MRV BLOG: MRV Market Commentary October 29, 2024

Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market.  These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:

Over the past month, the U.S. dairy industry has experienced notable price fluctuations influenced by several key factors including: Declining Output, Butterfat and Protein Demand, Evolving Preferences, Farm Bill Expiration, Improving Margins, Export Dynamics.

U.S. milk production has been decreasing, with a 1% drop compared to the previous year. This decline has persisted for 14 consecutive months, marking a rare and extended period of reduced output. Despite the overall decline in milk volume, the production of butterfat and protein components has increased. Increased production of butterfat is partly due to demand, there’s a growing consumer preference for dairy products with higher butterfat content. While production focuses on items like cheese and yogurt due to demand, Class 1 milk consumption continues to decline consistently. Overall, Class 2 dairy products show steady demand, with health-conscious and convenience-driven choices, such as high-protein, low-sugar, and single-serve options, becoming key drivers in the market.

The farms have been under pressure in many ways over the last year and with the expiration of the U.S. Farm Bill on September 30, 2024, this has introduced uncertainty regarding agricultural subsidies and support programs. This legislative gap could lead to increased dairy prices in 2025 if new policies are not enacted promptly. However, it’s not all gloom for farmers. Recent data indicates that dairy profit margins have reached their best levels since May 2022, driven by higher milk prices and, recently, lower feed costs. This improvement may encourage increased production, also potentially influencing future price trends.

On a milk solids equivalent basis, U.S. dairy exports value have risen 10% in August 2024 compared to the same month last year. This uptick is driven by global demand for cheese and protein products, affecting domestic availability and prices.

USDEC

The upcoming holiday season is likely to keep commodity markets closely watched as consumers and manufacturers adjust to supply and price shifts. These factors collectively contribute to the recent volatility in dairy product prices.

This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.

Statistical data referenced here is gleaned from reports by MRV Proprietary Data, Feedstuffs, USDEC, CME Group, Dairy Herd Management, EDairy, FoodAndWine, TheCattleSite, and USDA