Nate Donnay

Minnesota

Contributing Writer at Dairy Processing

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Articles

The dairy industry’s supply and demand outlook

3 weeks ago | dairyfoods.com | Nate Donnay

We are setting up for an interesting and potentially volatile dairy market in 2025. We have the normal supply and demand drivers to contend with plus the unknowns around government policy, animal disease, a record amount of new cheese processing capacity coming online and changes to the Federal Milk Marketing Order pricing formulas. It’s always hard to write a long-term outlook, but it feels especially hard right now. Let’s start with the milk supply.
Optimism remains for 2025

2 months ago | hoards.com | Nate Donnay

The author is the director of dairy market insight with StoneX Group Inc. At the start of 2025, market sentiment and supply and demand risks are tilted toward the downside, but I think we’ll see decent milk prices and margins for dairy farmers despite the risks. The industry is concerned about new cheese capacity coming online, milk production growing, mixed signals on domestic demand, and the possibility of trade wars that could dent exports.
A sunny outlook for U.S. dairy

Nov 26, 2024 | dairyfoods.com | Nate Donnay

The outlook for U.S. dairy products in 2025 varies by product. The two with the most-clear trajectories are cheese and skim powders (nonfat dry milk (NFDM)/skim milk powder (SMP)). U.S. dairy exports are typically a function of available supply in the U.S., supply in other major exporting regions, import demand, as well as prices and price spreads.
What may come from the final FMMO decision

Nov 14, 2024 | hoards.com | Nate Donnay

On November 12, USDA released its final decision on the Federal Milk Market Order (FMMO) reform process that started back in 2023. There were only minor changes between the recommended decision released on July 1, 2024, and the final decision. Next, ballots will be mailed out to farmers who were pooled on a federal order during January 2024 to vote on the proposed changes. The ballots must be post-marked by January 15, 2025, and returned to USDA to be counted.
What is the outlook for U.S. Dairy exports?

Sep 27, 2024 | dairyfoods.com | Nate Donnay

If we’re just looking at volume, the export outlook for the second half of 2024 and early 2025 is generally steady, but that isn’t necessarily a bad thing. Exports are a function of how much product is available in the U.S., how much is available from the other major exporters, and the demand for imported dairy products. Growth in U.S. milk production is expected to be weak while the growth prospects for Europe look stronger in Q4/Q1.
European prices could be a US opportunity

Sep 19, 2024 | hoards.com | Nate Donnay

The price of butter in Europe hit a new record high in September at around $4 per pound (€7,950 per metric ton). The previous high was about $3.60 per pound (€7,478 per metric ton), which was recorded back in June 2022. The bad news is butter prices across the major dairy exporters are much less correlated than powder prices, so it is unlikely the strength in Europe will pull U.S. butter prices up to $4.
Erratic demand: Dairy prices expected to rise

Sep 12, 2024 | dairyprocessing.com | Nate Donnay

US dairy supply and demand is highly seasonal. In the first half of the year, we produce more than we consume, and inventories build. Then we rely on those inventories in the second half of the year as milk production falls and consumption steps higher for year-end holidays in November and December. Since we’re past the midpoint in the year, it’s worth looking at how the markets developed in the first half and what we might see in the second half of the year.
Will milk production bounce back?

Aug 29, 2024 | hoards.com | Nate Donnay

Last month, I wrote about how the U.S. dairy market is in a Goldilocks period: production is weak and demand is not great, but it is good enough to keep milk prices at profitable levels given the poor production. Due to a lack of replacement heifers and avian influenza, it might be hard for the industry to boost milk production despite the profitable margins. Under those conditions, no news is good news, and frankly, I don’t have much news or analysis to share.
How long will this balanced market last?

Aug 1, 2024 | hoards.com | Nate Donnay

The U.S. dairy market seems to be in a Goldilocks period. Relatively weak production is matching up with relatively weak demand to keep milk prices at good levels, while lower feed costs are boosting margins for dairy farmers. I don’t know how long this will last, but let’s walk through the situation. USDA just released the June Milk Production report, and headline U.S. milk production was down 1% from last year, which was a little worse than the 0.7% drop I was forecasting.
US milk production facing some headwinds

Jul 19, 2024 | dairyprocessing.com | Nate Donnay

Milk production in the United States is on a losing streak. After adjusting for leap year, production was below the prior year for nine consecutive months (July 2023 to March 2024), which is the longest streak since 2001. And odds are we’ll stay below year ago for another four to five months.