24 February 2024

27 minute read

By: Jim Wyckoff

USDA Sec. Vilsack: US ‘18 months or so’ away from finding bird flu vaccine

US veterinarians are “18 months or so” away from identifying a vaccine for the current strain of highly pathogenic avian influenza (HPAI) and USDA is developing a process to distribute it, Ag Secretary Tom Vilsack told a House Ag Committee hearing. USDA plans to discuss poultry vaccinations with trading partners, amid concerns that other countries could restrict imports of vaccinated US poultry, Vilsack said. The US does not allow poultry imports from countries affected by HPAI or from flocks vaccinated against the disease. France’s decision last year to vaccinate ducks against HPAI prompted import restrictions.

USDA annual Ag Outlook Forum forecast highlights for US livestock and dairy

OUTLOOK FOR US DAIRY

The US dairy sector enters 2024 facing lower feed prices, a smaller dairy herd, but broadly strengthening prices for both dairy products and fluid milk production. The January 1 dairy cow inventories in 2024 were 41,000 head lower than the previous year, at 9.357 million head. Additionally, there were about 14,000 fewer dairy replacement heifers in the herd. Cow numbers in milk production are expected to stabilize in 2024, ending the year at about the same level as the beginning of the year. The expected number of cows combined with milk per cow expected to continue growing, but at a slower rate than historical averages, as well as one additional milk day, result in milk production in 2024 growing at an annual rate of 0.7 percent.

Exports are projected to grow at a faster rate than imports, on both a fat and skim-solids basis, as tight supplies in global dairy markets make US prices relatively more competitive for international consumers. Domestic use is projected to increase on a fat basis, but decline slightly on a skim-solids basis as domestic users compete for products that have strong export value. Stocks are projected to tighten further, both a fat and skim-solids basis, due to the continued pace of usage and milk production. Milk prices are expected to be higher in 2024, as modest increases in production, coupled with robust demand for dairy products from both domestic and global markets support the values of most dairy products. Tighter supplies from major dairy exporters will support global dairy prices and support US prices, as well. Strong rates of usage and tighter stocks of fat and skim-solids basis are projected to underpin Class III and Class IV milk prices and, in turn, raise the all milk price from 2023 levels.

Milk Cow Inventories Lower to Start the Year, Projected to Stabilize in 2024

For 2024, US dairy producers are expected to face lower feed costs and relatively improved forage supplies from the past several years. Milk cow inventories have been steadily declining since the beginning of 2023 and growth in milk output per cow continues to be lower than historical trends. In 2024, projected prices for milk and dairy products are lower than the recent peaks of 2022 and 2023, but they remain at higher levels compared with the years prior to 2020. Additionally, resilient domestic demand for dairy products and relatively tighter global dairy product markets are expected to encourage US milk production levels.

Milk production growth is projected to be constrained however, by the availability of cows and bred heifers to bring into the domestic milk herd. On January 1, 2024, the dairy herd was 0.4 percent lower than the previous year. Furthermore, dairy heifer replacements were also 0.4 lower and the number of heifers expected to calve in 2024 was down more than 1 percent. The dairy cow herd has been trending lower since reaching a peak in 2021, as feed prices have risen and squeezed margins for milk producers. In 2023, average milk cow inventories steadily declined from 9.427 million cows in the first quarter to 9.360 million cows in the fourth quarter, largely driven by lower margins in the first half of the year and strong cull cow prices due to tight US beef markets.

Improved margins in fourth-quarter 2023 are expected to be a stabilizing factor for the dairy cow herd in 2024. Slaughter rates of dairy cows fell in the second half of 2023, with the trend continuing into January 2024. Given the relatively tight availability of dairy replacement heifers, the lower slaughter rates suggest that the industry is likely to maintain close-to-current inventory levels for much of 2024. As a result, the projection for number of milk cows in 2024 is lower than 2023, but the quarterly projections have inventories during the fourth quarter at the same level they are projected to be during the first quarter.

Milk Per Cow Growth Continues To Be Slower But With Higher Component Rates

Milk production is projected to increase 0.7 percent in 2024 to 228.2 billion pounds. The growth in production is due to higher output per cow, projected to increase 0.9 percent relative to the previous year, taking into account the extra milking day in 2024. In 2023, growth in milk per cow was just 0.1 percent higher than 2022. This was largely due to lower milk production levels in the second-half of the year, at least in part due to extremely hot summer conditions in several key milk-producing regions of the country.

