecdotal reports indicated that some western barrel manufacturers struggled to keep up with demand due to production issues – which drove some buyers to the markets to find replacement barrels. That explanation justified the recent spot CME barrel premium to blocks. But, things changed quickly at the end of the week when barrels fell back into the $1.50s and blocks held steady. CME blocks averaged $1.6275/lb, down 2.35¢ from the previous week. Barrels averaged $1.653/lb, up 4.4¢ from the previous week. That left barrels a 2.55¢ premium to blocks – but that relationship appears set to shift based on Friday’s trading. Cheese demand should pick up next week as Thanksgiving demand pulls more cheese from store shelves. But, at this point in the season, that may be too little too late. While sharply lower markets don’t appear in the cards, higher markets may be off the table as cheese seasonally becomes more available.

September cheese domestic commercial disappearance at 1.12 billion pounds and 0.68% more than last year. That puts YTD commercial disappearance 0.5% higher than one year ago. Despite lower prices this year, retailers have had fewer promotions, which may affect demand. That accounts for an additional 63.5 million pounds of butter commercial disappearance compared to last year – given 22.9 million pounds in incremental production, indicating that markets are mostly balanced. Compared to a year ago, market prices are nearly 50-60 cents less – that may be due to a few factors like higher volumes of spot cheese traded at the CME – double the previous year and retailers holding fewer stocks that are pushing stocks back to manufacturers. Additionally, pizza demand is trending back toward pre-pandemic levels.

Butter Market

CME butter prices continued to slide this week after rising on Monday. Prices dropped below the $2.50/lb level for the first time since mid-July. That likely signals the end of the season as bulk butter packing turns on at the end of next week as demand seasonally slows and churning picks up. Anecdotal reports suggest cream is moving a long way to find processing, which will pick up next week as some plants shut down for the holidays. CME butter averaged $2.68/lb, down 17.85¢ from the prior week. Prices could continue to slide, but given world butter prices – it seems US prices don’t have much more downside potential as that would make US butter competitive in international markets headed into 2024.

September butter domestic commercial disappearance at 166.1 million pounds and 10.6% more than last year. That puts YTD commercial disappearance 8.2% higher than one year ago. Spot butter prices moved above $3/lb toward the end of the month, so that may have less impact on September butter prices and more on October and November. That accounts for an additional 119 million pounds of butter commercial disappearance compared to last year – given 54 million pounds in incremental production, which suggests most of that product came from stocks accounting for the fall price run.


Spot NDM prices peaked at $1.22/lb this week before pulling back. CME NDM prices averaged $1.2085/lb, up 2.35¢ compared to the previous week. There is more long-term concern about product availability, but a straight shot higher seems unlikely this time around. Weather news is mixed and seems to be upsetting plantings in Brazil – as regions have too much or not enough rain and heat this week is sweltering. That is keeping feed futures higher and crimping on-farm margin expectations. Additionally, milk is flat to declining in several regions. While cheese demand may not be setting the world on fire, it is sufficient to pull milk away from driers. That could keep prices somewhat range bound and supported into the winter months.

September NDM/SMP domestic commercial disappearance at 65.1 million pounds and 21.7% less than last year. That puts YTD commercial disappearance 6.1% less than one year ago – one of the lowest years on record. Further declines in US milk powder consumption put a more significant burden on export products. It is possible there was more restocking in October and November so that demand could lift. Higher interest rates may play into this NDM sales dynamic, keeping more products with cooperatives and processors vs. brokers and end-users this year compared to the past five years.

Whey & Lactose Products

CME spot whey prices moved up again. CME whey averaged 41.2¢, up 2.1¢ compared to last week on comparable trades to the previous week. European prices were unchanged this week on a higher euro – that could have permitted a modestly higher US price to remain competitive. Most of the news was unchanged and focused on China’s questionable demand. Dairy Market News (DMN) western mostly was unchanged at 40¢ this week. Central mostly was 39¢, unchanged from the prior week. Lactose was 25¢, down 0.5¢ from the previous week. WPC was up again, +0.5¢ to 89.5¢ this week.

Whey commercial disappearance at 47.1 million pounds 78.7% more than a year ago – YTD volumes are up 26% vs. 2022. WPC commercial disappearance at 21.1 million pounds 144% more than a year ago – YTD volumes are up 173% vs. 2022. That appears to be the primary driver of whey demand this year. Lactose commercial disappearance at 20.5 million pounds 305% more than a year ago.