The 2024 year ended with Class III prices showing more traction in December than in previous months as cheese and whey protein prices improved, and Class IV prices remained elevated to reflect strong market conditions.

As we look to the last month of the year, milk prices are trending lower than the previous months’ highs with milk production up year over year, new cheese plants online and holiday buying finishing up noted as a few influencing factors. Yet margins continue to look favorable.

Milk futures remain high as feed costs drop to levels last seen in 2020, yet other market pressures such as lower butter and cheese prices and waning holiday demand, as well as recent milk production reports revealing gains for the first time in more than a year, complicate the matter.

The outlook for dairy producers continues to be strong for the remainder of the year, despite milk futures retreating some – albeit still high compared to less fruitful years – and an anticipated high-yielding 2024 harvest. October’s income-over-feed cost projections remain in dairy producers’ favor for a profitable month with the margin just shy of $16 as of Sept. 24.

Futures prices for milk and feed are looking favorable for dairy producers with the fourth quarter of 2024 on the horizon. At the time of this report, the all-milk price forecast was at a staggering $25.06 per hundredweight (cwt) for September and feed costs were at $10.27 per cwt, the lowest since 2020.

Margin outlook has significantly improved from a few months ago as sustained high cheese and butter prices drive milk prices higher and lower feed costs all contribute to the positive outlook.

Margins appear encouraging with the recent swell in Class III prices and improved feed costs. Cheese exports to Mexico have also been critical for U.S. dairy producers as shipments to China and Southeast Asia have slowed. Yet, with extreme weather conditions and the continued spread of avian influenza, having a strategy to manage risk is essential.

The dairy landscape is seeing rapid, much-welcomed improvements as milk markets rallied in May with Class III futures surpassing $20 per hundredweight (cwt), $4 above April’s prices. Coupled with feed costs receding, dairy margins are looking better for the remainder of the year.

Dairy producers in non-major dairy states will notice a change to how their Dairy-Revenue Protection (Dairy-RP) insurance coverage is determined.