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Volatility will continue into 2024


As 2023 comes to a close, dairy producers are hopeful that 2024 will be a better year. Record-low Dairy Margin Coverage (DMC) levels are one measure pointing to the tough financial year that has been endured in 2023. Earlier hopes for a better second half of the year have been slow to develop.


Looking ahead to next year highlights the fact that many factors make the 2024 outlook uncertain. Growth in U.S. milk production, backed by technological advancements and greater efficiencies, could keep downward pressure on 2024 milk prices. The emphasis on export potential, especially to high-demand areas like Asia, could compensate for the expected growth in milk production. More robust domestic dairy product demand could also be crucial to the supply-demand balance and prices.


A few projections


The Food and Agricultural Policy Research Institute (FAPRI-MU) at the University of Missouri recently updated the long-term baseline for the dairy industry (on.hoards.com/2023BaseUpdate). The baseline highlights that lower feed costs should help the financial picture for dairy producers if the U.S. does not face additional drought conditions in 2024. A summary of the key dairy drivers are contained in the table.


Scott Brown

October 18, 2023

hoards.com

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