Mixed dairy markets: Butter & powders dip, cheese holds steady. Feed costs plunge, offering producer relief. Global shifts loom.
EXECUTIVE SUMMARY: CME dairy markets showed divergence on May 13, 2025: cash butter (-0.75¢), NDM (-0.25¢), and dry whey (-1.25¢) declined amid ample inventories, while cheese prices held flat despite firmer futures. Class III milk futures rose $0.09 to $18.74/cwt, contrasting with USDA’s conservative 2025 forecasts. A sharp drop in corn (-4.7¢) and soybean meal (-$4.70/ton) futures signaled margin relief for producers. Global factors, including EU production constraints and New Zealand’s pivot to value-added products, added complexity. Traders eyed opportunities in cheese futures’ premium over USDA projections, while analysts warned of oversupply risks from new U.S. processing capacity.
KEY TAKEAWAYS:
- Butter & powders weaken: Cash butter hit $2.3425/lb (-0.75¢) on high inventories, while dry whey plummeted to $0.5300/lb (-1.25¢).
- Cheese stability masks futures optimism: Flat spot prices contrasted with June cheese futures at $1.9250/lb (+0.50¢), hinting at future tightness.
- Feed costs nosedive: Corn and soybean meal futures fell sharply, improving breakevens for dairy operations.
- USDA vs. futures disconnect: Class III futures traded $1.14/cwt above USDA’s 2025 forecast, signaling market optimism.
- Global rebalancing: EU milk declines and NZ’s strategic shifts may reshape export dynamics, favoring U.S. cheese and NDM.
Dairy markets mixed: cash butter and powders weaken while cheese futures edge higher; feed costs decline sharply
Key Price Changes & Market Trends
Today’s Chicago Mercantile Exchange (CME) cash dairy markets presented a mixed picture with butter, nonfat dry milk (NDM), and dry whey posting declines while cheese prices remained unchanged. Futures markets offered a slightly different sentiment, particularly for cheese, and a significant drop in feed grain futures provided a positive note for producers.
| Product | Closing Price | Change from Yesterday |
| Cheese (Blocks) | $1.7800/lb | Unchanged |
| Cheese (Barrels) | $1.7700/lb | Unchanged |
| Butter | $2.3425/lb | -0.75¢ |
| Nonfat Dry Milk | $1.2075/lb | -0.25¢ |
| Dry Whey | $0.5300/lb | -1.25¢ |
Commentary on Price Movements:
Cheddar blocks and barrels held steady in the cash market, though June Class III milk futures rose $0.09 to $18.74/cwt, and June cheese futures saw a modest gain of $0.0050 to settle at $1.9250/lb. This stability in cash cheese, juxtaposed with slightly firmer futures, suggests a market balancing current supply-demand against forward expectations. Current spot block prices ($1.7800/lb) are just under the USDA’s April 2025 annual average forecast of $1.790/lb.
Butter prices continued their downward trend, declining by 0.75¢ to $2.3425/lb, consistent with reports of comfortable domestic butter inventories. The current cash price is significantly below the USDA’s April 2025 annual forecast of $2.445/lb, underscoring ongoing price pressure.
NDM eased by 0.25¢ to $1.2075/lb, trading just below the USDA’s annual forecast of $1.22/lb. Dry whey experienced the most substantial decline among major dairy commodities today, falling 1.25¢ to $0.5300/lb.
Volume and Trading Activity
Trading activity on May 13th varied across the dairy complex, with some products seeing minimal transactions while others showed specific market pressures through bid/ask spreads.
Butter activity was limited with only 2 loads trading. The session concluded with 1 unfilled bid against 5 offers, suggesting selling interest surpassed buying interest at closing prices.
No trades were executed for cheddar blocks, though the market closed with 2 unfilled bids versus a single offer. This configuration hints at some underlying support at the $1.7800/lb level. Similarly, no trades occurred in cheddar barrels, with the market closing with a balanced 1 bid and 1 offer.
NDM saw moderate activity with 5 trades completed. A significant feature was its closing posture: 10 unfilled bids stood against only 1 offer. This strong bid depth, despite the day’s slight price decrease, suggests robust underlying demand.
Dry whey had minimal activity with only 1 load traded. The market closed with a balanced 3 bids and 3 offers.
Global Context
International dairy market dynamics continue to exert influence on U.S. prices and trade opportunities, with several key global factors at play.
The European Union is anticipating a 0.2% year-over-year decline in milk deliveries for 2025, primarily due to ongoing regulatory pressures and shrinking dairy herd sizes across member states. Additionally, animal diseases, such as Bluetongue virus, impacted EU milk production in 2024, reducing output and causing fertility issues in affected herds. These constraints in EU output could create export opportunities for U.S. dairy products and lend support to global dairy prices.
New Zealand’s dairy industry is undergoing a strategic reorientation, prioritizing value-added products over sheer volume. Milk production in New Zealand for 2025 is forecast to be below its five-year average. This shift could mean less direct competition from New Zealand in some global commodity markets, potentially opening market share for U.S. exporters.
Mexico remains a vital export market for U.S. dairy, particularly for cheese, accounting for a substantial portion of U.S. cheese exports. However, the threat of retaliatory tariffs from Mexico on U.S. dairy products continues to be a concern.
China reduced its dairy import volumes in 2024, citing domestic economic issues. Future purchasing patterns from China will significantly influence global dairy trade flows and price levels.
Forecasts and Analysis
A review of current forecasts from the USDA and prevailing CME futures prices reveals differing outlooks for the dairy sector, particularly concerning medium-term price levels.
