Weekly forecast update – Nov. 24, 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.

The holiday week did little to shift the forecast direction.

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 and Jan/Feb 2024 butter adjustments based on spot market declines this week.
  • Reduced NDM forecast a few cents through Q1 2024.

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

More milk moved to manufacturing plants during the extended holiday week. Milk will begin flowing back to bottling as school resumes session on Monday. Still, in some parts of the country, milk is a bit tighter than expected, namely in California, but less bottling kept manufacturers busy. In the East, milk is rising, which could cause milk to feel more available seasonally than in recent months. In the Midwest, milk sought a home as bottling and some cheese plants slowed production toward the weekend. As a result, spot milk looking, for a home met with class price discounts. The USDA FMMO hearing resumes in Carmel, Indiana, next week.

US October milk production marked the fourth consecutive month of YoY declines. Output totaled 18.7 billion pounds and 0.53% less than a year ago. Significant declines in the West, lackluster output in the Midwest, and gains in the East that could not offset lower output from larger production states. Western and Southwestern reporting states, except for Arizona, produced as much or less milk than a year ago – including 2.6% less in California and 1.9% lower in Texas. Wisconsin, Illinois, Iowa, and Minnesota increases were less than 1%. South Dakota may reflect new dairy operations. The US milking herd was 9.37 million head – 0.45% less than last year or 42,000 fewer cows. Output-per-cow was 1,933 pounds – 0.05% lower than last year – most states were unchanged.

Cheese Market

This week markets only traded through Wednesday due to closed markets for the Thanksgiving holiday. During the shortened holiday week, prices continued to decline with barrel markets collapsing headed into the holiday. Blocks averaged $1.5933/lb, down 2.87¢ compared to the previous week. Barrels averaged $1.4817/lb, down 17.13¢ compared to the prior week. That widened the weekly block-barrel spread to 11.16¢ this week. After closing at $1.44/lb that was the lowest barrel price since early July. While there were anecdotal reports spread through the broker network that western barrels were tight, the spot trade over the past two weeks suggests that any tightness has been corrected. It is likely the rumor lead to the mid-month barrel premium to blocks and this is an overcorrection to the downside for prices that remained too high for too long. With the burger and sandwich season in the rearview mirror, processed cheese demand could be lower headed into the winter.

USDA reported US cheese stocks at 1.46 billion pounds on Oct. 31 – 1.15% more than a year ago. That reflects a steady performance in recent months. MoM stocks declined 19 million pounds – similar to the five-year average. American cheese stocks were 838.4 million pounds – up 0.86% vs. last year. MoM stocks dropped 13 million pounds – similar to last year.

Butter Market

CME butter prices recovered some lost ground in early trading before sliding again on Wednesday. CME butter averaged $2.5158/lb, down 10.67¢ from the previous week. Since the beginning of the month, spot butter prices have lost 64.25¢ – a sizeable decline, but expected. Spot trading volumes picked up this week with 15 loads trading. Prices could experience a bit more sell-side pressure headed into next week, but given higher European and Kiwi butter prices, it seems prices settling near last year’s levels seems reasonable – larger declines could make some US butter competitive in international markets. Overall, cream demand is waning and more is headed to butter churns. With the season nearly complete, bulk packers are starting to become busy with more butter headed to cold storage.

USDA reported US butter stocks at 238.3 million pounds on Oct. 31 – 0.6% less than a year ago. That reflects a seasonal decline comparable to the last two years. MoM stocks declined 28 million pounds – similar to last year but less than the five-year average. The stocks were down compared to last year due to higher butter production and slowing exports, resulting in more butter moving to storage. Also, commercial disappearance slowed due to high prices.


Spot NDM prices pulled back to $1.1725/lb on Tuesday resulting in a weekly average of $1.1833/lb, down 2.52¢ compared to the previous week. There are reports that demand has moderated and that prices could linger in the upper teens headed into the end of the year as milk seasonally finds its way to driers as bottling demand adjusts to less bottling as schools let out for winter breaks in a matter of weeks. Seasonally, milk production is on the rise and that will increase milk powder availability. At this point, Oceania is past its peak output, but the northern hemisphere will be on the rise. Given more demand for cheese, it is likely the United States and Europe could produce at similar, if not lower levels compared to last year.

Most news this week was from overseas markets. New Zealand’s October SMP exports totaled 87 million pounds – 30% more than a year ago, the highest for that month since 2017. That put New Zealand’s YTD SMP exports up 38.6% compared to last year—good news for New Zealand – more competition for US and EU27 exporters. Exports to China increased by 11% compared to the previous year. Higher exports to SEA and Saudi Arabia drove the higher results. The most significant declines were in Indonesia and the Philippines.

China’s WMP imports totaled 40.8 million pounds – 31.8% lower than a year ago but consistent with this year’s monthly performance. That put China’s YTD WMP imports down 37.8% compared to last year – suggesting, at least for now, that this is the new demand level that the world needs to adjust to. All declines came from New Zealand. China’s SMP imports totaled 49.5 million pounds – 1% more than a year ago, consistent with this year’s monthly performance. That put China’s YTD SMP imports up 8.9% compared to last year. Despite increases in SMP and cheese – China’s milk equivalent imports are less than last year. All increases came from New Zealand. Imports from the United States were less than a year ago.

Whey & Lactose Products

CME spot whey prices pulled back a bit this week. CME whey averaged 39.74¢, down 1.28¢ compared to last week on just two trades, but uncovered offers left on the board most days. European prices were a bit higher this week on a higher euro. Most of the news focused on China’s questionable demand – which was confirmed with lower imports and more coming from Belarus and Poland. That seems to suggest that Chinese processors’ margins are compressed. Given higher NDPSR whey prices – that could keep US cheese processors’ margins limited also. 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 90¢ this week.

China’s October whey imports were 118.9 million pounds – 3.6% less than a year ago. Imports from the United States were 13% less – offset by increases from Belarus (+34%) and Poland (+18%) – suggesting buyers are looking for discounts and value. China’s infant formula imports remain less than a year ago – through October, volumes are down 10.4%.