The USDA milk production growth forecast for 2023 was increased from the prior month due to better average yields per cow. According to the October WASDE report, milk output is expected to lift 0.5% YOY at 103.2bn kgs in 2023 after edging up 0.1% YOY in 2022. Forecast milk production in 2024 was unchanged at 104.5bn kgs, up 1.2% YOY.

The 2023 all-milk price forecast was increased from the prior month to US$0.407/l (with higher butter and NFDM prices) but is down from US$0.503/l in 2022. In 2024, prices are projected to fall another 0.7% to US$0.405/l.

The same report was neutral for corn (with estimated ending stocks below expectations but still plentiful supplies) and bullish for soybeans (as the USDA reduced yields below the critical 50bu/acre level). Our estimate of income-over-feed cost suggests margins would have more than doubled between July and September and will remain above the US$19c/kg mark for the rest of the year and into 2024.