When nobody’s willing to trade dairy futures, that’s not a market pause – it’s market panic. Your milk check knows the difference.
Executive Summary: Today’s complete trading freeze at CME – zero sales across all products – screams one thing: this market’s at a breaking point. Butter plummeting to $1.65 puts it below cheese for the first time since 2021, flipping your entire component strategy upside down. With Class III at $17.19 and Class IV at $14.60, your October milk check just lost $1.50-2.00/cwt versus last month. Mexico’s actively replacing 507 million pounds of our exports while Texas adds three plants needing 5 billion pounds of milk – whether you’re profitable or not. The smart operators are locking in feed at $4.22 corn and hedging milk before this gets worse. Tomorrow’s $1.70 cheese support level? Break that and we’re in freefall territory.
Listen, I’ve been watching these markets for over two decades, and what happened today tells me we’re at one of those inflection points that could go either way. Zero trades across the board – that’s not normal market behavior. When everyone’s sitting on their hands like this, it usually means something’s about to break.
Let’s start with what matters most to you: butter took another hit today, dropping 1.75 cents to $1.65/lb. That’s putting real pressure on your Class IV milk, and if you’re heavy on butterfat production, you’re feeling it. Meanwhile, cheese blocks nudged up a quarter-cent to $1.7375/lb – not much, but at least it’s heading in the right direction.
Today’s Price Action: Real Numbers for Real Farmers
Product
Price
Today’s Move
Week Trend (Oct 7-8)
What This Means for Your Operation
Butter
$1.6500/lb
-1.75¢
Down from $1.6675
Your butterfat premiums are evaporating – it might be time to reconsider that Jersey expansion
Cheddar Block
$1.7375/lb
+0.25¢
Up from $1.7350
Small positive for Class III, but needs follow-through buying to matter
Cheddar Barrel
$1.7400/lb
No Change
Flat from $1.7400
Processors have what they need – no urgency in the market
NDM Grade A
$1.1500/lb
No Change
Flat from $1.1500
Export markets are stable, but nothing to write home about
Dry Whey
$0.6300/lb
No Change
Flat from $0.6300
Your other solids value is holding but unremarkable
Here’s what’s really interesting: yesterday, we saw 22 butter trades before everything went silent today. That tells me buyers stepped back after pushing prices lower – they’re waiting to see if sellers get desperate. The fact that butter is now trading below cheese for the first time since 2021? That’s a fundamental shift that will reshape your milk checks through winter.
Trading Floor Intelligence: Reading Between the Lines
The bid/ask spreads today paint a clear picture. Butter showed two bids against four offers – more sellers than buyers, confirming the weakness. Cheese blocks had a tighter spread with two bids and one offer, which is actually encouraging if you’re long on Class III.
What really caught my attention was the complete absence of trading. Zero sales across all products versus 56 total trades earlier this week. I’ve seen this pattern before – the last time markets went this quiet, cheese dropped 4 cents in two sessions. If blocks break below $1.70 tomorrow, expect accelerated selling.
Global Markets: The Competition’s Getting Tougher
You need to understand what’s happening globally because it’s directly affecting your milk check. According to the USDA Foreign Agricultural Service’s May 2025 report, Mexico’s milk production reached 7.91 billion liters in the first seven months of 2025, representing a 2.3% increase from the same period in 2024. Their July production alone hit 1.22 billion liters, a 1.8% year-over-year increase.
Here’s what keeps me up at night: Mexico’s targeting a significant reduction in powder imports over the next five years. They’re already producing 13.9 million metric tons of milk annually and building more processing capacity. If current trends hold, Mexico could displace about 230,000 metric tons of our NFDM exports by 2026 – that’s roughly 507 million pounds.
Meanwhile, we’re seeing mixed signals from other markets. China’s dairy imports through July 2025 reached 1.77 million tons, up 6% year-over-year, according to Chinese customs data. However, here’s the context that nobody’s talking about – it’s still 28% below their 2021 peak of 2.46 million tons. Their whole milk powder imports specifically dropped 13% to just 292,000 tons through July, while whey imports jumped 16% to 411,000 tons.
Export Volumes That Matter (January-July 2025)
Mexico fluid milk imports: Down 21% projected for full year to 30,000 MT
Mexico SMP imports: Up 13% projected to 230,000 MT
China total dairy imports: 1.77 million tons, up 6% YoY but down 28% from the 2021 peak
China WMP imports: 292,000 tons, down 13% YoY
Southeast Asia growth: 7% annually, but extremely price-sensitive
Feed Costs: The Only Good News Today
At least feed markets are cooperating. Corn’s sitting at $4.22/bushel and soybean meal at $278.10/ton – both well below last year’s averages. Your milk-to-feed ratio is roughly 2.35, down from 2.51 in August but still profitable if you’re managing other costs well.