The 2024 growth rate is projected higher than 2023, but is lower than the longer-term average, reflecting the recent slowdown in the rate of growth seen in recent years. While growth in milk output per cow has been slowing, this has been somewhat offset by higher fat test levels seen over the last decade. This likely reflects producers’ shifting productivity focus from total milk production to the production of components contained within milk. The higher fat and skim-solids contents would dampen the impact of slower growth on a milk-per-cow basis for many processed dairy product markets. This shift is consistent with the long-term trends of milk production tilting more heavily toward the production of processed dairy products—such as cheese, butter, and whey-containing products- rather than fluid milk.

Tighter Global Milk Production Expected to Support US Exports

Global dairy markets are expected to be an influential factor in the US dairy outlook for 2024. Overall, global dairy trade is expected to be constrained by lower milk production in several key exporters—notably the European Union and New Zealand. Lower milk production in these markets is expected to translate into lower exports of several dairy products, in particular: butter and nonfat dry milk (NDM). This is expected to help support global dairy prices in 2023. The reduced production in Europe and Oceania would provide opportunities for other dairy exporters to meet global demand, with the United States well positioned to ship product to key markets.

Strong Domestic Use of Dairy Products in 2023 Tighten Inventories

The United States dairy market begins the year with sharply lower beginning stocks of dairy products, both on a fat and skim-solids basis. At the end of 2023, fat basis stocks were 4-percent lower than the previous year, while skim-solids basis stocks were 15-percent lower. For skim[1]solids basis products, there was a particularly strong decline in dry whey products and whey protein concentrate, which historically have been more oriented toward export. In 2023, however, these products saw substantial increases in domestic use, in part spurred by the relatively low whey prices through much of the year. On the fat basis side, butter stocks were 9 percent lower at the end of 2023 compared with the previous year, as growth in domestic use outpaced production during the year, helping support butter prices. American style cheese was a notable exception in 2023, as stock levels increased relative to 2022. This may be in part due to the increased cheese production capacity that has occurred over the past decade which has resulted in production outpacing use. In 2023, uncompetitive cheese prices for much of the year resulted in substantially lower exports, and inventories built. Overall, domestic use increased 2 percent on a fat basis and 3 percent on a skim-solids basis in 2023. For 2024, domestic use on a fat basis is projected to increase 1 percent. On a skim-solids basis, domestic use is projected to decline about 1 percent, as domestic use is expected to have to compete with foreign demand. However, at 182.0 billion pounds, the skim-solids basis use is higher than the 5-year average, indicating continued strength in domestic demand for many skim products.

US Dairy Exports Projected Higher in 2024 for both Fat and Skim-Solids

US price competitiveness was an important factor in trade in 2023. High domestic prices for cheese and butter resulted in higher imports and lower exports than in 2022 on a fats basis. Likewise, weaker foreign demand for skim products resulted in low international prices. Skim[1]solids basis exports in 2023 were lower than the record amount shipped in 2022. For 2024, fat basis exports are projected to grow at a higher rate than imports; at 10 percent and 1 percent, respectively. This reflects improved price competitiveness for US products given relatively tight supplies among competing exporters. Skim-solids exports in 2024 are also projected to be 4 percent higher than 2023, although international demand is expected to compete with US domestic use.

Strong Demand Projected to Support US Dairy Prices in 2024

Strong domestic and international demand is expected to be supportive for US milk and dairy product prices. The all milk price is projected to be $20.95 per cwt in 2024, up from an estimated $20.48 in 2023. The 2024 Class IV milk price is projected to be $20.20 per cwt, up from the 2023 estimate of $19.12 based on higher butter and NDM prices. Butter prices in 2023 witnessed a strong surge in pricing in the fall and winter, leading up to the peak holiday demand period. While prices fell after holiday demand was fulfilled late in the year, January 2024 prices are higher than they were a year ago due to tighter stocks. Additionally, strong international prices in early 2024 have made US butter more competitive on the international market, further supporting the outlook for higher butter prices. US butter prices are projected to average $2.77 per pound in 2024, up from $2.62 in 2023—although not as high as the $2.87 reached in 2022. NDM prices in 2023 fell sharply, down to $1.19 per pound from the record high prices of $1.69 in 2022. Lower prices led to lower production of NDM products and ultimately sharply lower stocks at the end of the year.

