Cheese prices crash 6¢ on surplus milk, butter dips as NDM defies trend with export-driven gains in mixed dairy markets.
EXECUTIVE SUMMARY: The CME dairy markets saw sharp divergences on April 21, with cheddar blocks plummeting 6¢ to $1.7750/lb amid abundant Midwest milk supplies and sluggish post-Easter demand, while barrels fell 3.25¢ despite higher trading activity. Butter slipped 2.25¢ on thin trading, reflecting ample inventories, but Nonfat Dry Milk (NDM) gained 1¢ due to strong export orders from Southeast Asia and Mexico. Global dynamics intensified the split: EU and New Zealand production pressured cheese/butter prices, while NDM capitalized on tight international powder markets. Trading volumes remained low in cheese blocks and butter, raising volatility concerns, as producers were urged to hedge against milk price swings and monitor feed costs. Market sentiment leaned bearish for cheese but cautiously optimistic for NDM’s export potential.
KEY TAKEAWAYS:
- Cheese Collapse: Blocks hit $1.7750/lb (-6¢) on surplus milk and weak demand, with barrels inverting to trade higher at $1.8075/lb despite a 3.25¢ drop.
- Butter Stability Test: Prices eased to $2.3200/lb (-2.25¢) amid light trading, signaling buyer patience despite historically high levels.
- NDM Resilience: Rose 1¢ to $1.1825/lb on robust global demand, contrasting with milkfat weakness.
- Global Split: EU/NZ milk output pressures cheese/butter, while U.S. NDM gains export traction.
- Risk Alert: Producers advised to hedge amid volatile Class III prices and rising soybean meal costs.
Cheese prices plunged on the CME cash market today amid signs of ample supply and hesitant demand, with blocks dropping 6 cents and barrels falling 3.25 cents. Butter also weakened as limited trading activity suggested comfortable inventory levels, while Nonfat Dry Milk bucked the trend with modest gains, supported by solid export demand. This divergence highlights the current split market conditions, with protein components showing strength against weakness in the milkfat complex.
Key Price Changes & Market Trends
Today’s session at the Chicago Mercantile Exchange saw significant downward pressure in cheese and butter prices while Nonfat Dry Milk prices firmed. Dry whey experienced a minor decline as well.
| Product | Closing Price ($/lb) | Change from Prior Day (¢/lb) |
| Cheese (Blocks) | $1.7750 | -6.00 |
| Cheese (Barrels) | $1.8075 | -3.25 |
| Butter | $2.3200 | -2.25 |
| Nonfat Dry Milk (NDM) | $1.1825 | +1.00 |
| Dry Whey | $0.4775 | -0.50 |
Commentary on Price Movements
Cheese: Cheddar cheese prices dropped substantially today, with blocks leading the decline. The 6-cent plunge in blocks to $1.7750 per pound coincided with reports of readily available milk supplies in key Midwestern production regions directed to cheese vats, potentially boosting near-term supply. Post-Easter retail restocking appears less robust than anticipated, while food service demand remains tentative despite higher trading activity in barrels. The unusual price inversion, with barrels ($1.8075) trading above blocks ($1.7750), likely reflects the thin block trading rather than a fundamental shift in market dynamics.
Butter: Prices eased by 2.25 cents to $2.3200 per pound on minimal trading. This movement suggests the market balances comfortable inventory levels against steady but not aggressive demand. Recent USDA Cold Storage data may indicate sufficient butter stocks nationally, reducing buyer urgency in the spot market. While prices remain historically elevated, today’s lack of buying interest points to a potential near-term ceiling.
Nonfat Dry Milk: Unlike other commodities, NDM gained 1 cent to settle at $1.1825 per pound. This strength likely stems from firm international skim milk powder prices and continued solid export demand, particularly from Mexico and Southeast Asian markets. Domestic demand for high-protein ingredients also remains supportive.
Dry Whey: Prices dipped slightly by 0.50 cents to $0.4775 per pound, suggesting a relatively balanced market. Whey supplies remain generally available, given robust cheese production rates. At the same time, demand from both domestic food processing and animal feed sectors appears stable but not strong enough to drive significant price increases.
Volume and Trading Activity
Trading activity varied significantly across dairy products today, with overall volume relatively light, particularly in butter and block cheese markets.
Butter: Activity was minimal, with only one load trading hands. Two bids and one offer were on the board at the close, indicating minimal market depth and participation. This thin trading environment makes the price discovery process less reliable and potentially more volatile.
Cheddar Blocks: Only one load traded today. Notably, no bids were registered at the close, while two offers remained unfilled, clearly signaling the selling pressure that drove prices sharply lower. This imbalance reflects significant buyer hesitancy at current price levels.
Cheddar Barrels: This market saw the most activity among dairy products, with five loads trading. However, unlike blocks, no bids were present at the close against two unfilled offers, reinforcing the overall weak tone in the cheese complex despite the higher volume.
NDM Grade A: Moderate activity was observed with four loads trading. The market appeared more balanced, with four bids and three offers posted at the close, suggesting more two-sided interest than the cheese markets. This balanced bid/ask picture lends credibility to today’s price increase.
Dry Whey: Activity was moderate, with three loads trading. At the close, one bid remained on the board, with no offers present, indicating some underlying support but a lack of aggressive selling interest at current levels.
The low volume in butter and blocks suggests today’s price discovery was based on limited participation, potentially making these price points less representative of broader market sentiment and subject to revision with increased activity in coming sessions.