Here’s the regional reality check: Wisconsin farmers are seeing corn $15-$20/ton cheaper than California producers due to lower transportation costs. At current prices, you’re looking at about $7.80/cwt over feed costs – tight but manageable. The DMC program hasn’t triggered payments in over a year because these low feed costs are masking the margin squeeze from other expenses, such as labor and minerals.
Production Reality: Where All This Milk Is Going
The USDA’s latest forecast projects milk production to reach 228 billion pounds in 2025, a 300 million-pound increase from its previous estimate and 1.7 billion pounds above the 2024 level. But here’s what they’re not highlighting in those numbers – it’s WHERE this milk is being produced that matters.
Texas production increased 10.6% year-over-year, while Wisconsin’s production barely changed at 0.1%. We’ve added 57,000 cows nationally since the labor total year, bringing us to 6.8 million head, according to the. However, the data for these cows are concentrated in states with new processing capacity. That $11 billion in new processing investment everyone’s talking about? It requires an additional 15 billion pounds of milk by 2028. Three new cheese plants in Texas alone.
Herd dynamics tell an interesting story. Producers added 50,000 head in 2024, according to Mexico’s AMLAC data (yes, I’m tracking their numbers too – know your competition), but beef-on-dairy breeding is keeping heifer supplies tight here at home. That controlled growth might be the only thing preventing a complete price collapse.
What’s Really Driving These Prices
Looking at the domestic side, retail demand is steady but nothing spectacular. Food service is picking up heading into the holiday season, but it’s not enough to absorb all this new production. According to USDA AMS data from 2016 to 2025, retail cheese prices have remained in a $3.49 to $4.39 per pound range, with an average of $3.94. That ceiling is keeping a lid on Class III prices.
The export story gets more complex by the day. We’re $200-300/MT cheaper than EU competitors on cheese, which is helping us maintain market share. However, New Zealand’s aggressive pricing in Southeast Asia is eroding our powder markets, and their October SMP futures at $2,590/MT translate to approximately $1.18/lb – not far from our current spot price of $1.15.
Forward Outlook: Reading the Tea Leaves
The USDA’s projecting Class III to average $18.80/cwt for 2025, down from earlier estimates, while Class IV is expected to average $20.40/cwt. But here’s the thing about these forecasts – they don’t come with confidence intervals. Based on historical accuracy, you should probably think of these as plus or minus 50 cents with about 70% confidence.
The futures market is pricing in continued weakness. October Class III settled at $17.19/cwt while Class IV hit $14.60/cwt – that inversion tells you everything about where traders think butterfat is heading.
Intraday Volatility Patterns
According to research on dairy futures volatility from Wisconsin’s ag economics department, volatility typically peaks between USDA announcements and diminishes as contracts approach expiration. We’re 10 days from the October expiration, so expect increased price swings if any significant news hits.
Regional Focus: Upper Midwest Reality Check
Wisconsin and Minnesota producers, you’re facing a unique challenge. Despite being the traditional dairy heartland, your growth has stalled at 0.1%, while the southwestern states are booming. Local processors report adequate to surplus milk supplies, which is putting downward pressure on your premiums.
The saving grace? Strong local cheese demand is absorbing most of your production. However, with the new Texas plants coming online, you will face increased competition for markets. Several producers I know in Dodge County are already adjusting their breeding programs to focus more on components rather than volume.
Action Items for Your Operation
First, take a hard look at your Q4 risk management. October $17 puts are still reasonably priced, and with this market uncertainty, some downside protection makes sense.
Second, with butter this weak, it’s time to reconsider your component strategy. If you’re heavy on Jerseys or running high butterfat rations, the math might not work anymore. Focus on protein – that’s where the money is right now.
Third, lock in those feed prices. Current corn and bean prices offer opportunities to secure favorable rates through Q1 2026. Don’t wait for the market to turn.
And don’t forget – the DMC enrollment deadline is October 31. I know the program hasn’t paid out recently, but at these milk prices, it’s cheap insurance.
Industry Intelligence You Need to Know
That $11 billion processing expansion is reshaping everything. Texas alone is adding three cheese plants that’ll need 5 billion pounds of milk. But here’s what nobody’s talking about – Nestlé just withdrew from a global methane emissions alliance, and several major retailers are reconsidering their sustainability requirements. This could affect premium programs that many of you are counting on.
