Market Reports

After a period of exuberance, the dairy markets ran into some resistance this week. Though milk supplies are far from plentiful, demand for spot milk has stabilized and combined with a lackluster demand picture, there has been little incentive over the last few days to push the markets further upward.

With the benefit of hindsight, USDA now believes there were many fewer dairy heifers on hand at the beginning of 2023 than previously thought. In its biannual Cattle inventory report, the agency slashed its estimate of the dairy heifer headcount on January 1, 2023 by 263,600 head.

Milk production growth in the U.S. sputtered at the end of 2023, leaving the full year result nearly unchanged from the year prior. After expanding during the first half of the year, volumes contracted between July and December as milk prices remained under pressure.

A blast of cold air from Canada reached as far south as Texas this week, closing schools, freezing pipes, sidelining milk trucks, and disrupting dairy processing.

The dairy trade is feeling around for the bottom in the cheese market. Cheese output remains robust, but low prices have finally attracted international attention. U.S. cheese exports topped 85 million pounds in November, the highest-ever volume for the month, up 3% from the previous monthly high, logged in November 2022. Once again, record-setting shipments to Mexico helped to offset softer demand from Japan and South Korea.

Mild winter conditions across most of the country have supported milk production though margins remain thin, especially for producers in the western U.S. Milk remains readily available for manufacturers.