USA – In preparation for the upcoming year, US dairy farmers are closely examining the latest insights provided by the U.S. Department of Agriculture (USDA) Economic Research Service Livestock, Dairy, and Poultry Outlook.
Released monthly, this comprehensive report analyzes production and economic data within the livestock, dairy, and poultry sectors.
The November report indicated a 0.7% decline in U.S. milk production during the third quarter of 2023 compared to the same period in the previous year.
Additionally, the total number of milk cows in the U.S. decreased by 41,000 head from the prior quarter and 33,000 head lower than the same period a year prior.
The report also revealed that September witnessed an increase in the all-milk price to US$21 per hundredweight (cwt.), marking a US$1.30 rise from the prior month but registering US$3.10 lower than September 2022.
Fortunately, dairy farmers benefited from lower feed costs in September compared to the previous year. The milk-feed ratio calculated by the National Agricultural Statistics Service (NASS) increased to US$1.89 in September 2023, showcasing a positive trend.
As part of the USDA Dairy Margin Coverage program, dairy farmers’ milk margin above feed costs in September 2023 was US$8.44 cwt. This reflected an increase of US$1.98 cwt from the previous month but a decrease of US$0.18 cwt compared to September 2022.
Looking ahead to 2024, the USDA projects continued contraction in the U.S. milking herd into early 2024, with an expected expansion later in the year.
However, the number of milk cows is anticipated to be 10,000 less than the previous forecast, and milk per cow is also reduced, resulting in a 0.4 billion pounds lower estimate for milk production compared to the previous projection.
Notably, the USDA Economic Research Service estimated the Class III milk price in 2024 to be US$17.70 per cwt., the Class IV price at US$18.85 per cwt., and the all-milk price for 2024 at US$20.80 per cwt.
Analysts recommend utilizing resources such as the Ohio State University Extension’s Farm Business Profitability and Benchmarking Program to assess current financial situations and evaluate alternative scenarios based on projected production, revenue, and expenses.
Collaboration with Extension educators and trusted advisors is encouraged to interpret and apply USDA projections effectively.
Dairy farmers are urged to analyze their 2023 production and financial performance, utilizing realistic production and cost values in their budget.
In addition to domestic considerations, global trends and signals from the wholesale market should be monitored, as they can impact milk prices and demand.
Looking beyond the national landscape, the UK’s dairy sector is also experiencing shifts.
GB milk production for the 2023/24 season is forecasted to be 1.3% less than the previous milk year. The forecast reflects a seasonal shift, with the first half running ahead due to higher prices and favorable weather.
However, a decline is anticipated in the latter half of the year. External factors such as lower milk prices and input costs are expected to pose challenges to cash flows for farmers, especially with higher interest rates and impending tax bills.