Unlock Exclusive Insights with HighGround Dairy's Global Dairy Forecast Reports

Our team of experts recently released our Global Dairy Forecast Report, which covers all the critical global fundamentals impacting prices today and into the future. In this newsletter, we want to give you a sneak peek of what is inside our report, but there is a lot more to discover. You can get the full scoop when you sign up free 30-day trial!

1. Global Milk Production A Mixed Bag: Milk collections from the top five exporters have been negative since July 2023, with New Zealand contributing to recent improvements. EU data is expected to remain flat or slightly negative, but conditions in Western Europe are improving, suggesting a turnaround by late September. Oceania’s strong spring milk output and the EU’s recovery post-Bluetongue will shift focus back to demand to sustain prices.
2. China’s Economic Band-Aid: China reaffirmed its growth goals but introduced limited new stimulus, disappointing investors. Infrastructure investments are planned, but weak consumer demand and property struggles continue. Policymakers are crafting solutions, but the lack of a clear strategy leaves markets waiting for stronger direction.
3. Conflict in the Middle East: Potential Israeli strikes on Iran’s energy infrastructure could disrupt oil exports, pushing prices above $100 per barrel and reigniting inflation concerns. Rising energy costs would hit dairy-importing regions like the Middle East hard. The geopolitical landscape remains tense, adding to global market uncertainty.
4. The European Correction: European dairy markets are correcting after months of high prices for fat and SMP. Better weather and healthier cows should boost production and balance supply, though rising energy costs could slow the pace of price relief.
5. WMP Supported into Peak Oceania Milk: New Zealand producers are favoring fat and SMP production over whole milk powder (WMP) due to higher returns. As cooperatives direct more milk to these streams, WMP production is expected to decline further this season.

1. Cheese Prices: Cheese prices came off their highs in September as greater total production and improved Cheddar output from the prior month helped alleviate market conditions. While more cheese is being made, limited stockpiles, improved export demand, and upcoming holidays will counteract improved availability providing near-term support to prices after the recent sharp declines.
2. Retail Update: Class II products continue to dominate the dairy aisle due to insatiable consumer demand for cream cheese, cottage cheese, and yogurt. High prices for butter resulted in lower retail purchasing in recent weeks. Mozzarella reigns the king of cheese in 2024 at retail, but the football season has brought higher demand for other pizza cheese as well such as Colby Jack and Parmesan.
3. Butter Prices and the California Rundown: Since September 16, 2024, the CME spot butter price has tanked $0.4550/lb. as buyers finally believe there is enough butter to go around. Purchasing for holiday demand was likely met earlier this year, compared to 2022 and 2023 leaving markets to drop with out big demand for holiday buying. Butter output climbed by 14.5% YoY in August and stocks are plentiful. August milk production in California, responsible for nearly 1/3 of US butter in 2023, helped to drive total output higher. However, bird flu is running across the state with expectations that the stellar August performance may not last.
4. End of the 2018 Farm Bill: The 2018 Farm Bill officially ended on September 30, 2024, without Congress passing an extension or a new bill. Significant impacts will not occur until January 1, 2025, and while markets prepare for the worst, it is likely lawmakers are waiting for a post-presidential election vote with expectations that an extension will come before the start of the new year.
5. FMMO Comments: The USDA published comments related to its Recommended Decision for the Federal Milk Marketing Orders. There was a wealth of feedback from dairy producers, processors, and market participants focused on the key topics of milk compositions factors, surveyed commodity products, Class III and Class IV formula factors, Base Class I skim milk price, and Class I differentials.

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