The Barfresh acquisition of Arps Dairy demonstrates that consolidation is still occurring at the processor level. When processors consolidate, farmers usually lose negotiating power. Keep that in mind as you plan your marketing strategy.
Putting Today in Perspective
Today’s silent market follows Monday’s brutal session, where cheese crashed 4 cents and butter tanked 5.5 cents. The lack of trading suggests everyone’s reassessing after that shock. Historically, October marks the transition from flush spring production to tighter winter supplies, but with 228 billion pounds of milk projected this year, those seasonal patterns no longer hold the same significance.
What I have learned from decades in this business is that quiet markets, like today, often precede significant moves. With butter trading below cheese, expanding milk production, and our largest export customer actively working to replace us, the bearish factors are stacking up. But markets have a way of surprising us when sentiment gets too one-sided.
Stay focused on what you can control – your cost structure, component quality, and risk management. The survivors in this cycle will be the ones making smart decisions now, not waiting for markets to recover. Because while prices always cycle, the structure of this industry is changing permanently, and you need to position yourself accordingly.
Tomorrow, watch those $1.70 cheese supports closely. If they break, we could see accelerated selling into the October contract expiration. And keep an eye on Thursday’s export data – any surprise there could shift this market quickly.
KEY TAKEAWAYS
The Trading Floor Went Silent: Zero CME trades today – when markets freeze like this, smart money knows something’s about to break. If cheese drops below $1.70 tomorrow, we’re looking at $16 Class III by month-end.
Your Component Strategy Just Died: Butter at $1.65 versus cheese at $1.7375 flips 30 years of breeding wisdom. Those high-butterfat Jerseys you’ve been selecting? They’re costing you money now.
Mexico’s Done Being Our Customer: They’re displacing 507 million pounds of our exports while Texas builds plants needing 5 billion pounds. Translation: too much milk, shrinking markets, and you’re caught in the middle.
Tomorrow Decides Everything: Break $1.70 cheese support and this market goes into freefall. Lock in feed at $4.22 corn today, hedge your Q4 milk tonight, and prepare for $15 Class III if support fails.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
11 Proven Strategies to Lower Feed Costs and Boost Efficiency on Your Dairy – This how-to guide provides actionable strategies for minimizing feed waste, optimizing rations, and improving feed conversion ratios. It offers practical steps to secure margins and reduce operational costs, directly complementing the main article’s focus on tight milk-to-feed ratios.
Genetic Revolution: How Record-Breaking Milk Components Are Reshaping Dairy’s Future – This strategic analysis reveals how genomics and AI are driving record gains in butterfat and protein. It provides essential context for the butter-below-cheese market shift and demonstrates how to leverage new breeding strategies to position your herd for long-term component value.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Fixed safety nets lose 30% purchasing power by 2031—your $9.50 coverage becomes worth $6.45
EXECUTIVE SUMMARY: What we’re discovering through conversations with dairy farmers across the country is that fixed safety net programs, while valuable, are creating an interesting planning challenge—coverage that doesn’t adjust for inflation loses roughly 30% of its purchasing power over typical extension periods. Take the Johnson farm example: their 500-cow Wisconsin operation faces $15,000-$ 20,000 in annual premiums for coverage that protects only half of their 12 million pounds of production, while the other half remains exposed to market volatility. Meanwhile, operations from Texas to Vermont are finding creative ways to build resilience beyond government programs—forming buying groups that cut feed costs by 10-15%, investing in shared equipment that reduces per-unit expenses, and developing direct market relationships that capture premium pricing. Recent discussions with producers suggest that the most successful operations treat safety nets as just one tool in their risk management toolkit, not the complete solution. The farms weathering volatility best are those focusing on fundamentals they can control: feed efficiency improvements that add $50-100 per cow annually, reproductive programs that reduce replacement costs, and facility investments that pay for themselves through improved cow comfort. Looking ahead, the real opportunity might be in building operations that are efficient enough for safety nets to become backup protection rather than a primary strategy.
You know, I was talking with a neighbor the other day about dairy safety net programs, and we got to discussing something that I think a lot of us are wondering about: what does longer-term program planning actually mean for our operations?
The headlines sound encouraging—expanded coverage options, program certainty, all that. However, when you delve into the planning aspect of things… that’s where the conversation becomes more interesting. And frankly, more important for those of us trying to make smart risk management decisions.
Understanding the Safety Net Framework
So here’s what we’re looking at with recent program developments. Congress has been working on extending program availability further into the future, which would give us more certainty about having these tools available when we need them. The basic program structure remains focused on providing safety net coverage for dairy operations, although, as many of us have seen, the details can become quite complex quite quickly.