For 2024, NDM prices are projected to be $1.24 per cwt due to improved domestic and international demand. The 2024 Class III milk price is projected to be $17.10 per cwt, up from the 2023 estimate of $17.02 per cwt. Class III prices are not expected to increase as much as Class IV due to a projected fall in cheese prices that will offset the projected increase in whey. Cheese prices fell nearly 17 percent in 2023, to $1.76 per pound. The United States has seen a dramatic increase in cheese production since 2018, as additional production capacity has been added. American-style cheese exports fell in 2023, after a substantial increase in 2022. As a result, inventories of American-style cheeses were larger than the previous year heading into 2024. This is expected to put downward pressure on domestic prices. For 2024, cheese prices are projected at $1.69 per pound, a 4 percent decline from 2023.

Whey prices fell sharply in 2023, from $0.61 per pound in 2022 to $0.36 per pound. Weak export demand during the second half of the year resulted in sharply lower prices. The lower prices seemed to have spurred increased domestic use for whey products, however. For 2024, whey prices are projected to be $0.48 per pound—up strongly from the previous year, but still lower than 2022. The projected price increase is due to improved global demand for whey, which has seen prices steadily improve since the September 2023, as well as continued firm demand from domestic users

OUTLOOK FOR LIVESTOCK AND POULTRY IN 2024

USDA Total red meat and poultry production in 2023 declined almost one percent to 106.9 billion pounds, the first decline in aggregate meat production since 2014. The decline was driven almost entirely by lower beef and veal production with increases in pork, broiler, and turkey production insufficient to offset the impacts of a multiyear drought on the cattle sector. Despite expectations of expanded production of pork and broiler meat in 2024, growth in supplies of red meat and poultry are expected to be limited by the impacts of the multiyear drought on supplies of cattle and continued adjustments of the turkey sector to an extended period of weak prices and the impact of Highly Pathogenic Avian Influenza (HPAI) on turkey flocks in late 2023 and early 2024.

For 2024, red meat and poultry production is forecast to increase fractionally to 107.0 billion pounds. For 2024, tighter supplies of cattle are expected to support higher fed steer prices. Hog and broiler prices are expected to be higher despite higher production as stronger domestic and export demand absorb increased supplies. Turkey prices are forecast lower than 2023 as weak demand offsets expected reductions in production in the first part of 2024. However, moving through 2024, prices are expected to steadily move higher during the year and surpass 2023 by late 2024.

Feed Prices Will Decline and Forage Supplies Will Improve Feed prices during 2024 are likely to be slightly lower than 2023. Corn prices in the first part of 2024 are expected to be below a year ago reflecting a forecast 2023/24 crop year average of $ 4.80 per bushel. Prices later in the year are expected to be below 2023, reflecting a decline in the season average price to $4.40 per bushel for 2024/25. Soybean meal prices in the first part of 2024 will reflect a 2023/24 crop year average of $380 per ton and prices in the fourth quarter are expected to reflect a market year forecast of $320 for 2024/2025 as greater crush capacity increases supplies of soybean meal. Hay stocks on December 1, 2023, were 75.7 million tons, 7 percent higher than 2022.

Although a number of major cattle producing States such as Texas, Oklahoma, Nebraska, North, and South Dakota had higher levels of stocks, these levels were below historical levels and many cow-calf producing areas in the Southeast reported lower stock levels. Cattle and Beef The cattle inventory marked its fifth year of contraction in 2023. The Cattle report estimated the number of cattle and calves on January 1, 2024, at 87.2 million head, down 2 percent from a year earlier 3 and the lowest inventory level since 1951. The number of cows and heifers that calved was estimated at 37.6 million head, down 2 percent from the previous year. The beef cow herd was estimated at 28.2 million head, 2 percent smaller than 2023 and the lowest since 1961.

The 2023 calf crop was estimated at 33.6 million head, about 2 percent smaller than the 2022 calf crop. The US cattle inventory will likely decline further in 2024. The Cattle report estimated that producers retained 1 percent fewer replacement heifers for the beef cow herd this year, and that fewer numbers of beef heifers expected to calve during 2024. The dairy cow herd was estimated fractionally below 2023, and producers indicated intentions to hold slightly fewer heifers for addition to the dairy herd. Beef and dairy cow slaughter thus far in 2024 has been below 2023 but may reflect the effects of winter weather on mid-January slaughter schedules. Nonetheless, with a smaller cow base, cow slaughter is expected to decline during the year, but reductions may also reflect improved forage conditions and strong calf prices which would support retention of cows as a precursor to any herd rebuilding.

