The good news is U.S. milk production is expected to grow in 2024. Michael McConnell of the USDA’s Chief Economist’s Office says the bad news is the growth rate will slow compared to last year.

“Overall, we see milk production projected to continue growing but at a decreasing rate from what we’ve seen in recent years. Feed prices are projected to be lower in the upcoming year, but we’re expecting tighter global markets for dairy products, which is going to provide price support and, as a result, we’re expecting to see a fair amount of price competition in the upcoming year as both domestic and international users compete for products that are in relatively tighter markets.”

The good news for U.S. dairy farmers is it will cost less to feed their animals in 2024.

“The outlook for feed markets is for lower prices in 2024 and 2025. This should be supportive of the margins of milk producers overall. In 2023, we saw a sharp decline in the milk-feed ratio, and it was the lowest level we had seen going all the way back to 2012. Later on, in 2023, we saw it begin to recover a bit as lower feed prices came to market. But generally speaking, we’re expecting feed prices to abate a bit in 2024, which is good news when it comes to margins.”

McConnell says they expect cow inventories to remain stable this year.

“Levels are projected to be lower in 2024 than they were last year, we are expecting to see a bit of a flatter trajectory than what we saw. We saw a bit of contraction taking place in quarters three and four of 2023. We’re currently projecting a small uptick in the fourth quarter as we begin to see prices and margins improve over the course of the year.”