Now, you probably already know this, but the way these safety net programs generally work is you can cover a portion of your production with premium costs that tend to increase as you go for higher coverage levels. Initial tiers typically offer better premium rates, and as you add more coverage… well, it gets expensive in a hurry.
What’s interesting here is how different this approach is from, say, your typical business insurance. Most commercial policies adjust rates and coverage annually based on changing conditions. But agricultural safety nets? They tend to become established and then remain in place for years at a time.
The Reality of Fixed Protection Levels
This is where the conversation with my neighbor got really interesting. Fixed coverage levels lose what economists call purchasing power as costs rise over time—and they generally do. It’s like having equipment insurance that covers replacement at today’s prices when you’ll need to buy that equipment several years from now at tomorrow’s prices.
For those of us running mid-size operations, this becomes particularly important. If you’re milking, say, 400-600 cows, you’re producing enough milk that only part of it typically gets the better tier coverage under most program structures. The rest is essentially exposed to market volatility.
The Hidden Cost of Fixed Safety Nets: How Your $9.50 Coverage Loses $3.05 in Real Value by 2031 – While politicians promise program certainty, inflation quietly steals 30% of your protection. Smart farmers are building their own cushions instead of waiting for Washington to adjust.
I’ve noticed that producers who truly understand this dynamic tend to approach their overall risk management strategy differently. They’re not just considering whether to enroll in programs—they’re also asking what else they need to do to maintain protection as conditions evolve.
While safety net coverage stays fixed, actual farm costs have more than doubled over 20 years
Case Study: The 500-Cow Decision
Let me walk you through a real-world example that might help illustrate this. Take a typical 500-cow Holstein operation in Wisconsin—let’s call them the Johnson farm. They’re averaging about 24,000 pounds per cow annually, which translates to approximately 12 million pounds of total production.
Under current program structures, they can obtain better premium rates on their first tier of coverage—approximately half their production. For the Johnsons, that means roughly 6 million pounds gets decent safety net protection, while the other 6 million pounds is basically exposed to market volatility.
If they’re paying premiums for coverage on that protected portion, they need to factor those costs into their budget—probably around $15,000 to $ 20,000 annually, depending on the coverage levels they choose. However, they also need to consider what happens to the value of that coverage over time.
The Johnsons have been dairy farming for 20 years. They’ve seen feed costs go from $120 per ton to over $300 per ton during tough years. Labor costs have more than doubled. Equipment prices… don’t even get me started. So, when they consider fixed coverage levels that remain unchanged for years, they’re thinking about whether that protection will still be meaningful when they actually need it.
What they’ve decided to do is treat safety net programs as just one piece of their risk management puzzle—not the whole solution.
The Johnson Farm Blueprint: How One 500-Cow Operation Built Real Protection Beyond Programs – Four pillars, measurable results. While neighbors worry about Washington, the Johnsons control what they can control – and it’s working.
The Other Side of Your Milk Check
And speaking of things that evolve while safety net coverage remains relatively static… there’s another piece that affects our milk checks that doesn’t get discussed enough at the kitchen table. Make allowances—those deductions that supposedly cover processing costs—are something many producers report seeing changes in over time.
Here’s a simple exercise that might be worth doing: take your last six months of milk checks and calculate what a $0.50 per hundredweight change in deductions would mean to your annual cash flow. For a 500-cow operation producing about 12 million pounds annually, that’s $60,000. Not exactly pocket change, especially when you’re already paying premiums for safety net coverage.
Make allowance changes hit every hundredweight—the bigger you are, the harder you fall.
How Your Operation Size Changes Everything
You know what I’ve been noticing more and more? These policy and market changes affect farms very differently depending on your scale.
Farm size dramatically changes your risk profile under current safety net structures.
If you’re running a smaller operation—perhaps 150-250 cows—most of your production likely receives reasonable safety net protection. The challenge is that you’re often more dependent on cooperative pricing without a lot of market alternatives. Additionally, your time is typically fully committed to daily operations.
But if you’re in that middle range—say 400-800 cows—you’re producing enough that changes represent serious money, but only a portion of your milk typically gets meaningful coverage. Additionally, you’ve likely invested heavily in facilities and equipment over the years, making it expensive to consider switching market relationships.
