Market Reports

U.S. milk output fell short of year-ago volumes for the 14th straight month in August. The deficit was narrow; production was just 0.1% lower than August 2023. Given sizable improvements in milk components, butterfat and protein output were surely higher than last year, and it’s possible that milk solids output also topped August 2023 volumes. But August 2023 set a very low bar, and, at least on a fluid basis, U.S. milk output failed to clear it.

The dairy markets moved higher again as the trade grappled with structural barriers to expansion throughout the Northern Hemisphere. In the United States, limits to growth are well known.

Tighter milk supplies and lower milk solids output have stiffened competition among dairy processors. While there are no obvious winners, there is a clear loser.

The bears went into hibernation a little early this year, and the bulls enjoyed raucous celebrations on LaSalle Street. Milk and dairy product futures soared to life-of-contract highs amid continued barriers to growth.

U.S. milk output has trailed prior-year volumes for 13 straight months. In Wednesday’s Milk Production report, USDA slashed its initial estimate of June milk output. The agency now reports a 1.7% drop in milk production during the tail end of the flush.

Like Katie Ledecky in a Paris pool, the dairy spot markets hit one milestone after another. CME spot Cheddar barrels gave a standout performance, blocks tied for their highest mark since January 2023, butter leapt to its loftiest value since last October, and spot nonfat dry milk (NDM) cleared the bar for the first time in 18 months.