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Butter demand driving dairy price forecasts

The USDA is calling for slightly more milk production this year because of increased cow output while forecasts for next year are unchanged.

The department’s October supply and demand report says recent strength in butter prices, and expectations for firm demand, are expected to carry through the remainder of 2023.

Katie Burgess with Ever.ag tells Brownfield butter hit a record high price of $3.42 earlier this month, topping the previous record set in 2022 by 16 cents.

“When it gets high like this, it does have a tendency to really crash as we make our way through the holiday season,” she says.  “I don’t think that’s coming quite yet, but definitely something we’re probably going to see over the next couple of months.”

The USDA has also raised its forecast for 2023 nonfat dry milk because of price strength.  The agency says large cheese stocks are holding down prices which led to reduced price expectations into the new year.  Whey prices were left unchanged.  USDA is forecasting the Class III price lower because of lower cheese prices, and raised the Class IV price because of higher butter and nonfat dry milk prices.

Next year the agency is expecting higher butter and nonfat dry milk prices because of strong demand.  Cheese prices were lowered, and whey was left unchanged. The 2024 Class III price was reduced because of lower cheese prices, while strong butter and nonfat dry milk price expectations led to a higher Class IV forecast.

The 2023 all milk price was increased 30 cents to $20.47 per hundredweight and prices for 2024 were raised by 25 cents from last month to $20.55.