Farm Size
Annual Prod
Coverage %
Exposed Prod
Risk Exposure
150-250 Cows
3.6-6M lbs
90-100%
0-0.6M lbs
$0-3K
400-600 Cows
9.6-14.4M lbs
50-65%
5-8.4M lbs
$25-42K
1000+ Cows
24M+ lbs
25-35%
16-18M lbs
$80-90K
The largest operations? They’re often negotiating premiums above base prices anyway. Safety net coverage is nice to have, but it’s not make-or-break for their cash flow. Their volume helps them absorb cost increases that might really hurt smaller farms.
What’s encouraging is seeing some mid-size operations get creative about this challenge—forming marketing groups, exploring regional processing options, or investing in technologies that improve their bargaining position with processors.
Understanding Market Relationships
Many dairy cooperatives operate both marketing and processing businesses. That creates some interesting dynamics when policies and market conditions change.
Now, I’m not saying there’s anything wrong with this business model—cooperatives serve important functions and most are trying to optimize total value for their members. However, it’s worth understanding how your cooperative or processor generates revenue across all its operations, not just what is reflected in your milk price.
I’ve noticed that producers who take time to really understand their market relationships tend to make better decisions about their overall marketing strategy. They’re also better positioned to have productive conversations about pricing, services, and long-term contracts.
Take butterfat premiums, for example. Some operations focus heavily on maximizing butterfat performance through breeding and feeding programs because their market relationships reward that approach. Others find better returns through improvements in volume and efficiency. Understanding how your specific market relationship works helps you make smarter investment decisions.
Alternative Approaches and Innovations
Some producers are exploring alternatives to traditional market structures. Mobile processing options are becoming a topic of conversation in some regions, although they still require substantial investment and regulatory navigation. Some operations are exploring direct-to-consumer approaches, particularly for specialty products like organic or grass-fed milk.
For example, some Wisconsin producers I know have formed buying groups for feed and supplies, using their combined purchasing power to negotiate better prices. In Texas, several operations have invested in shared equipment for feed processing, spreading the cost across multiple farms while improving feed quality and reducing per-unit costs.
In Michigan, a group of approximately 20 mid-sized dairies has pooled resources to hire a professional nutritionist who works exclusively with their operations. The cost per farm is manageable, but they’re getting top-tier expertise that would be unaffordable individually.
Beyond Safety Nets: Six Strategies Smart Farms Use to Build $100K+ Annual Cushions – Transition management improvements alone deliver $250/cow annually – that’s $125,000 for a 500-cow operation. No government program required
The Planning Framework That Actually Works
So where does this leave us? Well, I think it starts with understanding your own numbers—really understanding them, not just having a general sense of where things stand.
Smart risk management starts with understanding your operation’s unique position.
Calculate what a 10% increase in feed costs would do to your margins. Determine your break-even milk price based on current cost structures. Understand what percentage of your income comes from components like butterfat and protein premiums versus base price.
Here’s a practical framework that might be worth working through:
Monthly Financial Reality Check:
Track your all-in cost of production per hundredweight
Monitor your margin over feed costs as a key indicator
Calculate how policy or market changes affect your actual cash flow
Compare your costs to regional averages when available
Risk Assessment Questions:
What’s your biggest vulnerability—price volatility, cost inflation, or cash flow timing?
How much of your production gets meaningful safety net protection?
What happens to your operation if margins stay tight for 18 months?
Do you have access to alternative markets if your current relationship doesn’t work out?
Regional Realities and Opportunities
Some Wisconsin producers I’ve talked with report focusing more on feed efficiency and reproductive performance as ways to improve their cost structure independent of policy support. The emphasis on transition period management has intensified—getting those fresh cows off to a strong start makes a significant difference in overall herd performance and lifetime production.
What’s interesting is seeing more precision feeding approaches, where operations track individual cow performance and adjust rations accordingly. The technology has gotten more affordable, and the payback through improved feed conversion is pretty compelling when margins are tight.
In Texas and California, some producers mention investing in technologies that help manage heat stress and improve labor efficiency. The climate challenges they face make cow comfort investments particularly important for maintaining production levels during the summer months.
In Vermont and New York, some operations are exploring value-added enterprises and direct marketing opportunities. The proximity to urban markets creates opportunities that aren’t available in more remote areas, although navigating regulatory requirements can be challenging.
Meanwhile, in Iowa and Minnesota, several dairy operations with which I am familiar have begun collaborating with crop farmers on manure-for-feed arrangements that benefit both parties. The dairy receives competitively priced corn silage, the grain farmer receives valuable nutrients, and both parties save on transportation costs.
