Cheese blocks ↑0.25¢ amid mixed dairy moves: Barrels ↓2¢, whey plunges 1.5¢. Global tensions & feed costs shape volatile markets.
EXECUTIVE SUMMARY: The May 20 CME dairy session saw divergent trends, with cheddar blocks gaining 0.25¢ on active trading (11 deals) while barrels (-2¢), NDM (-0.5¢), and whey (-1.5¢) retreated. Butter held steady at $2.3425/lb despite zero trades, reflecting balanced bids/offers. Global pressures mounted as Chinese tariffs and EU production shifts countered strong U.S. cheese demand, while rising corn (+1.7%) and soybean meal futures signaled potential margin squeezes. Traders are eyeing wide block/barrel spreads and the USDA’s revised milk production forecasts, with analysts urging vigilance on export flows and summer demand signals.
KEY TAKEAWAYS:
- Block/Barrel Divergence: Cheddar blocks rose 0.25¢ (11 trades) vs barrels’ 2¢ drop, highlighting market segmentation
- Global Headwinds: China’s 84% whey tariffs and EU production growth challenge U.S. export competitiveness
- Feed Cost Alert: July corn (+1.7%) and soybean meal futures (+0.4%) threaten dairy margins
- Quiet Butter Equilibrium: Unchanged price at $2.3425/lb masks inventory pressures despite balanced bids/offers
- USDA Optimism: Milk production forecasts revised upward (+0.4B lbs) despite price decline projections
Today’s CME dairy session displayed divergent price movements across the dairy complex, with Cheddar blocks posting a modest gain while other products retreated or remained stable. Trading activity was concentrated in the Cheddar block market, which saw 11 trades completed, while the butter market remained quiet with no trades executed despite balanced bids and offers.
Key Price Changes & Market Trends
Today’s session at the Chicago Mercantile Exchange saw mixed movements across the dairy complex. Cheddar blocks posted a slight gain, while barrels, Nonfat Dry Milk (NDM), and Dry Whey experienced price declines. The butter market remained unchanged.
| Product | Closing Price ($/lb.) | Change from Yesterday (¢/lb.) |
| Cheese (Blocks) | $1.9000 | +0.25¢ |
| Cheese (Barrels) | $1.8350 | -2.00¢ |
| Butter | $2.3425 | Unchanged |
| Nonfat Dry Milk | $1.2250 | -0.50¢ |
| Dry Whey | $0.5250 | -1.50¢ |
Cheddar Blocks edged up by 0.25 cents, suggesting firm demand or tighter spot availability for blocks. The 11 trades executed indicate active interest in this category.
Cheddar Barrels saw a more significant decrease of 2.00 cents. This could be attributed to a temporary offer increase relative to bids or processors finding ample supplies.
Butter prices held steady at $2.3425/lb. Although no trades were executed, two bids and two offers suggest a market currently in equilibrium at this price point.
Nonfat Dry Milk (NDM) prices softened by 0.50 cents. With four bids versus one offer, the price decline might reflect sellers adjusting to meet buyer interest at slightly lower levels.
Dry Whey experienced the most substantial drop of the day, falling 1.50 cents. This could indicate robust supplies or a dip in demand from domestic or international users.
Volume and Trading Activity
Trading activity was most robust in the Cheddar block market, with 11 loads changing hands. Dry Whey also saw moderate activity with five trades. Butter was quiet with no trades executed, though an equal number of bids and offers were posted. Cheddar barrels and NDM saw limited trading volumes, with two trades each.
- Butter: 0 trades, two bids, two offers
- Cheddar Blocks: 11 trades, three bids, three offers
- Cheddar Barrels: 2 trades, one bid, three offers. The bid/ask spread here suggests sellers were more prominent
- Nonfat Dry Milk (NDM): 2 trades, four bids, one offer. The higher number of bids compared to offers at the settled price indicates underlying support despite the slight price dip
- Dry Whey: 5 trades, two bids, one offer
Notable trading patterns include the concentrated activity in Cheddar blocks, potentially signaling focused procurement efforts by buyers. Despite balanced bids and offers, the lack of trades in butter suggests the market is waiting for further signals before committing to new price levels.
Global Context
Global dairy markets continue to present a mixed picture, influencing U.S. dairy dynamics.
