Discover why US dairy prices are on the rise as cheese exports hit record highs. Will this trend continue to benefit farmers and consumers alike? Find out more.
Optimism remains high for US dairy prices as agricultural economist Lucas Fuess reports a trend of slow and steady price improvements over the last quarter. He notes, “We see some improvement in milk prices over the next several months, with better feed costs bringing good news for US dairy farmers.”
The cheese markets have been a significant driver for Class III gains heading into May, with the June Class III contract rising approximately $4 in the past month. Fuess elaborates, “We’ve seen strong cheese exports, especially in February and March,” adding, “March was an all-time record high cheese export month for the US, which is fantastic news.”
“March was a record-high cheese export month for the US, which is fantastic news.”
Furthermore, Fuess highlights that limited milk production growth in both the US and abroad, coupled with weaker cheddar production, has helped boost prices. “We’re at multi-month highs in the cheese market,” Fuess explains. “Pushing Class III prices up to Class IV levels is very good news indeed.”
Key Points:
- Milk production has seen nine consecutive months of weaker year-over-year output.
- Fuess expects demand growth, especially during June Dairy Month, to raise prices further.
- Domestic demand has been solid, with sluggish milk production responses.
- Core inflation returned to Federal Reserve targets in late 2023, with low unemployment and growing real wages.
- If inflation moderates, the Fed may cut interest rates in 2024.
- US dairy exports peaked during high farm milk price years, notably due to China in 2014 and 2022.
- Economic challenges in China may impact future exports.
- High milk prices are linked to large export increases, while low prices show lower export growth.
- Ending stocks of dairy products affect farm-level milk prices.
- USDA forecasts an All Milk price of $20 per hundredweight (cwt).
- Demand for dairy-based products continues to rise.
- US milk prices are below the EU but above New Zealand.
- Mexico remains a strong demand source for US dairy products.
- Current margins are pressured, but $20/cwt milk with $4.50/bu corn is better than with $6+ corn.
- American cheese stocks (cheddar) were up 1.5% over a year earlier.
