2024 Outlook: Cautious Optimism for Dairy Farmers

The year 2023 proved to be a challenging period for dairy farmers across the nation, marked by a substantial market decline from the high prices of the previous year. High feed costs further added to the difficulties, leading to margins reaching their lowest point since 2009. Despite this, Steve Nicholson, UW-Madison Department of Animal and Dairy Sciences Professor says there’s hope for 2024.

“Cow numbers are decreasing and the amount of milk per cow is remaining stable,” explains Nicholson. “Despite stable milk production per cow, innovative feeding and breeding strategies led to an 11% increase in butterfat per cow. This unexpected rise in butterfat has positively influenced the marketplace heading into 2024.”

While the high prices of 2022 influenced global markets, 2023 saw a decline in the rolling average of US dairy exports. Despite this, projections for 2024 indicate a more positive trend. Especially for major dairy products like dry whey, skim milk powder, non-fat dry milk, butter, and cheese. The US is positioned favorably compared to global competitors in these markets.

When it comes to milk prices, Nicholson says 2024 is showing signs of promise.

He says, “The milk price cycle, characterized by peaks and troughs, is expected to show signs of recovery in 2024. Projections suggest that the industry is past the low point of the cycle, offering hope for an upward trend in milk prices.”

Ongoing hearings since August 2023 regarding federal milk marketing orders have introduced potential changes to pricing formulas. The impact of these changes, particularly in the make allowance values and class one differentials, remains uncertain.

Nicholson says there are several wild card factors that are influencing how 2024 will play out. 

“Several wild cards, including the global economy, weather patterns, and the pending farm bill, pose uncertainties for 2024. Economic growth, inflation control, and potential changes in the farm bill could impact dairy margins.”