Weekly forecast update – Oct. 13, 2023

Forecast updates


  • Modified the forecast for October and November, given USDA’s most recent pre-solicitation announcement. Additionally, reports suggest that demand is good and supply it tightening.
  • Increased the Q2 to Q3 2024 forecast. Given the spread between Class III and IV milk, more milk could flow to driers this winter. Given cheese is reported tight, that could tighten the cheese supply early next year.


  • No significant changes – adjusted October based on spot markets.


  • Increased Q4 2023 forecast.
  • Raised Q1 2024 forecast based on slowing milk production and resulting NDM/SMP expectations.


  • Lifted whey forecast through Q2 2024 – currently US prices are chasing EU prices higher..

Milk Market

Weather is moderating, and reports suggest that milk is recovering, with more processors reporting flat week-to-week milk off the farm. USDA reported that smaller farm exits in the Upper Midwest may keep milk tighter than expected. Whether spot loads of milk are available varies from location to location. There are still premiums in the marketplace – but those could subside by year-end. Additionally, bottling demand appears to have stabilized – that could make it feel like milk is more available compared to previous weeks. That said, some regions continue to report strong bottling demand despite the holiday at the start of the week. Improved cow comfort will lift production at the end of the year.

The USDA FMMO hearing temporarily concluded on October 11 and will resume the week of November 27, assuming no prolonged government shut-downs. At the current pace, it seems unlikely to implement any new rules until 2025. Assuming the hearings conclude in early December, USDA needs to provide all parties an opportunity to provide briefs. That could put USDA reviewing all of the testimony and evidence on January 24. Typically, it can take 6-7 months before a recommended decision is issued, followed by 60 days afforded the industry for additional comments. That would put a final decision on a collision course with the 2024 presidential election – something USDA has typically avoided. As a result, a Q1 2025 implementation, assuming no lawsuits, seems reasonable.

Cheese Market

On Friday, USDA issued another dairy pre-solicitation, which was unusual given the annual bid process has yet to conclude. The solicitation will be for milk and various cheese products, but the actual bid date has not yet been released. This was similar to the May pre-solicitation notice. It is unusual for USDA to queue up bids – especially when the annual bid has not yet been announced. But this was a pre-solicitation notice – so that should provide bidders with sufficient time to evaluate the request.

This week CME spot markets were lackluster with markets holding near unchanged for most of the week. CME blocks traded three times with prices averaging $1.7015/lb, unchanged from the previous week. CME barrels increased throughout the week, with prices averaging $1.6190, up 6.6¢ from the previous week. That closed the weekly average block-barrel spread to 8.25¢. Most reports suggest that demand remains positive, especially domestic foodservice and retail, but that lower US prices could attract more interest by the end of the year. USDA reported several Midwest cheese plants reporting planned and unplanned downtime this week affecting milk intake. Some indicate that spot cheese is harder to come by than earlier in the year.

Ceres estimates August 2023 cheese commercial disappearance at 1.1 billion pounds – nearly 3% lower than a year ago. August’s commercial disappearance was consistent with last year. There have been some reports that demand remains modestly better than last year, and the YTD figure of +0.7% on commercial disappearance seems consistent with that sentiment. Processors report similar results, better than a year ago but less than forecast. Cheese demand should pick up into the holidays. Days of production on hand have expanded slowly throughout the year. So far, retail sales volumes appear to be picking up since summer.

Butter Market

CME butter prices eased after setting a record the previous week. Throughout the week, trades and offers moved the market lower. CME butter averaged $3.4440/lb – up 0.75¢ from the previous week. Higher spot markets freed up some cream that moved back to churns. Some anecdotal reports suggest that processors are reluctant to acquire cream unless an order backs the purchase. But, for this time of year, cream remains tight, and bulk butter is somewhat limited. While some bulk butter found its way to Chicago, it doesn’t appear there is much butter behind it.

Ceres estimates August 2023 butter commercial disappearance at 188 million pounds, 7.9% above last year. If that estimate is accurate, this August was the most butter consumed for that month on record. Compared to last year, spot butter prices were lower than a year ago – that may be helping to lift demand. Higher September and October butter prices could dampen demand for higher butterfat products. So far, USDA is reporting retail prices with a $3 still – that should be considered a reasonable price.


NDM spot prices reached $1.22/lb this week – the highest since February 2023. Internationally, milk powder prices are rising also. Demand is improving, and widespread supply concerns could worsen if milk production trends lower or Chinese imports pick up. Between less NDM/SMP from the United States and Europe, lower milk production from New Zealand’s North Island, and prospects of lower output from Ireland could be enough to lift prices. Most will wait until next week’s Global Dairy Trade before deciding how long this price run lasts. That said, the uptick in October is consistent with the 2021 price recovery trend. CME NDM averaged $1.205/lb, up 2.6¢ compared to last week.

Ceres estimates August 2023 NDM commercial disappearance at 39 million pounds, 48% below last year. If that estimate is accurate, this August was the least NDM consumed for that month since 2010. Compared to last year, spot NDM prices are lower, but brokers are slow to buy products, leaving older products in the warehouse. That said, slowing output – especially from western states – could cause NDM to move from the warehouse. Brokers seem to be timing the market as to when they want to pick up additional supplies.

Whey & Lactose Products

Whey prices strengthened on sizeable trades and significant bids left on the board this week. CME whey averaged 31.85¢, up 2.85¢ from the previous week. That was the highest weekly CME average since May 5. There were between six and 23 bids left on the board this week. Dairy Market News (DMN) western mostly was unchanged at 34¢ this week. Central mostly was 32¢, up 0.5¢ from the prior week. Lactose jumped up to 24¢, up 0.75¢ from the previous week. WPC is also rising, up 0.5¢ to 86.5¢ this week. Overall reports are still up in the air for whey powder demand, but most reports indicate that WPC80 interest is on the rise and that seems to be supporting the entire complex.

Ceres estimates Aug 23 whey commercial disappearance at 51.7 million pounds – 75.3% more than a year ago. Ceres estimates Aug 23 WPC commercial disappearance at nearly 17 million pounds – 113% more than a year ago. Overall the figures are much improved and likely price related.