2024: The Year of Protein

Agriculture has seen its fair share of ups and downs in recent months. For example we went on a rollercoaster ride of cheese and butter prices. And we keep seeing challenges across the globe with wars as well as weather.

Throughout the summer and early fall, the spotlight has been on butterfat, which reached a record high of $3.36 per pound.  This surge in prices was primarily driven by a heightened demand for butter. This was triggered by a rise in cream usage for ice cream production during the summer months. However the inability to find substantial demand for other dairy products like powdered milk and whey has kept overall milk prices in check.

“We are looking at 2024 as being the year of protein,” says Dan Basse, president of AgResource Company. “I’m encouraged that milk prices will rise. I think we can make it back to a seasonal high in 2024 somewhere between $20 and $22/cwt. That would be a big advantage from where we are sitting today.”

One of the significant factors affecting the dairy market has been the evolving relationship between the United States and China. As these two economic powerhouses reposition themselves as competitors, China’s demand for dairy products, particularly whey, has dwindled. The ongoing geopolitical and economic shifts between these nations have had a dampening effect on the demand for dairy exports.

Data shows that per capita grain yields worldwide have stagnated. To meet the growing global food demand, an additional 24 million acres of land need to be brought into production within the next five years. Basse says with the war in the Black Sea region disrupting agricultural activities, the responsibility falls largely on South America to meet this demand. 

Basse adds that another major driver of demand for 2024 will be renewable diesel. 

He says, “The expansion of crush facilities for tallow and used cooking oil, combined with the surplus of soybean meal, is expected to elevate soybean prices. The U.S. is set to crush approximately 600 million bushels over the next five years. This significantly impacts cash basis relationships and also opens opportunities for farmers, particularly in the dairy industry.”