Will this period of prosperity last?

Amid the holiday season, there is plenty of butter, cheese, dips, and whips flying off the grocery store shelves, much to the delight of dairy farmers across the country during this period of peak dairy demand. There is also joy being delivered after strong recent milk checks: September’s $23.34 per hundredweight (cwt.) Class III settlement was the highest since June 2022, while Class IV’s $22.29 mark was the best in just under two years. While prices don’t look as attractive in 2025, it will likely still be a much-welcomed year of positive margins.

Globally, the second half of 2024 marks a turning point for milk supply growth across the Big 7 export regions (the U.S., European Union, New Zealand, Australia, Brazil, Argentina, and Uruguay). Year-over-year production gains are forecast at 0.5%, offsetting the 0.5% year-over-year decline in the second half of 2023. However, volume growth is not expected to overwhelm the global market. RaboResearch forecasts milk supply growth of 0.8% in 2025.

In the U.S., October milk production grew 0.2% versus the prior year, marking the third consecutive year-on-year gain after a 13-month stretch of weaker output. RaboResearch expects production to continue moving higher versus the prior year in the last quarter of this year and into 2025, with 2025 expected to show a 0.9% year-over-year gain.

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