MRV BLOG: MRV Market Commentary December 14, 2023

Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market.  These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:



Recently, we have seen some all-time highs in commodity prices, more specifically with butter. Comparing this month to last we are seeing butter sink in price while its volume remains relatively unchanged. We saw a whopping $0.50 decrease in the price of butter month-over-month. Cheese also saw a decent decrease of about $0.12 and $0.15, for both block and barrel cheese respectively. Sales for block cheese had a 33% decline MoM while sales for barrel cheese had a 14% (MoM). Not following this trend in decreasing prices were dry whey and NFDM, both of which saw a very small increase of about 3 cents with both of their sales also increasing marginally. Butter futures suggest prices dropping over the next couple months before rising again presumably in early spring. However, this increase isn’t expected to exceed the current price.



October milk production fell, resulting in a decline in production of Class IV products. Butter production in October fell 0.9% compared to the same month last year. This lower butter production could be a reason for the record high prices we saw during the month. Production of cheese had an increase of 0.8% compared to October of last year and both NFDM and SMP combined had a decline of 12.9% in their production versus same month last year. Milk powder exports were sluggish, however, slower production kept excess product from accumulating. NFDM stocks decreased 10.8% versus last year’s October and 7.1% versus the prior month. Dry whey for human consumption decreased 2.6% as well compared to last year’s October. Like other commodities, this slower production likely contributed to the increase in spot prices for dry whey.


Changes in the Dairy Industry

While the DMC program, which has been more than needed this year, has been effective in supporting farmers during this year’s astronomically low margins, the dairy industry has also been pushing for some modernization with the FMMO (Federal Milk Marketing Order). Recent hearings have been held to gather input on what solutions and updates should be made, which include some immediate relief options as well. The FMMO recommended changes based on feedback from producers during these hearings are focused on the following seven points:

  1. Return to the “higher of” Class I mover
  2. Interim make allowance adjustments
  3. Update Class I differentials across the country
  4. Extend 30-day reporting limit to 45-day on forward priced sales of dry whey and NFDM
  5. Update the milk component factors for protein, nonfat solids, and other solids in the Class III and Class IV skim milk price formulas
  6. Discontinue use of barrel cheese in the protein component price formula
  7. Develop a process to ensure make allowances are reviewed on a more frequent basis by enacting legislation authorizing USDA to conduct mandatory plant cost studies every two years and report results to the dairy industry

The two ways the dairy industry is trying to push these changes are through a new farm bill and the federal order process.

Report fromUSDEC


On a milk solids equivalent, exports fell 6.6% in October with an average decline of 12% MoM since April this year. Cheese sales declined 4% YoY as shipments to Korea and Japan dropped by 40%. The large decrease in shipments to Korea and Japan covered the hefty increase of 54% in cheese shipped to Mexico, an October record, and the even larger increase of 145% to China. SMP exports declined 11%, most notably to major buyers like Mexico (-5%) and SE Asia (-6%). US butter volume slipped 72% in October, likely due to the increase in butter price from June to October which resulted in butterfat exports decreasing.

The USMCA’s, US-Mexico-Canada Agreement, recent dispute will weaken the agreement’s value to the US dairy industry. A panel back in January 2022 ruled that Canada had improperly restricted US dairy access to its market. Canada’s response made insufficient changes to its TRQ, tariff rate quota, system which resulted in a shortcoming of market access. Due to this shortcoming the US initiated a second case to challenge these changes that Canada set up. In November the three-member panel ruled that Canada had not acted unreasonably. Canada has protected its markets from US milk production which completely outpace what Canadian farmers can produce. While Mexico’s borders have been mostly open to free trade, which means a plethora of imports from the US.



Domestically, most commodities have slipped and futures are suggesting further declines. Milk production has declined which resulted in the higher prices we have been seeing, however, cheese did see a marginal increase in its production in October. This year hearings have been had in discussion of the dairy industry and proposing some adjustments to some items to support better dairy margins. Exports have declined in October (-6.6%) and the recent panel dispute regarding Canada and the USMCA were not favorable for US exports. MRV Dairy Solutions forecasts January 2024’s Class I prices to decline with most higher fat items also seeing this decline due to the large decrease from last month. MRV projects prices to remain lower before climbing slowly again at the beginning of Spring (March).

This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.

Statistical data referenced here is gleaned from reports by MRV Proprietary DataDaily Dairy ReportDairy Herd Management, USDEC, CME Group, Progressive Dairy (AG Proud) and USDA.

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