Dairy market predictions for 2025

JUNEAU, Wis. — The year is coming to a close and market trends are looking up for some during the final weeks of 2024 and into 2025.

Ben Buckner, chief grains and dairy analyst at AgResource Company, updated viewers and listeners of Professional Dairy Producers of Wisconsin’s show, “The Dairy Signal,” during his segment Dec. 12.

“For the last meeting of the year, we’ve got good news, at least if you’re a milk producer,” he said. “There’s been volatility within these specific markets but the weighted average of all products traded last week was $1.90 per pound. That’s the highest it’s been since the early part of 2022. I think dairy is going to be one of the bright spots in the U.S. ag economy for the foreseeable future, even probably in 2025.”

Buckner said consumption of dairy products has increased in the United States and he sees nothing to curtail this change.

“Everything we see is going really well,” he said. “Dairy consumption is growing pretty substantially in the U.S. and, I think, worldwide. U.S. milk yields are incredibly high. I don’t think we’ve reached peak yields by any means.”

For the first time in three years, Buckner said the U.S. Department of Agriculture predicts milk production will be up 0.7%, following a 0.04% growth in 2022, no growth in 2023, and a predicted decline of 0.04% to round out 2024.

The world’s dairy market is not decreasing, Buckner said, so he believes it can withstand the different trends. However, he said outcomes will come down to actual yields.

“This year will be different,” he said. “I think U.S. production growth will occur.”

When looking at Class III milk and cheese, Buckner said the world markets look elevated with Class III milk sitting around $19 to $20 per hundredweight, and roughly $1.80 per pound on cheese.

“We’re going to find that global demand is what’s going to give us this pop,” he said. “I don’t think you’ll have the real fear of supply issues driving markets much higher.”

Buckner said a lot of work needs to be done to rebuild cheese inventories, with the best timeframes potentially being in spring 2025.

“U.S. cheese is cheap and will probably be exported quickly,” he said. “There’s still a lot of work that needs to be done to get cheese stocks where they were a year ago but also to build them year after year.”

That said, Buckner believes Class III milk and cheese will continue to lead recovery in the dairy market, and 2025 has potential to find newer record cheese exports.

To start out the new year, Buckner said butter prices may stay roughly the same.

“Two years of butter being more or less $3 per pound has solved some issues,” he said. “We’re importing lots of butter. We did find enough milk to produce a lot more butter than we have the last two years, so we’ve seen production growth pretty steadily since last winter. There’s no price, we have found, that rations butter consumption in the U.S. or worldwide.”

New Zealand is the world’s largest exporter of butter, Buckner said, and recently saw prices at approximately $3.10 per pound, while the U.S. saw prices at $2.50 per pound.

“The discount we are seeing in the U.S. butter market is 60 cents per pound,” he said. “It’s something we really haven’t seen many times in history.”

Not all markets are looking as positive, however.

“Cheap whey really got rid of a lot of stocks and discouraged production growth,” Buckner said.

A lack of milk production growth forced whey production lower, he said.

Another market that is not predicted to have a positive 2025 is the beef market.

Buckner said the beef market is currently trending downward and has witnessed a long-lasting supply issue.

“It’s not seemingly getting better,” he said. “We import a lot of feeder cows from Mexico. If (trade issues) continue, it may kick that can down the road 3-6 months.”

Buckner said he does not see beef prices relaxing in 2025, but has hopes that 2026 will be the year to loosen up supply and demand in that market.

Feed prices also are down, Buckner said.

“Meal is flirting with the lowest prices we have seen since 2016,” he said. “We can’t identify what gets meal out of this hole.”

While Buckner wanted to highlight that the meal market needed a break in his segment of “The Dairy Signal,” he also said he does not think the U.S. will be getting back to $3.50 meal any time soon.

Corn prices also will not be getting down to roughly $3.50, Buckner said.

“Corn is going to be a more volatile market,” he said.

Since May, the market has dropped 370 million bushels in stocks. Buckner said this is similar to what was lost in the same time period last year.

“We’re kind of stuck here; corn is going to be about $4.30 to $4.80 for stock prices, I think, until we get new information,” he said.

Looking into 2025, Buckner said he believes the markets could see a 1%-2% increase above trends for corn and soybeans out of South America, providing ample competition for the U.S.

“I think we have some export growth ahead; certainly in late winter and spring,” he said. “It gives a lot of opportunities moving forward.”