The total number of cattle on feed in US feedlots of all sizes on January 1 was 14.2 million head, 2 percent higher than 2023 while the number of cattle outside of feedlots on January 1 was about 4 percent below a year ago. While the increase in cattle on feed reflects higher placements in 2023 due to dry conditions, the tighter supplies of cattle outside feedlots points towards lower placements and declining feedlot numbers during 2024. Changes in producer decisions concerning heifer retention over the course of the year can affect the levels of heifers available for placement, but current data would point fewer heifers retained. With an expected smaller pool of cattle available for placement, feeder cattle prices are forecast higher, and these may provide incentives to increase imports of cattle.

Imports of cattle are forecast at 2.05 million head in 2024, up from 1.98 million head in 2023. Although the demand pull from the US will be strong, imports will likely be limited by tighter supplies of cattle in Mexico and Canada. Commercial beef production for 2024 is forecast to fall by 3 percent, to 26.19 billion pounds. In the first part of the year, steer and heifer slaughter will reflect higher levels of cattle in feedlots at the beginning of the year but as the year progresses, marketings will decline as feedlot numbers diminish. Additionally, cow slaughter is expected to decline due to lower inventories and expectations that any response to improving returns or forage will likely be manifest in producers retaining cows later in the year. Heavier cattle weights, reflecting increased times on feed and a decreasing proportion of cows in the slaughter mix during 2024, will only partly offset lower slaughter numbers.

Beef exports declined 14 percent in 2023. Among the major markets of US beef, exports to Japan, South Korea, Canada, Taiwan, and China were lower, although exports to Mexico and Hong Kong increased. High US beef prices and increased competitor supplies limited competitiveness while economic sluggishness in several key countries dampened beef demand. Total beef exports are expected to decline to 2.79 billion pounds in 2024. US exports are likely to be pressured by tightening domestic beef supplies with the resultant higher prices making US beef less price competitive. Furthermore, increased beef production in export-oriented countries such as Australia and Brazil will likely increase competition in several markets.

Beef imports were 10 percent higher in 2023 as tighter supplies of domestic cow beef increased demand for imported beef trimmings. Increased supplies in Australia following years of drought supported increased imports as did higher slaughter in New Zealand. Among North American suppliers, imports 4 of beef from Canada were higher but more than offset by lower imports from Mexico. Imports of beef from Brazil were lower as the tariff-rate quota was filled early in the year and increased imports from other sources of supply helped fill US import demands. Imports are forecast at record 4.13 billion pounds for 2024, almost 11 percent higher than 2023.

US cow slaughter is forecast lower for much of the year and tighter domestic supplies of processing-type beef are expected to support demand. Although imports from Brazil will be constrained by over-quota duties, strong US processing beef prices will continue to make the US an attractive market. In addition, higher production in Australia is expected to result in larger amounts of beef for export. The 5-Area steer price for 2024 is forecast to average a record $180.0 per cwt, eclipsing 2023’s record $175.54. Cattle prices will likely be supported by tighter supplies of steers and heifers in feedlots as the year progresses and relatively firm packer demand. Feeder cattle prices are also likely to eclipse 2023’s record prices as feedlots will have to bid for tighter cattle supplies. Improved pasture conditions may result in increased competition for lighter-weight cattle, increasing costs for stocker operations. Feeder steer prices for 750–800 pound calves in 2024 are forecast to average $248.5 per cwt, compared to $218.69 in 2023.

Hogs and Pork

Despite poor returns for much of 2023, the hog sector is looking at increased production in 2024. The December 2023 Quarterly Hogs and Pigs report estimated that on December 1, 2023, the inventory of all hogs and pigs was just under 75.0 million head, virtually unchanged from the prior year. The breeding herd, however, likely reflected weak producer margins, declining 3 percent to 6.0 million head. Producers indicated intentions to farrow about 1.5 percent few hogs in the first half of 2024. However, the sector is facing relatively large number of hogs which will have to be slaughtered during the first half of 2024 as the pig crop in the second half of 2023 was about unchanged from 2022.

