In its November WASDE report, the USDA milk production growth forecast for 2023 was lowered from the prior month due to the revised dairy cow numbers in the USDA’s latest Milk Production report. Milk output is expected to be up 0.3% YOY at 103bn kgs in 2023 after a 0.1% YOY lift in 2022. Forecast milk production in 2024 was also lowered to 104.3bn kgs, up 1.3% YOY.

The 2023 all-milk price forecast was unchanged from the prior month at US$0.407/l (with lower butter but higher NFDM and dry whey prices), down from US$0.503/l in 2022. In 2024, prices are projected to rise 0.5% to US$0.409/l.

The same report was bearish for corn and soybeans, with higher projected yields and production much higher than pre-report market expectations. Our estimate of income-over-feed costs suggests margins will fall slightly in Q4-23 and into Q1-24 due to lower Class IV price futures to average US$18.6c/kg over the first half of next year.