Milk production forecasts for 2024 and 2025 have been scaled back, signaling a shift in expected output. According to the latest World Agricultural Supply and Demand Estimates (WASDE) Milk Production report, lower milk cow inventories and reduced milk output per cow have led to a revised 2024 forecast. Similarly, the 2025 outlook reflects slower growth in milk production per cow, signaling potential challenges ahead for producers. The USDA’s upcoming Cattle report is expected to shed light on whether dairy heifer retention will contribute to rebuilding the milking herd.

Trade patterns are also shaping the dairy market. Fat-basis imports for 2024 have increased due to higher cheese and butter imports, while skim-solids imports remain steady. Looking to 2025, fat-basis imports are expected to rise further, driven by continued demand for cheese and butter, while skim-solids imports are anticipated to decline due to reduced casein and milk protein concentrate imports.

On the export side, U.S. butter and cheese are gaining traction in global markets thanks to competitive pricing, boosting fat-basis export forecasts for both 2024 and 2025. However, the picture is less optimistic for skim-solids exports, as nonfat dry milk (NDM) and whey face stiff competition abroad, leading to lowered export expectations in this category.