Weekly forecast update – Oct. 20, 2023

Forecast updates


  • Adjusted Q4 prices based on spot markets.
  • Increase barrel prices through year-end
  • Reduced NOV23 blocks by a few cents.


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


  • Increased Q4 2023 forecast.
  • Raised 2024 forecast across all periods.


  • Lifted whey forecast through 2026. Prices are rising faster than anticipated based on stronger demand for WPC80 and less output.

Milk Market

USDA released the November Class I advanced price at $19.75/cwt –28¢/cwt more than October, but .$4.34/cwt less than last year. Prices continue to recover from the August low point. The higher price resulted from higher Class I butterfat and a lower skim price. The November advanced Class II skim was announced at $9.40/cwt, 15¢/cwt higher than October.

USDA released September 2023 milk production at 18.2 billion pounds and 0.18% less than a year ago. USDA also revised August milk production lower. YTD output is up a slim 0.23% compared to last year, which under performed 2021, suggesting flatlining of US output. Western and Southwestern states fell behind last year, with the exception to Arizona (+3.7%) and Utah (0%). Gains in Midwestern and Eastern states nearly offset those losses led by South Dakota (+7.4%) and Georgia (+3.4%). The US milking herd stood at 9.37 million head, down 0.4% compared to last year and 6,000 cows from August. Output per cow was 1,943 pounds, 0.2% more than last year. That seemed to be a mitigating factor for states with fewer cows.

Cheese Market

Spot cheese markets appear to be forming a bottom and could be prone to move up headed into the end of the year – but that won’t be without some selling. Barrels seem to be on steadier ground than blocks – that closed this week’s block-barrel spread to 7.6¢. CME barrels averaged $1.6765/lb, up 5.75¢ compared to the previous week. Blocks averaged $1.7525/lb, up 5.1¢. While barrels continued to appreciate into Friday, blocks stumbled on two trades. Currently, data appears to support higher prices, but the sell-side pressure at the CME remains intense. USDA reported that production steadily increased as fewer plants were down for maintenance. Over the weekend, a large cheese plant had some production issues that may offset some recent improvements.

News this week was from overseas. EU-27 August cheese production was 1.7 billion pounds, 4.2% more compared to last year – with Ireland yet to report 2023 production (Irish data excluded from 2022 and 2023 data for comparisons). While less than last year, output is consistent with 2021. YTD cheese production is running 1.6% ahead of last year’s pace (excluding Ireland). Danish cheese production shot up 8% compared to last year. Several countries, including Italy, France, and Germany posted gains compared to the previous year. Most reports indicate that cheese processors are well committed to several varieties through year-end.

Butter Market

After a down week, CME prices picked up but again dropped back on Friday. That resulted in a weekly average that continues to descend, with prices averaging $3.387/lb, down 5.6¢ compared to last week. There were some reports that cream started showing up to churns this week as Class II processors slowed intake to manage higher costs and to avoid building expensive inventory that could be subject to downward revisions. At the same time, the industry is gearing up for peak shipments over the next six to eight weeks. The Global Dairy Trade (GDT) butter and AMF prices increased compared to the previous auction, up 2.9% and 7.1%, respectively.

EU-27 August butter production was 385 million pounds, up 5.6% compared to last year – the third consecutive YoY increase. Seasonally, butter output has not yet reached seasonal lows – those are anticipated next month. YTD butter production is running 2.4% ahead of the same pace last year. French butter production led to an increase of 8.8% compared to last year. Ireland followed closely, up 6.9% compared to last year. Denmark posted a similar increase, up 5.4%. Italy, Spain, and the Netherlands slowed output, but the declines were modest compared to the previous year.


NDM spot prices continued a slow climb higher this week. CME spot prices averaged $1.2275/lb, up 2.25¢ compared to last week. Trading picked up this week, with 18 loads changing hands. GDT WMP and SMP prices increased, up 4.3% and 4.2%, respectively, compared to the previous event. That and rising European prices seem to confirm that international demand for NDM/SMP is rising this fall. At the same time, output appears to be moderating on somewhat flat to declining output compared to last year. Western manufacturers are reporting tighter stocks as milk flowing to driers slows this fall. As milk production in Europe and New Zealand slows, that could provide more opportunities for US exporters.

EU-27 August milk production was 26.8 billion pounds, 3.2% less than July, but 0.3% more than a year ago. YTD, European milk is 0.6% ahead of last year’s pace. That continues to reflect that European milk production is expanding at 0.5% YoY in most years. France led the declines, down 34% compared to last year. Several other countries fell behind, including Ireland and Italy. Gains from Germany are still positive, up 0.8%, but the YoY gaps are closing. Last year, German gains were sizeable and this year’s output is starting to lap the expansion period. Belgium was responsible for most of the YoY performance and the nation that kept Europe’s output on the plus side, up 10.7% compared to last year.

EU-27 August SMP production was nearly 260 million pounds, up 2.1% compared to last year – turning around a four-month YoY deficit. Seasonally, SMP output has not yet reached seasonal lows – those are anticipated next month. YTD SMP production is running 3.3% behind the same pace last year. Italy produced 20.8% more SMP than last year but declines from Poland fully offset that. Germany also fell behind last year’s pace by 35.3%.

Whey & Lactose Products

Whey prices lifted this week – sitting just shy of 40¢ by Friday. CME whey averaged 37.45¢, up 5.6¢ compared to last week. More robust WPC80 markets seem to be causing prices to lift. Additionally, US spot prices closed the gap on European prices this week. Dairy Market News (DMN) western mostly was up 1¢ to 35¢ this week. Central mostly was 33.5¢, up 1.5¢ from the prior week. Lactose jumped up to 24.6¢, up 0.6¢ from the previous week. WPC is also rising, up 0.5¢ to 87¢ this week. It appears lower-than-expected production is causing prices to lift. Higher whey will influence the Class I and III milk prices moving forward.

Nestle is closing an infant formula plant in Ireland as childbirth rates in China plunge – seems odd as the plant could have been recommissioned for other purposes. It is reasonable to expect that between China’s demand decline and prospects for lower milk from Ireland – Nestle opted to close the facility rather than retool.