Global Context
International dairy market dynamics are exerting mixed influences on U.S. prices. Production trends in major exporting regions like the European Union and New Zealand appear stable, slightly increasing as they progress through their respective seasonal cycles. This increased global milk supply, particularly if channeled into butter and cheese production in the EU, could contribute to a more competitive international market for these products, potentially capping U.S. export opportunities and adding downward pressure to domestic prices.
Conversely, the global market for milk powders, particularly skim milk powder (SMP, the international equivalent of NDM), seems to be on firmer footing. Steady import demand from key regions like Southeast Asia and the Middle East/North Africa (MENA), potentially coupled with less aggressive European export positioning, appears to support global powder prices. Today’s rise in CME NDM prices, despite domestic cheese/butter weakness, suggests that U.S. NDM remains competitive globally and is benefiting from this international demand-pull.
At current price levels, U.S. butter ($2.3200/lb) and cheese ($1.7750-$1.8075/lb) may face stiffer competition on the world market if international prices are softer. Market participants should continue monitoring exchange rates and competitor pricing to assess U.S. export competitiveness across the dairy complex.
Forecasts and Analysis
Today’s CME Class III futures settlement for May was $18.08/cwt, while the May Class IV settlement was $18.37/cwt. The significant weakness in today’s cash cheese market puts immediate downward pressure on the Class III complex, potentially challenging the $18.08 futures level if this cash weakness persists. Conversely, the strength of NDM supports the Class IV price.
Feed costs remain a critical variable for producer profitability. Today’s CME futures settlements show May Corn at $4.82/bushel and December Corn at $4.64/bushel. May Soybean Meal settled at $292.90/ton, with December Meal at $306.40/ton. While near-term corn prices are relatively stable, deferred soybean meal prices show an increase, suggesting potentially rising protein feed costs later in the year. This outlook, combined with potentially volatile milk prices indicated by today’s spot market action, underscores the importance of risk management for dairy producers.
Calculating the milk-feed price ratio based on current futures would provide essential insights into anticipated margin pressure or relief. Producers should closely monitor cheese market developments due to their significant impact on Class III prices and evaluate hedging strategies for milk output and feed inputs. Traders might anticipate continued volatility, particularly in the cheese complex, and watch for confirmation of trends in upcoming sessions and key data releases like Cold Storage and Milk Production reports.
Market Sentiment
Today’s prevailing sentiment in dairy markets appears decidedly mixed, reflecting the divergent price action across commodities. The sharp sell-off in cheese has generated a cautious, if not outright bearish, tone in that segment. The market commentary reflects growing unease about the balance between robust cheese production and potentially softening demand. One analyst might note, “Buyers seem hesitant to build inventory at current cheese prices, waiting for clearer demand signals or further price concessions.” The lack of bids on the CME board lends credence to this view.
Sentiment surrounding butter also appears cautious, influenced by ample inventories capping upside potential, though the historically high price level prevents deep bearishness. A broker might observe that the “butter market feels well-supplied; buyers are patient.”
In stark contrast, sentiment regarding NDM is more optimistic. Positive export expectations likely fuel the price strength. A trader might comment: “We continue to see consistent inquiries for NDM from Southeast Asian buyers, keeping the export pipeline active and supporting domestic prices.”
Overall, the market mood is fragmented. While concerns about milkfat and cheese values dominate discussions following today’s session, the underlying support for milk powders provides a counterpoint. Uncertainty regarding the strength of domestic demand heading into late spring and summer, coupled with evolving global market conditions, contributes to a cautious outlook despite pockets of optimism in the powder complex.
Closing Summary & Recommendations
In summary, today’s CME dairy markets were characterized by significant weakness in cheese and butter prices, driven by ample domestic supplies and cautious buyer sentiment. Nonfat Dry Milk provided a notable exception, strengthening on the back of positive export expectations and firmer global powder markets. Trading volume was light in butter and blocks, adding uncertainty to those price declines, while NDM saw more active, two-sided trade.
Based on today’s activity and broader market context, stakeholders should consider the following:
For Producers:
- Closely monitor the trajectory of cash cheese prices, as continued weakness could pressure Class III milk prices further
- Evaluate risk management strategies, paying attention to both milk price volatility and feed cost trends indicated by corn and soybean meal futures
- Consider that the relative strength in NDM offers some support to Class IV values, which may provide a more stable pricing option in the near term
For Traders:
- Recognize the current divergence between cheese/butter and NDM markets
- Look for confirmation of trends in subsequent trading sessions and upcoming fundamental reports (e.g., USDA Cold Storage, Milk Production)
- Be mindful of the low liquidity observed in butter and blocks, which could lead to heightened volatility
- Continue monitoring global market developments and export demand as key factors influencing price direction
The outlook suggests a market grappling with potentially heavy cheese and butter supplies against stronger fundamentals for milk powders, driven largely by export dynamics. Near-term price direction will likely hinge on evolving domestic demand, U.S. export competitiveness, and global milk production trends.
Learn more:
- CME Dairy Market Report: April 14, 2025 – Cheese Prices Surge on Active Trading Despite Bearish USDA Outlook; Butter, Powders Remain Static Amid Market Pause
- Global Dairy Disruption: How to Capitalize on International Market Shifts
- CME Dairy Report: Cheese Barrels Surge to Rare Premium Over Blocks as Markets Show Strength
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