Recent RaboResearch reports indicate the global dairy market is on track for modest growth in 2025, driven by steady supply expansion and rising export demand, despite evolving trade dynamics. Production growth is expected from most major exporting regions, with the European Union and the U.S. leading expansion efforts.
China’s milk production is projected to decrease by 1.5% year-on-year in 2025, with imports expected to improve by 2% after three years of declining volumes. This shift could support global dairy prices, particularly for milk powders and whey products.
As highlighted in recent market analyses, the U.S. dairy export landscape continues to face challenges from retaliatory tariffs, particularly China’s 84% duty on whey products. These trade barriers have created significant headwinds for certain product categories while creating opportunities in other markets.
European milk production has shown oscillation between growth and contraction in recent quarters, while U.S. production has stabilized after stagnation in recent years. These global supply dynamics influence price formation across all dairy commodity categories.
Forecasts and Analysis
Recent USDA projections and market analysis suggest a nuanced outlook for the U.S. dairy sector.
The USDA has recently raised its forecast for the average number of dairy cows by 5,000 head and milk per cow by 25 pounds for 2025. The national milking herd is projected to average 9.410 million head, with milk production forecast at 227.3 billion pounds, an increase of 0.4 billion pounds from the previous forecast.
Class III milk futures for June settled at .99/cwt today, maintaining the level from yesterday and continuing to trade at a premium to the USDA’s revised 2025 annual forecast of approximately .70/cwt. This premium suggests traders remain somewhat more optimistic about near-term milk prices than government forecasters.
Feed costs show some volatility, with today’s July corn futures settling at $4.5450/bu, up from yesterday’s $4.47, while July soybean meal settled at $292.40/ton compared to yesterday’s $291.20. If the trend continues, this modest increase in key feed ingredients could potentially pressure dairy producer margins.
The April 2025 WASDE report indicated a substantial downward revision in price forecasts across all major dairy commodities, signaling what some analysts describe as a “supply-driven price collapse”. Today’s mixed market performance suggests the industry is still navigating this recalibration process.
Market Sentiment
Market sentiment appears to be cautiously balanced, with pockets of strength offset by areas of price pressure.
“The mixed price movements we’re seeing today reflect the complex chess match happening in dairy markets right now,” noted one CME dairy trader. “Global factors and domestic inventories create product-specific trends rather than a unified market direction.”
A market analyst observed during today’s session: “The bidding activity in blocks suggests confidence in cheese demand continuing through summer, while the pressure on barrels highlights the ongoing divergence between retail and food service channels.”
One processor commented, “Butter inventories continue to weigh heavily on market psychology despite strong international prices. Significant upward price movement remains unlikely until we see meaningful drawdowns in cold storage.”
Overall, the sentiment is one of watchfulness. While domestic demand provides a solid base, particularly for cheese, international factors and feed cost volatility are key variables that traders and producers closely monitor.
Closing Summary & Recommendations
In summary, today’s CME dairy markets were characterized by a modest gain in Cheddar blocks, declines in Cheddar barrels, NDM, and Dry Whey, and a stable butter market. Trading volumes were led by Cheddar blocks, indicating specific buyer interest.
For producers, today’s declines in cheese barrels, NDM, and whey prices warrant careful attention. Consider evaluating hedging strategies given the continued premium of nearby futures contracts over the USDA’s recently increased annual forecasts. The strength in block cheese markets provides a potential bright spot for operations focused on retail-oriented production.
Traders should monitor the widening spread between blocks and barrels, which may present spread trading opportunities. Additionally, the impact of rising feed costs on production decisions and the continuing influence of global market dynamics, particularly from China and the EU, will be important factors to watch in the coming days.
Analysts should focus on upcoming cold storage reports and production data to gauge whether current price levels will find support or face further pressure. The divergence between product categories suggests market participants should maintain a product-specific approach to analysis rather than viewing dairy as a monolithic market.
In this environment of mixed signals and moderate volatility, strategic risk management and close attention to domestic and international demand indicators will be essential for all dairy market participants.
Learn more:
- CME Dairy Market Report: End of Day – May 19, 2025
- Global Dairy Market in 2025: Production Shifts, Demand Fluctuations, and Trade Dynamics
- Weekly US Dairy Market Report: May 9, 2025
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