Region
Primary Strategy
Key Investment
Cost Impact
Risk Factor
Wisconsin
Feed efficiency & reproduction
Transition cow management
-$0.75/cwt feed costs
Component price volatility
Texas/California
Heat stress management
Cooling systems & automation
-15% summer production loss
Energy cost increases
Vermont/New York
Value-added/direct marketing
Processing infrastructure
+$2-4/cwt premium potential
Regulatory compliance
Iowa/Minnesota
Manure-for-feed partnerships
Nutrient exchange programs
-$0.50/cwt feed + fertilizer
Weather dependency
What This Means for Your Planning
Safety net programs provide a foundation—and that’s not nothing. Having some certainty about program availability helps with planning, even if the structure isn’t perfect. But building a sustainable operation on top of that foundation? That’s still up to us.
I’d encourage you to consider enrolling in available programs despite their limitations. Even imperfect protection is better than no protection when margins are tight. Consider enrollment strategies that offer premium savings, if your cash flow allows it. But don’t stop there.
Cost Management Priorities:
Focus on feed efficiency improvements—every tenth of a point improvement in feed conversion helps your bottom line
Evaluate your reproductive program’s impact—shorter calving intervals and improved conception rates reduce replacement costs
Consider facility investments that improve cow comfort—better stall design, improved ventilation, and adequate water access often pay for themselves
Invest in fresh cow management—transition period nutrition and management probably has the biggest impact on overall herd performance
Market Relationship Evaluation:
Build relationships with multiple market channels where possible—even if you can’t switch completely, having options provides leverage
Understand the total value proposition—consider component premiums, quality bonuses, and services provided
Ask questions about how pricing decisions get made—understanding the process helps you plan better
Keep good records so you can make informed comparisons—track your actual costs and returns to evaluate opportunities objectively
The Bottom Line
The conversation my neighbor and I had reminded me that we’re all navigating similar challenges, just with different herd sizes and in different regions. Safety net programs give us some tools for managing risk. But the real work of building resilient dairy operations? That’s something we do together, one cow at a time, one decision at a time.
Whether it’s improving your dry cow management to reduce metabolic disorders, investing in better ventilation systems to improve cow comfort during hot weather, or fine-tuning your breeding program to improve longevity—those day-to-day operational decisions probably matter more for your long-term success than any policy program.
The programs provide a safety net, but operational excellence provides the path forward. In my experience, producers who focus most on controlling what they can—such as feed quality, cow comfort, reproductive performance, and financial management—tend to be the ones who not only survive market volatility but also find ways to thrive despite it.
The safety net is there when you need it. But building a farm that doesn’t need to use it very often? That’s probably the best strategy of all.
So here’s my question for you: What’s one specific change you’re making this year to improve your operation’s resilience—regardless of what safety net programs do? Drop a comment below and share what’s working on your farm. Sometimes the best insights come from hearing what our neighbors are trying.
KEY TAKEAWAYS:
Calculate your real coverage gap: For a 500-cow operation producing 12 million pounds, only 50% gets meaningful protection—that’s $60,000 annual exposure from just a $0.50/cwt market swing, which smart producers are offsetting through efficiency gains averaging 0.1-0.2 points in feed conversion
Build three-layer protection beyond programs: Wisconsin buying groups report 10-15% feed cost savings, Michigan operations sharing professional nutritionists cut consultation costs 70%, and Texas dairies investing in heat abatement see 8-12% production gains during summer stress periods
Focus on transition period ROI: Operations improving fresh cow management report $200-300 returns per cow through reduced metabolic issues, better peak milk (5-8 pounds higher), and improved reproductive performance—protection that works regardless of policy changes
Create market flexibility now: Producers maintaining relationships with 2-3 potential buyers report better component premiums (averaging $0.15-0.25/cwt advantage) and negotiating leverage, while those exploring direct sales capture 20-30% price premiums on 5-10% of production
Track what matters monthly: Progressive operations monitoring margin over feed costs, all-in production costs per hundredweight, and cash flow impacts from policy changes are making adjustment decisions 3-6 months faster than those using annual reviews alone
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
11 Proven Strategies to Lower Feed Costs and Boost Efficiency on Your Dairy – This tactical guide reveals how to achieve measurable efficiency gains through operational changes, from forage management to rumen health. It provides actionable strategies for lowering your farm’s largest expense and building a strong financial foundation.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – This piece identifies key innovations with proven ROI. It provides specific investment ranges, payback timeframes, and bottom-line benefits of adopting emerging technologies like calf monitoring and precision feeding. This shows how modernizing your operation can create a significant competitive advantage.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
40% of U.S. cheese exports face an immediate threat as Argentina drops 9% dairy tax—while your industry leaders stay silent
EXECUTIVE SUMMARY: Here’s what we discovered: Argentina suspended all agricultural export taxes on September 22nd—a move that instantly makes their dairy products $200-300 per metric ton cheaper than ours in global markets. With Mexico accounting for 40% of U.S. cheese exports (approximately $2-3 billion annually), this “temporary” policy, in effect through October 31st, threatens to crater milk prices by 20% or more. The silence from National Milk, IDFA, and major co-ops isn’t a coincidence—many of these same companies operate profitable facilities in Argentina and Brazil. Historical patterns show that Argentina’s “temporary” measures have a nasty habit of becoming permanent (remember Macri’s 2015 tax elimination, which was reversed in 2018?). The domino effect could be catastrophic: Turkey’s 60% inflation and Brazil’s 20% currency slide make them prime candidates to copy Argentina’s playbook. Suppose you’re shipping to processors with significant exposure to Mexico. In that case, you have exactly 36 days to lock in price protection before this market manipulation, disguised as policy reform, decimates your milk check.
