What’s Influencing Dairy Markets?

Dairy demand has slowly picked up throughout 2024.  Cory Geiger, lead dairy economist at CoBank, said lower supplies have resulted in higher prices.

“A lot of dynamics moving around the market right now," he noted.  "Early in the year, cheese prices were pretty ho-hum, my guess would be. And then cheese exports picked up. We're on a record pace right now. Internationally speaking, it should be the first one billion pound cheese export year. It should easily finish out the year for that. Demand started picking up internationally, supplies got tight, and now domestic demand has been pretty strong too. So, as all that's taken place, and milk production's not been growing either here in the world's second-largest dairy export market, the 27 countries of the EU, so price has been steadily moving up.”

The markets are back in a more typical pattern compared to earlier this year.

“Earlier in the year, especially for those parts of the country that make a lot of cheese - We're at World Dairy Expo in Wisconsin - Class three prices were inverted," Geiger said.  "So, normally, Class 3 cheese and whey are higher than Class 4 butter powder. But that wasn't the case up until September here, and now the markets have gone back to a traditional pattern.” 

Beef on dairy, Geiger added, is one of the new factors in the dairy market affecting price swings.

“So the beef on dairy, you know, we start with a calf born from the Holstein or Jersey dam and from a beef Sire," Geiger said.  "The reason that trend is going is because the carcass yields more meat. The other thing is that the U.S. cattle herd is at the lowest level since 1951, so the demand is out there for these calves, and that's not going away anytime soon. But then, what's happened here now is dairy replacements - the number of animals ready to enter the milking stream - are at a 20-year low. So, there's a lot of different moving parts that we've never really seen in our generation in the dairy industry.”

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