Despite reduced farrowings in second-half 2023, the rate of growth in pigs per litter in the last 2 quarters of 2023 averaged about 4 percent more than the prior year and more than offset the reduction in farrowings. Moving into the second half of 2024, availability of hogs for slaughter will reflect lower farrowing in the first half of the year but likely a return to pre-COVID rates of growth in prigs per litter. As a result, the first half pig crop may be about one percent higher and these higher numbers will be reflected in continued higher year-over-year levels of slaughter.

US hog imports are forecast at just under 6.65 million head for 2024, down about 2 percent from 2023. Imports in 2023 were stimulated by structural changes in the Canadian hog and pork sectors which resulted in increased shipments to the United States. As Canadian hog production in 2024 is forecast to be lower, fewer supplies are expected to be available for export. Furthermore, relatively large supplies of hogs in the US may limit the demand for Canadian hogs. Driven by larger pig crops in second-half 2023 and first-half 2024, commercial pork production for 2024 is forecast at 27.88 billion pounds, about 2 percent higher than 2023. In addition to increased supplies of market-ready hogs during the year, carcass weights are expected to increase after declining in 2023. Pork exports in 2023 increased just over 7 percent to 6.82 billion pounds.

Exports to most countries in North and Central America countries were higher. Shipments to Mexico increased almost 10 percent, 5 exports to Canada were 8 percent higher and exports to Central America and the Caribbean were about 16 percent higher. On the other side of the world, the trade situation was more of a mixed bag with exports to Japan and China one percent and 18 percent lower, respectively, but exports to South Korea 10 percent higher and shipments to Australia up 90 percent. However, in both China and Japan, where aggregate imports were lower, the US was able to gain or maintain market share, largely at the expense of the EU which had lower production in 2023. With expectations of growth in U.S pork production, firming global demand and continued constraints on EU supplies, US exports in 2024 are forecast to increase about 4 percent to 7.08 billion pounds. However, US exporters will likely find themselves facing increased competition in a number of key markets from expanded Brazilian supplies.

Pork imports declined 15 percent in 2023 to 1.14 billion pounds. Imports from three of the four major import sources (Canada, the EU, and Mexico) declined at double-digit rates, but imports from Brazil, the fourth largest source of imports was higher. Despite higher domestic US production, increased production in Mexico and Brazil will likely make the US an attractive destination for pork. However, continued tight supplies in the EU may limit imports from that region although demand may remain strong for certain specialty products. US imports are expected to increase in 2024 to 1.20 billion pounds, 5 percent higher than 2023. National base 51%-52% lean hog prices, live equivalent, are forecast to average $60 per cwt for 2024, up from last year’s $58.59. Despite increased availability of hogs, expected increases in both domestic and export demand are expected to provide support for prices.

Broiler Meat

For 2024, broiler meat production is forecast just under one percent higher to a record 46.8 billion pounds. After a contraction in production in second half of 2023, and indications of generally lower eggs set and chicks placed in early 2024, higher bird weights are helping underpin expectations of steady-to-slowly increasing production in the first part of 2024. Broiler price-feed margins began improving in late 2023, and with expectations of higher broiler prices and moderating feed costs through much of 2024, there may be incentives to expand production. However, the expansion is likely to remain modest.

Broiler-type layers on January 1, 2024, were estimated at less than one percent higher and the number of broiler type pullets hatched in December was 4 percent below 2023. Egg fertility (hatchability) although relatively stable thus far in 2024, remains below historical levels. Thus, the majority of the increase in production in 2024 will likely reflect higher bird weights. US broiler meat exports for 2024 are forecast to decrease fractionally to 7.22 billion pounds. Despite higher expected US supplies, domestic demand is expected to support prices and dampen export competitiveness, particularly in price-sensitive markets. Although a number of key markets are expected to increase total broiler imports in 2024, increased production in Brazil, the largest exporter of broiler meat, will likely compete for market share in several key US markets.

The National Composite wholesale broiler price is forecast to average a record $1.27 per pound in 2024, compared with an average of $1.24 in 2023. Despite modestly larger broiler meat supplies, lower supplies of beef will likely help support higher prices. Turkey Turkey production for 2024 is forecast to decrease one percent to 5.40 billion pounds. Flock depopulations in late 2023 and early 2024 due to Highly Pathogenic Avian Influenza (HPAI) are expected to constrain early-2024 production. Relatively weak demand has kept prices at below-year[1]early levels since June of 2023 limiting incentives to expand.

