Report on U.S. Dairy Market Outlook: Fourth Quarter 2024 and 2025 Projections
Introduction
The U.S. Department of Agriculture (USDA) regularly publishes the Livestock, Dairy, and Poultry Outlook report, which provides critical insights into the U.S. agricultural economy. This report covers the dynamics of livestock and dairy production, the prices of related products, and forecasts for the upcoming periods. The most recent update from November 2024 reflects changes to the forecasts for dairy production, prices, and inventory, with adjustments based on third-quarter data from 2024. This report offers an overview of the key developments in U.S. dairy markets, including updated milk production forecasts, price adjustments, and a look ahead to 2025.
Key Findings from the November 2024 Outlook
Milk Production and Herd Size
Milk production in the U.S. is expected to reach 226.0 billion pounds in 2024, an increase of 0.2 billion pounds from previous forecasts. While the forecast for herd size and milk per cow in the fourth quarter of 2024 remains unchanged, adjustments based on third-quarter data have led to the overall increase in the milk production estimate for the year. The dairy sector continues to experience challenges related to labor, feed costs, and environmental conditions, but production remains relatively stable for the time being.
For milk per cow, the expected national average is likely to reflect modest growth, largely driven by advancements in genetics, feed efficiency, and overall management practices on dairy farms. The herd size is expected to remain largely unchanged from earlier forecasts, reflecting a cautious approach from dairy farmers given market conditions and ongoing financial pressures.
Price Adjustments for Dairy Products
In response to fluctuating market conditions, the price forecasts for several key dairy products have been revised. Notably, the price forecast for butter in 2024 has been revised downward. This revision is largely due to recent price movements and higher-than-expected inventories for butter, which have placed downward pressure on market prices.
Conversely, the price forecasts for dry whey and nonfat dry milk (NFDM) have been revised upward. This adjustment reflects tight inventories and strong international demand for these products. The global demand for dairy products such as whey and NFDM continues to be robust, particularly from international markets in Asia and other regions.
All-Milk Price Forecasts
The all-milk price forecast for 2024 has been lowered to $22.75 per hundredweight (cwt), down from previous projections. This decrease reflects the adjusted prices for key dairy products like butter and cheese, as well as slower-than-expected growth in overall demand for milk. Despite these adjustments, the all-milk price forecast for 2025 has been revised upward to $22.85 per cwt, reflecting a more optimistic outlook for the second year.
The outlook for 2025 suggests a stable dairy market, with potential for slight price increases as domestic production stabilizes and international demand continues to support prices for products like cheese, butter, and dry whey.
The Impact of International Markets
International markets continue to play a significant role in shaping U.S. dairy prices. In particular, global demand for U.S. dairy products, such as nonfat dry milk and whey, has been particularly strong. Countries in Asia, especially China, have been key players in driving demand for these products. The robust demand from these regions has contributed to higher prices for dry whey and nonfat dry milk, even as butter prices have faced downward pressure.
In addition to strong international demand for certain dairy products, global competition has been intensifying. Other milk-producing regions, such as the European Union and New Zealand, have seen fluctuations in production levels and price movements, affecting global market conditions. The USDA continues to monitor these international developments closely to provide a comprehensive outlook for U.S. dairy exports.
2024-2025 Outlook for Dairy Products
For 2024, the overall outlook for U.S. dairy remains positive but tempered by several factors. Price revisions for key products like butter, dry whey, and nonfat dry milk reflect the ongoing market volatility and inventory fluctuations. However, strong international demand for U.S. dairy products, particularly from Asia, is expected to support market stability in the coming months.
Looking to 2025, the dairy sector is expected to experience modest growth in both production and prices. The revision for Cheddar cheese prices indicates optimism for the year, driven by stable domestic demand and ongoing global interest in U.S. dairy products. The forecast for milk production in 2025 is expected to remain robust, with relatively stable growth in milk per cow and a cautious approach to herd size.
Red Meat and Poultry Outlook
The USDA’s Livestock, Dairy, and Poultry Outlook report also includes projections for red meats (beef, pork, lamb) and poultry (broilers, turkey, eggs). However, for the dairy industry, the primary focus remains on milk production, dairy product prices, and the influence of both domestic and international market forces.
Economic Impacts of the Outlook
The USDA’s report highlights the economic impacts of changes in the World Agricultural Supply and Demand Estimates (WASDE), particularly as they relate to the domestic and international markets for dairy products. These projections are crucial for dairy farmers, processors, and traders who rely on the USDA’s analysis for decision-making.
Changes in feed costs, labor availability, and global demand trends all play a role in shaping the U.S. dairy outlook. Additionally, policy changes, such as trade agreements or domestic subsidies, could further affect market dynamics. As the dairy market continues to be influenced by a wide range of factors, the USDA will continue to update its forecasts to reflect the latest developments.
Conclusion
The November 2024 Livestock, Dairy, and Poultry Outlook provides a detailed picture of the current state of the U.S. dairy market. While milk production forecasts for 2024 have been adjusted upward slightly, the dairy industry continues to face significant challenges, including fluctuating product prices, inventory levels, and global competition. The price revisions for products like butter, dry whey, and nonfat dry milk reflect the ongoing volatility in the market, but there is also optimism for the future. With a modest upward revision for 2025, dairy producers are likely to see some stability in the coming year.
As U.S. dairy farmers navigate these market fluctuations, the importance of global trade and international demand cannot be overstated. Continued strong demand from countries like China and other Asian markets will help sustain U.S. dairy exports, while domestic consumption remains key to overall market health.
The 2024-2025 forecast indicates that while challenges remain, the U.S. dairy sector is likely to experience gradual recovery and modest growth in the coming years, particularly in the prices of certain dairy products like Cheddar cheese and dry whey.
Sources
- U.S. Department of Agriculture (USDA) Livestock, Dairy, and Poultry Outlook Report, November 2024
- World Agricultural Supply and Demand Estimates (WASDE) Report, November 2024
- USDA Economic Research Service (ERS) – Dairy Markets and Policy: https://www.ers.usda.gov/topics/dairy/
- USDA Dairy Market News: https://www.ams.usda.gov/market-news/dairy