USDA 2025 Annual Forecasts (April 2025 WASDE Report):
- All-Milk Price: $21.10/cwt
- Class III Milk: $17.60/cwt
- Class IV Milk: $18.20/cwt
- Cheddar Cheese: $1.790/lb
- Butter: $2.445/lb
- Nonfat Dry Milk: $1.220/lb
- Dry Whey: $0.510/lb
- U.S. Milk Production: 226.9 billion pounds
CME June 2025 Futures (May 13, 2025):
- Class III Milk: $18.74/cwt
- Class IV Milk: $17.72/cwt
- Cheese: $1.9250/lb
- Butter: $2.3948/lb
- NDM: $1.2300/lb
- Dry Whey: $0.5500/lb
| Product | USDA 2025 Avg. Forecast (April) | CME June 2025 Settlement (May 13) | Difference |
| Class III Milk | $17.60/cwt | $18.74/cwt | +$1.14/cwt |
| Class IV Milk | $18.20/cwt | $17.72/cwt | -$0.48/cwt |
| Cheddar Cheese | $1.790/lb | $1.9250/lb | +$0.1350/lb |
| Butter | $2.445/lb | $2.3948/lb | -$0.0502/lb |
| NDM | $1.220/lb | $1.2300/lb | +$0.0100/lb |
| Dry Whey | $0.510/lb | $0.5500/lb | +$0.0400/lb |
A notable positive development for dairy producers was the significant decrease in feed costs. July corn futures settled at $4.4250/bu, down $0.0475, and July soybean meal futures closed at $293.60/ton, a decline of $4.70. This substantial reduction in projected feed expenses offers a potential improvement to producer margins, a welcome development given the mixed signals in dairy product prices.
The comparison highlights a significant divergence: CME June 2025 Class III futures ($18.74/cwt) are trading substantially above the USDA’s 2025 annual average forecast for Class III milk ($17.60/cwt). This suggests that near-term market sentiment is considerably more optimistic than the USDA’s outlook for the year as a whole.
Market Sentiment
The overall atmosphere in the dairy markets on May 13th was one of cautious and mixed sentiment, reflecting the divergent price movements and conflicting signals from various market indicators.
One market observer noted, “The cash cheese market remains in a wait-and-see mode, with unchanged prices reflecting caution despite some firmness in futures. Buyers seem hesitant to chase prices higher given the new processing capacity slated to come online later this year.” This reflects the current stasis in spot cheese and awareness of future supply potential.
Regarding butter, an analyst commented, “Butter continues to feel heavy, with domestic inventories capping any upside momentum, even as global prices show some life. The focus is squarely on stimulating domestic demand or finding competitive export outlets to work through these stocks.”
A feed analyst remarked, “While NDM and Dry Whey cash prices saw some pressure today, the underlying bid support for NDM is encouraging for powder markets. However, the feed cost decline is the real silver lining from today’s session, offering much-needed potential margin relief for dairy producers.”
General sentiment appears cautiously mixed. There is an undercurrent of support in the cheese complex, particularly evident in the futures market, and significant optimism stemming from the sharp drop in projected feed costs. This positive sentiment is counterbalanced by weakness in the cash markets for butter and powders.
Closing Summary & Recommendations
In summary, May 13th saw a mixed performance in the CME dairy markets. Cash butter, NDM, and dry whey prices all declined, with butter continuing to be pressured by ample domestic inventories. Spot cheese prices held steady, though cheese futures posted modest gains, contributing to a stronger Class III milk futures settlement. A significant positive development was the sharp drop in corn and soybean meal futures, signaling potential relief on feed costs for dairy producers.
Recommendations for Stakeholders:
Producers should closely monitor the evolving feed cost landscape. Given the current premium in Class III milk and cheese futures over the USDA’s 2025 annual forecasts, evaluating hedging strategies for a portion of anticipated 2025 production may be prudent. This could help secure favorable prices against the backdrop of the USDA’s more cautious longer-term outlook and the expected increase in U.S. milk production and cheese manufacturing capacity.
Traders may find opportunities in the current disconnect between cash market pricing and futures values, particularly within the cheese complex. The divergence between the Class III and Class IV outlooks could also present spread trading possibilities. The strong underlying bid support observed in the NDM market today, despite the price dip, warrants close attention as it may signal resilience in that segment.
Analysts should focus on several key areas: the impact of new U.S. cheese processing capacity as it comes online; evolving global milk production trends, especially in the EU and New Zealand; and the resilience of global dairy demand in the face of ongoing economic headwinds and geopolitical factors. The sustainability of the current premiums in nearby futures contracts over the USDA’s annual forecasts remains a central question for market assessment.
Learn more:
- Weekly US Dairy Market Report: May 9, 2025 – Export Boom, Tariff Risks, and Market Volatility
Analyzes surging U.S. dairy exports and geopolitical risks, contextualizing the price disconnect between bullish spot markets and cautious USDA forecasts highlighted in today’s report. - CME Dairy Market Report: May 6, 2025 – Dairy Prices Rally Across the Board as Global Demand Surges
Explores the precursor rally to today’s mixed session, detailing how tightening cheese inventories and GDT auction momentum created near-term price support now facing milk production headwinds. - Weekly Global Dairy Market Recap: May 5, 2025 – Divergence and Disconnects
Examines conflicting international trends – EU softness vs. Oceania strength – that underpin today’s analysis of global rebalancing opportunities for U.S. exporters.
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