New Federal Orders to Take Effect Nationwide on Dec. 1
Published: Friday, January 24, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department published its Federal Order Final Decision. All 11 orders approved the final changes. USDA stated: "This final rule amends the 11 FMMOs with implementation on June 1, except for the amendments to skim milk composition factors, which have a later implementation date."
Increasing milk composition factors to 3.3% protein, 6% other solids and 9.3% nonfat solids will be implemented on Dec. 1. Barrel Cheddar will be eliminated from milk pricing formulas and the Dairy Products Mandatory Reporting Program. The change will be instituted in June. After this time, only block Cheddar will be used to determine the monthly average cheese price.
Make allowances will increase and butterfat recovery in the Class III formula will be upped to 91% in June. The Class I mover returns to the "higher of" Class III or Class IV skim milk price and a rolling monthly Class I Extended Shelf Life adjustment is included. Both will be implemented in June. Class I differentials will be altered in some regions, according to the USDA.
USDA lowered its milk production forecast from last month in its latest World Agricultural Supply and Demand Estimates, citing lower milk cow numbers and lower expected milk per cow based on the recent Milk Production report. The 2025 forecast was also lowered due to slower growth in output per cow.
2024 production and marketings were projected at 225.8 and 224.8 billion pounds, respectively, down 500 million pounds on both from last month's estimate. If realized, both would be down 600 million pounds, or .3%, from 2023.
2025 production and marketings were projected at 227.2 and 226.2 billion pounds, respectively, down 800 million on both. If realized, both would be up 1.4 billion pounds, or .6%, from 2024.
Class and product price estimates for 2024 were adjusted to reflect reported prices. Prices for 2025 cheese, butter, NDM and whey were expected to be higher due to less milk production and supportive demand. The Class III milk price was raised, with higher cheese and whey prices. Class IV milk prices were also raised, due to higher butter and NDM price forecasts.
The 2024 Class III average was lowered to $19.89 per hundredweight, down a penny from last month's estimate, and compares to $17.02 in 2023 and $21.96 in 2022. The 2025 average was projected at $19.70, up 90 cents from a month ago.
The Class IV price will average $20.75 in 2024, unchanged from last month's estimate, and compares to $19.12 in 2023 and $24.47 in 2022. The 2025 average was projected to hit $20.80, up 40 cents from last month's projection.
This month's U.S. corn outlook calls for lower production, feed and residual use, exports and ending stocks. Corn production was estimated at 14.9 billion bushels, down 276 million as a 3.8-bushel per acre cut in yield to 179.3 bushels is partially offset by a .2-million-acre increase in harvested area. Total corn use was down 75 million bushels to 15.1 billion. Feed and residual use was reduced 50 million bushels to 5.8 billion. Exports were cut 25 million bushels to 2.5 billion reflecting lower supplies. Corn stocks were lowered 198 million bushels and the season-average corn price was raised 15 cents to $4.25 per bushel.
Soybean production was estimated at 4.4 billion bushels, down 95 million led by decreases for Indiana, Kansas, South Dakota, Illinois, Iowa and Ohio. Harvested area was estimated at 86.1 million acres, down .2 million. Yield was estimated at 50.7 bushels per acre, down 1 bushel. Soybean ending stocks were projected at 380 million bushels, down 90 million. The U.S. season-average soybean price was projected at $10.20 per bushel, unchanged from last month, and soybean meal was increased $10 to $310 per short ton.
Dairy cow culling for the week ending Jan. 4 totaled 44,100 head, up 4,200 from the previous week, but 4,400, or 9.1%, below a year ago.
Volatility hit the CME cheese market the third week of 2025. The Cheddar blocks jumped 9 cents last Monday, leaping to $1.91 per pound, then dropped 7.75 cents last Wednesday, regained 6.75 cents last Thursday, climbing back to $1.89, and stayed there Friday, up 7 cents on the week, and 44.50 cents above a year ago.
The barrels marched to $1.89 last Thursday, highest since Oct. 30, and that's where they also finished last Friday, 4 cents higher on the week, and 42.25 cents above a year ago. CME sales totaled 13 loads of block on the week and seven of barrel.
Football playoffs are underway and the Super Bowl is less than a month away, the prime cheese consumption time of the year, but cheese demand may lessen after that. HighGround Dairy's "Monday Morning Huddle" stated, "New cheese capacity in Kansas has been in operation for over two months, but the quality spec is likely not yet ready to pass a grade at the CME, though HighGround believes it is close. Leprino Foods' new Lubbock, Texas plant should be running soon but will also have a ramp-up period."
Meanwhile, StoneX said, "It will be some time before the U.S. cheesemakers can build inventories at a more normal pace. Last week's weakness clearly did not make buyers step away but in fact encouraged them to buy the dip. The market is telling us demand for cheese, be it pipeline refilling or just building up some inventory, is still alive and well."
"We've said that the $1.85-$1.95 cheese price average seems to be a good market clearing level for cheese." Meanwhile, "EU Cheddar has been trending higher which could lend some support as they continue to trade at a strong premium to U.S. block prices," said StoneX.
Midwest cheese production continues to pick up following the holiday downtime by quite a margin, according to Dairy Market News. Cheese demand throughout the region is steady to seasonally lighter. A number of Cheddar and Italian-style cheesemakers say demand is meeting or beating seasonal expectations. Milk availability quickly tightened following the holiday lulls. Spot milk prices were above the Class III baseline at mid-week.
Western cheese production is steady to stronger. Steady or strengthening milk production in the region is providing more milk to cheese vats and demand for milk from cheesemakers is reportedly healthy. Demand from domestic and international buyers is mixed, says DMN.
Cash butter climbed to $2.6125 per pound last Monday, highest since Nov. 15, 2024, but it closed last Friday at $2.53, down 7 cents on the week, and 1.5 cents below a year ago. There were 31 sales logged for the week.
The U.S. fat test is substantial and made a new record in November, according to HGD. "Concerns about milk production in the nation's top-butter state may provide near-term support, though cream multiples remain historically low with multiple regions reporting ample availability."
The Jan. 13 "Daily Dairy Report" pointed out the United States exported nearly 6.8 million pounds of butter in November, a substantial increase relative to November 2023, as U.S. product remained competitively priced. Despite this, the U.S. was a net importer of butter in November, bringing a record 16.4 million pounds ashore. This suggests that Americans purchased 241.4 million pounds of butter in November, the most for any month ever and 22% more than November 2023.
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