Key Takeaways:
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While butter prices have maintained a decent value, cheese has not been so lucky. Lower cheese values are hindering Class III prices with futures as of January 16, 2024, averaging just $15.69/cwt in the first quarter of 2024. Producers cannot sustain prices at these levels, making the start of 2024 likely to be difficult for farmers paid on Class III values.
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Milk production in the U.S. and abroad continues to lag prior year levels. Fewer cows in the national herd along with limited heifer inventories may make it difficult for milk volumes to grow substantially during 2024. Combine that with unfavorable Class III prices in the near term and producers will likely be slow to expand. That said, there is room for increases as new manufacturing facilities come online. Cheaper feed will also take some pressure off farmers’ margins, improving yields on better-quality feedstuffs.
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Despite lower total milk production as well as lower production of key dairy products, prices have not jumped upward, indicating a lack of demand. As inflation and other macroeconomic factors take a toll on consumers around the world, demand may remain subdued.
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