Eggs in incubators on the first of January were 9 percent below 2023, continuing a trend of below year-earlier levels since November 2023. Monthly poult placements in November and December of 2023 were also below previous year levels. However, as the sector recovers from the depopulations induced by HPAI discoveries, bird numbers will likely increase. Although turkey prices are likely to remain relatively weak, moderating feed costs are expected to benefit the sector. With increased flocks and more favorable production costs, the stage may be set for expanded production in second half of the year.

Turkey exports for 2024 are forecast to increase 5 percent to 515 million pounds. Mexico remains the largest destination for turkey exports, but lower US prices may make turkey more attractive in price[1]sensitive markets. As turkey production recovered in 2023 from the 2022 HPAI discoveries, wholesale hen prices dropped from 2022’s record high price. Although prices at the beginning of 2023 followed through on late-2022 prices (averaging a record for January of $1.72 per pound), with the exception of March, prices moved steadily lower during the year. By December prices averaged $0.82 per pound, the lowest price for that month since 2017.

Despite expectations of lower production for most of the year, prices are expected to 7 increase only gradually and not exceed 2023 before the fourth quarter. For 2024, the average National turkey hen price is forecast to average just under $1.07 per pound, compared to an average of $1.40 in 2023.

Eggs

Total US egg production in 2024 is expected to be 9.31 billion dozen, just over one percent higher than 2023. At the start of 2024, the sector is recovering from HPAI-related culls in November, December, and early January, which resulted in the depopulation of 13.6 million table egg layers. Nonetheless, at the beginning of the year, the table egg flock was 311.8 million birds, 1.4 percent above 2023. Gains in late-2023 production were also supported by higher levels of eggs per bird. Growth in eggs per layer is expected to carry into 2024, but as new hens are added to laying flocks, some of the efficiency gain maybe lost. Thus, lay-rate gains later in year may be somewhat slower than those earlier in the year and this will have a dampening impact on production growth.

Hatching egg production in 2024 is expected to increase only modestly as broiler and table egg producers only gradually increase their flocks. In 2023, egg and egg product exports increased almost 11 percent from 2022’s highly depressed levels to 250 million dozen, shell egg equivalent. Although restrictions on imports from HPAI infected areas generally focus on zones rather than state or national levels, US prices were high, especially in the early part of the year, limiting sales. However increased demand by Canada and Mexico helped support sales. For 2024, despite increased production and lower prices, exports are expected to be lower as international demand weakens. Exports are expected to decline 4 percent in 2024 to 241 million dozen.

For 2024, New York wholesale egg prices are forecast to average $1.83 per dozen. Although this is down from the $1.92 average for 2023, the relatively high price reflects early-year price spikes as markets responded to concerns about the availability of supplies of table eggs ahead of the Easter. However, with only modest growth in production and relatively strong demand, second- and third[1]quarter prices are expected to average higher than 2023.

Weekly USDA dairy report

CME GROUP CASH MARKETS (2/16) BUTTER: Grade AA closed at $2.7500. The weekly average for Grade AA is $2.7240 (-0.0200). CHEESE: Barrels closed at $1.6075 and 40# blocks at $1.4800. The weekly average for barrels is $1.5865 (+0.0095) and blocks, $1.5315 (-0.0790). NONFAT DRY MILK: Grade A closed at $1.1700. The weekly average for Grade A is $1.1835 (-0.0340). DRY WHEY: Extra grade dry whey closed at $0.5200 The weekly average for dry whey is $0.5220 (+0.0145).

BUTTER HIGHLIGHTS: Retail demand is steady throughout the country. Food service demand is strong in the East region and steady in all other regions. Cream loads are readily available for butter makers to utilize throughout most of the country. Some butter plant contacts expect cream offers to be abundant for the remainder of the month. Butter manufacturers are running busy production schedules to build for anticipated spring demands. Stakeholders note unsalted butter availability is tight. Distributors relay inquiries from international customers have been more frequent recently. Bulk butter overages range from 4 to 15 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese plant managers relay seasonally steady production schedules in the East region. Contacts share block cheese inventories are growing. Cheese demand in the Central region is noted to be seasonally quiet. Contacts in the Midwest are focusing on building inventories for spring demand. Milk availability is tighter than predicted. During week seven of last year spot milk prices were $10- to $2 -under Class III whereas below-Class prices for spot milk loads have yet to be reported this month. Some end users report tight milk availability in the West, while others suggest Class III spot loads are generally available when needed. Plant managers share steady cheese production schedules. Spot cheese inventories are noted to be tighter than in recent weeks in the West. A block/barrel inversion has been in place on the CME since last Friday.

