meta CME Dairy Market Report: January 22, 2025 – Broad Weakness Amid Disease Concerns & Policy Changes | The Bullvine

CME Dairy Market Report: January 22, 2025 – Broad Weakness Amid Disease Concerns & Policy Changes

See how bird flu and policy changes are affecting the CME dairy market. How do these changes impact dairy prices and industry stability? Learn more here.

Summary:

The CME dairy market saw prices fall as worries over bird flu and new Federal Milk Marketing Order changes shook the industry. Cheese prices, especially barrels, dropped the most, while the butter market fell 1.25¢. Nonfat Dry Milk (NDM) held firm with a slight price rise despite no trades being made. The avian flu has lowered milk production in California, adding to market uncertainty. With new rules removing barrel pricing from milk calculations starting June 1, 2025, the industry braces for more changes and challenges.

Key Takeaways

  • Most dairy products dropped in price, with barrel prices dropping the most.
  • The butter market is still facing issues despite not many offers.
  • Nonfat Dry Milk (NDM) is doing well, with small gains despite mixed trading.
  • Ongoing disease outbreaks are still affecting production and market feelings.
CME dairy market, butter prices, Federal Milk Marketing Order, Nonfat Dry Milk, avian influenza

Today, the CME dairy market experienced a significant drop, leading to lower product prices. This decline, attributed to concerns about bird flu and the impending Federal Milk Marketing Order changes, mainly affected the butter market, which ended at $2.5225/lb, down 1.25¢, with three trades completed.

Daily CME Cash Dairy Product Prices ($/lb.) – January 22, 2025

FinalChange ¢/lb.TradesBidsOffers
Butter2.5225-1.25310
Cheddar Block1.7750-0.50460
Cheddar Barrel1.8100-4.00412
NDM Grade A1.3525+0.50042
Dry Whey0.7000-3.75421

Weekly CME Cash Dairy Product Prices ($/lb.) – January 22, 2025

MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter2.53502.52252.52882.56406
Cheddar Block1.78001.77501.77751.88255
Cheddar Barrel1.85001.81001.83001.87405
NDM Grade A1.34751.35251.35001.36803
Dry Whey0.73750.70000.71880.73804

Price Action Details

Cheese Markets: The cheese market saw barrel prices drop by 4.00¢ to $1.8100/lb, while block prices fell by 0.50¢ to $1.7750/lb. This narrowing gap between block and barrel prices indicates people are adjusting due to new rules starting June 1, which will remove barrel pricing from milk price calculations. These changes are driven by upcoming federal rules, increased cheese production, and demand fluctuations, especially from countries like China. Seasonal changes and speculative trading also affect prices as cheesemakers shift focus to prepare for new pricing methods. This reflects industry movements in anticipation of changes to milk pricing.

Butter prices decreased, closing at $2.5225/lb with three trades recorded. This is a drop from last week’s average of $2.5640. The only good news was Grade A Nonfat Dry Milk, which went up by 0.50¢ to $1.3525/lb, even though no trades were made. This results from the U.S. making more butter, and November 2024 marked the 12th straight month of growth. Having too much butter is lowering prices. The demand drops after the holidays, making prices fall more. World competition is tough, with places like Poland selling butter from storage to control high prices. 

Meanwhile, NDM prices rose slightly to $1.3525/lb, even with no trades. This is due to possible export demand and a significant 10.9% drop in NDM and skim milk powder production from last year. These supply drops could raise prices, and the slight increase could start a correction in NDM pricing. 

Forward Outlook

The dairy industry faces significant changes due to new rules and ongoing problems. The latest Federal Milk Marketing Order rules will start on June 1, 2025. These rules will change prices, especially by removing barrel cheddar from pricing formulas. Also, make allowances, which are costs given to processors for handling cheese, will be adjusted. These changes could affect both dairy producers and processors financially. 

Another issue adding to the challenge is the avian influenza outbreaks that have reduced production, particularly in California, causing a 9.2% drop in milk output. This situation further stresses supply levels in these challenging times. 

The feed cost is rising, putting more pressure on farmer profits. These increasing expenses make dealing with the market’s ups and downs even harder. These factors suggest tough times for the dairy market, likely continuing into early 2025. 

Dairy farmers and industry players must stay current and proactively plan for these changes. Working with an expert in risk management can provide sound advice and help avoid potential issues as these new rules and market challenges unfold, empowering you to navigate these changes effectively.

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