So I’m sitting here at 5 AM—couldn’t sleep, actually—scrolling through the news, and there it is. Argentina suspended their agricultural export taxes. September 22nd. Just… gone. And nobody’s talking about it.
Look, maybe I’m overreacting. My wife says I do that. But I’ve been covering dairy for twenty-something years, and this feels… different. Really different.
You know how sometimes you get that feeling in your gut? Like when you see a fresh cow not eating and you just know something’s off? That’s what this feels like.
The Thing Nobody at Your Co-op Meeting Will Tell You
Alright, so here’s what I’ve been able to piece together…
Argentina’s been taxing agricultural exports for years, right? Different products, different rates. The reports coming out say they were hitting soybeans pretty hard—maybe around 30 percent—and dairy products were also being taxed. I’ve seen numbers anywhere from 8 to 10 percent on dairy, depending on who you ask.
Now they’re saying it’s temporary. Through October 31st, supposedly. Or until they hit some big export revenue target—I’ve heard $7 billion thrown around, but honestly, who knows if that’s accurate.
Temporary. Right.
You know what else was supposed to be temporary? Remember when Macri took over down there… what, 2015? Eliminated export taxes completely. Said it was the new way forward. Permanent change. All that.
Three years later? Boom. “Emergency measures.” Taxes are back.
I’ve been watching this long enough to know—Argentina’s “temporary” has a funny way of becoming permanent. And their “permanent”? That disappears faster than free donuts at a co-op meeting.
Mexico’s Buying HOW Much of Our Cheese?
Mexico’s strategic importance to the U.S. dairy industry is undeniable. The chart shows U.S. cheese exports to Mexico have grown steadily, with a 40% market share. This explosive growth is now directly threatened by Argentina’s sudden export tax elimination.
So I’m at the feed store last week—you know, the one by the old John Deere place in Dodge County—and this trucker’s there. Does the Mexico run for one of the big outfits.
He goes, “You know how much cheese is going south?”
And yeah, I knew it was a lot, but when you actually look at the numbers… Jesus. According to recent trade reports, approximately 40% of all U.S. cheese exports are destined for Mexico. That’s… what, $2-3 billion worth? Wisconsin alone is shipping tens of millions. California? Even more. Texas? Don’t even get me started—those processors down there are basically running on Mexico business.
Mexico’s 40% share of U.S. dairy exports represents $2.3 billion in annual trade now under direct threat from Argentina’s export tax elimination. When your biggest customer has cheaper alternatives, your milk check follows the market down.
But here’s the kicker—and this is what nobody’s talking about—Argentina already ships a ton of dairy to Brazil. They’ve got the infrastructure. The relationships. Brazilian companies have been dealing with Mexican importers for decades.
All Argentina needed was a price advantage.
Putting All Your Eggs in One Basket: How Mexico Became American Dairy’s Single Point of Failure. When 37% of Your Cheese Sales Depend on One Country, You’re Not Diversified—You’re Hostage.
And dropping export taxes? Well… do the math. If they were taxing dairy at 9% and that’s now gone, their products just became that much cheaper overnight. We’re talking maybe $200-300 per metric ton advantage. Maybe more.
You can’t compete with that. Nobody can.
Actually, I was just talking to this producer near Fond du Lac last week—milks about 800 head and has been in the business for forty years—and he says his processor already warned him that Mexico contracts might be “under review” come November. Under review. You know what that means.
Your Co-op Board’s Interesting Side Investments
Now… I’m going to be cautious here due to legal considerations, but…
Have you ever looked at who owns what in the South American dairy industry? I mean, really look?