FLUID MILK: Throughout the East, contacts relay generally steady farm milk output. Central region output is also noted as steady, but component levels have receded in recent weeks. Western milk output levels are steady to stronger from one area to the next. Condensed skim demand has strengthened, and stores are not as available as they were in the early winter. Cream stores are widely available, as below-market multiples were reported in both the Central and West regions. Butter plants are still taking on the bulk share of cream supplies in the country, while ice cream manufacturing remains slower than some contacts expected this late in the winter season. F.O.B. cream multiples are 1.05- 1.27 in the East, .90-1.25 in the Midwest, and .90-1.20 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) price ranges moved higher in the Central/East, while contracting in the West. Condensed skim demand is noted as increasing throughout most of the country. Dry buttermilk prices were lower in the Central/East, but mixed in the West. Condensed buttermilk trading is active, with ample cream moving through churns. Dry whole milk prices were unchanged on slow spot market activity. Dry whey prices increased across the nation this week. Firm whey protein concentrate (WPC) markets have shifted production of whey solids away from drying sweet whey, which has kept availability somewhat snug. WPC 34% prices were steady to higher. WPC 34% availability has tightened up, and some manufacturers say their stores are expected to remain tighter through Q1 and Q2. Lactose prices were mixed, as export demand is noted as soft. Casein prices were unchanged.

INTERNATIONAL DAIRY MARKET NEWS

WESTERN EUROPEAN OVERVIEW: West European milk output has continued to rise seasonally, and some dairy contacts say intakes are not as low as they expected to start the year. However, milk production in many Western European countries is still trending below the levels of the last few years. Some dairy analysts anticipate stagnant dairy prices, high production costs, and regulatory constraints may hinder possible milk production growth for the coming months.

EASTERN EUROPEAN OVERVIEW: Several countries in Eastern Europe have posted monthly milk production gains in every month of 2023. Besides Belarus, Poland and the Czech Republic have had significant milk production growth this last year. According to CLAL data made available to USDA, December 2023 cows' milk delivered to dairies in Poland was 1,070,000 MT, up 1.9 percent from December 2022. In the Czech Republic, December 2023 cows' milk delivered to dairies was 268,000 MT, up 2.0 percent from December 2022.

OCEANIA: AUSTRALIA: Contacts in Australia say milk output is declining but is doing better than it was this time last year. Contacts note milk production was below expectations during the summer of the 2022/2023 production season and say weather in the country this year has contributed to improved output. Industry sources indicate rainfall during the summer months has contributed to favorable feed quality and better weather condition. Despite this, some contacts say they anticipate overall production throughout the 2023/2024 production season to remain even with the prior season.

NEW ZEALAND: In New Zealand, industry sources report farmers are growing more optimistic about milk prices, following recent price increases along with lower inflation impacting farms. Farmers in some parts of the country relay milk production is trending higher than expected for this time of year. Some farmers are, reportedly, concerned with dry weather and whether a drought will come in the coming months. Opinions are mixed on if a previously forecasted drought will emerge in the coming months and extend into autumn or if the time for the drought has passed.

SOUTH AMERICA: In New Zealand, industry sources report farmers are growing more optimistic about milk prices, following recent price increases along with lower inflation impacting farms. Farmers in some parts of the country relay milk production is trending higher than expected for this time of year. Some farmers are, reportedly, concerned with dry weather and whether a drought will come in the coming months.

US NATIONAL RETAIL REPORT: Retail advertisement totals decreased on both the conventional and organic aisles this week, 17 and 19 percent, respectively. Conventional butter ad totals slipped 11 percent, but one-pound conventional butter maintains the title of being the most advertised dairy item during week seven. Conventional yogurt ad totals, the only conventional dairy commodity with ad numbers that moved higher, increased 11 percent. One-pound conventional butter had a weighted average advertised price of $4.66, $.13 higher than last week's price.