Dairy markets face turbulence as U.S.-Canada tariffs are put on hold. Cheese holds firm while butter and whey stumble. Global supply growth looms, China’s imports may rise, and EU production shifts. What’s a farmer to do? Dive into today’s CME recap for strategies to navigate these choppy waters.
Summary:
The new U.S.-Canada tariffs have been put on hold, but that has not stopped them from shaking up the dairy market, which is showing mixed results today. While cheddar cheese prices stayed strong, butter and dry whey took a hit, pointing to uncertain times for dairy farmers. Globally, the dairy supply is expected to grow slightly by 0.8% this year, with China possibly boosting imports by 2%. Farmers should focus on being efficient, watch for changes in demand, and prepare for any price swings. With the potential for Canada to place extra tariffs on U.S. goods, the dairy industry is in for significant changes.
Key Takeaways:
- U.S.-Canada dairy tariffs have taken effect, impacting a significant $1.2B trade in dairy products.
- Cheddar blocks show positive price movement, reflecting steady demand despite tariff effects.
- Butter and dry whey experience price drops, indicating possible oversupply and weak demand respectively.
- With global milk production expected to grow, efficiency and diverse market strategies become crucial for farmers.
- Canada’s retaliatory tariffs on U.S. goods add to trade tensions, emphasizing the need for strategic market navigation.
- The Chinese dairy market faces internal challenges but offers potential import growth opportunities.
- Farmers are advised to focus on risk management to mitigate the effects of market volatility.
From farm to futures: The CME dairy market influences prices for milk, cheese, and butter across the nation.
Amid the bustling backdrop of today’s CME dairy market, the spotlight shifts to the mixed signals being sent by commodities as new tariffs between the U.S. and Canada have been put on hold. It’s a pivotal moment as producers, traders, and observers strive to understand the unfolding impact on the market landscape.
Key Results
Today’s CME trading saw mixed movements across dairy commodities as new tariffs between the U.S. and Canada came into effect:
- Cheddar Block: +0.50¢/lb to $1.9350 (5 trades)
- Cheddar Barrel: Unchanged at $1.8650 (4 trades)
- Butter: -1.00¢/lb to $2.4500 (2 trades, one bed, five offers)
- NDM: Unchanged at $1.3450 (7 trades, two bids, one offer)
- Dry Whey: -3.00¢/lb to $0.6600 (1 trade, one bid, six offers)
Market Breakdown
Daily Trading Activity (February 4, 2025)
| Product | Final Price ($/lb) | Daily Change (¢/lb) | Trades | Bids | Offers |
|---|---|---|---|---|---|
| Butter | 2.4500 | -1.00 | 2 | 1 | 5 |
| Cheddar Block | 1.9350 | +0.50 | 5 | 0 | 0 |
| Cheddar Barrel | 1.8650 | NC | 4 | 0 | 0 |
| NDM Grade A | 1.3450 | NC | 7 | 2 | 1 |
| Dry Whey | 0.6600 | -3.00 | 1 | 1 | 6 |
Market Analysis
Cheese Market Holds Firm Amid Tariff Implementation
Cheddar blocks inched up 0.50¢/lb to $1.9350, with active trading (5 trades) suggesting resilient demand. Barrels held steady at $1.8650. These movements come as the new 25% U.S.-Canada dairy tariffs take effect today, disrupting $1.2B in trade. The long-term impact remains uncertain, but short-term cheese demand appears robust.
Butter and Whey Face Pressure
Butter declined 1.00¢/lb to $2.4500, with more offers (5) than bids (1), indicating potential oversupply. Dry whey saw a significant 3.00¢/lb drop to $0.6600, with six offers against one bid, signaling weak demand for milk proteins.
Global Supply Outlook
RaboResearch forecasts a 0.8% growth in the global milk supply by 2025, driven by improved margins and stable feed costs. Despite challenges in some regions, this growth includes ongoing herd reductions in China due to low domestic milk prices.
Implications for Farmers
- Navigate Tariff Impacts: The U.S.-Canada dairy tariffs were officially implemented today, February 4, 2025, and are now 30 days delayed.
- Focus on Efficiency: As global supply increases, prioritize cost-effective production and component-rich milk to maintain competitiveness.
- Monitor Global Demand: China’s potential 2% import growth in 2025 could significantly impact global dairy markets.
- Prepare for Volatility: Today’s mixed price movements underscore ongoing market uncertainties. Consider risk management strategies to protect against potential price swings.
Global Context
Chinese Market
- Domestic milk prices near decade lows, leading to herd reductions and farm closures.
- Potential 2% year-on-year growth in dairy imports for 2025, despite economic pressures.
EU Production
Recent reports suggest potential growth in EU milk production, contributing to global supply increases.
The Bottom Line
Farmers face a complex global market as new tariffs reshape the North American dairy trade. Today’s CME results show resilience in cheese but weakness in other sectors. A strategic focus on efficiency, market diversification, and risk management will be crucial as the industry navigates these choppy waters.
Learn more:
- American Dairy Farmers Grapple with Trade War and Immigration Policies: The Fight to Stay Afloat
- Global Dairy Trade: Key Insights Every Dairy Farmer Should Know
- North American Dairy Trade: US-Mexico Relations Strengthen Amid Canada’s Growing Trade Tensions
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