Some of the same companies buying your milk here have operations down there. Big operations. I’m talking major ownership stakes in Argentine processors, Brazilian plants, the whole nine yards.
I’m not saying it’s a conspiracy. But when something this big happens and National Milk doesn’t say a word? IDFA’s silent? Your co-op board’s acting like nothing’s happening?
Makes you wonder, doesn’t it?
Actually, I ran into… well, let’s just say a former industry bigwig at a conference last week. The guy who used to be pretty high up. Even he looked worried. And this guy’s seen everything.
He says, “this is different. This isn’t market volatility. This is market manipulation.”
It Gets Worse (Because Of Course It Does)
So I’m talking to this analyst—a smart guy who covers global markets—and he starts laying out what happens next.
Turkey’s watching Argentina. Their currency’s trash, inflation’s through the roof—I’ve heard anywhere from 40 to 60 percent, depending on who’s counting. They export billions in ag products to Europe. If Argentina gets away with this, Turkey will likely follow suit, and the same could happen in Brazil. Their currency’s been sliding all year. Down maybe 20% against the dollar. And Brazil controls… what, a fifth of global soybean exports? Something like that. Huge chunk, anyway.
Once they see Argentina getting away with it…
It’s like dominoes. Remember back in ’09 when one bank started dumping assets and suddenly everybody had to? Same thing, but with countries using agriculture to prop up their currencies.
From $17.50 to $10.00: The Currency War Price Collapse That Could Cost You 43% of Your Milk Revenue. Every Day You Wait, Your Window to Protect Yourself Gets Smaller
Actually, wait. This is even scarier than I thought. Because once this starts, how do you stop it? Every country with a weak currency and agricultural exports is gonna look at this playbook and think, “Why not us?”
I was at a meeting in Madison last month—Wisconsin Dairy Business Association thing—and this economist from UW was saying something that stuck with me. She said, “The next trade war won’t be about tariffs. It’ll be about currency manipulation through agricultural policy.”
Guess she was right.
The Cavalry Ain’t Coming
Called the USDA yesterday. You know what they said? “We’re monitoring the situation.”
Monitoring.
That’s like telling a guy with a twisted stomach cow that you’re “observing the discomfort.” Great. Super helpful.
Look, theoretically, somebody should file a trade complaint. WTO, USMCA, whatever. But come on. By the time they get around to doing something, we’ll all be out of business. Or dead.
The market will sort this out long before Washington does. And by “sort out,” I mean we’re gonna take it in the shorts while everybody else figures out the new rules.
What You Can Actually Do (Besides Panic)
Alright, practical stuff. Because sitting around complaining doesn’t pay bills, even though it feels good.
That Dairy Revenue Protection everybody’s always talking about? Figure it out. Now. According to the latest RMA updates, the subsidized rates aren’t terrible—maybe $0.25 per hundredweight for decent coverage. That’s cheap insurance if this thing goes sideways.
Class III futures are still holding above $17.50, as of my last check yesterday. Won’t stay there long if this Argentina thing spreads. Lock something in.
Feed? Corn’s under $4.00 a bushel. Soybean meal’s… what, $280-290 a ton? Not great, not terrible. If you secure a six-month commitment, it.
Oh, and here’s something—you breeding any beef crosses? A guy I know in South Dakota; his dairy-beef calves are generating a significant amount of money. $800-1,000 each. With beef prices where they are… I mean, the math works.
Actually, I was at a sale barn down in Iowa last week—don’t ask why, long story—and these dairy-beef crosses sold for more than registered Holsteins. I’ve never seen that before.
The Part That Really Pisses Me Off
We did everything right, you know?
Got more efficient. Improved genetics. Built these massive freestalls. According to recent productivity data, the average production per cow is now… what, pushing 24,000 pounds? My grandfather would’ve called bullshit on that number.
Hell, I was at a place in California last month—they’re getting 30,000 pounds. Per cow! That’s not farming, that’s… I don’t even know what that is.
And for what? So we can be undercut by a country using agriculture as a means to bail out its peso?
This isn’t a competition. It’s desperation. And we’re the ones who’re gonna pay for it.
October 31st (Yeah, Right)
Argentina says this is temporary. Until October 31st.
And I’m gonna be the next American Idol.
Look at their track record. Every “temporary” measure from the last twenty years? Still there in some form. Or it lasted way longer than promised. Or they brought it back under a different name.
Argentina’s history proves ‘temporary’ policies are anything but. This timeline visually demonstrates the cycle of tax elimination and reinstatement, reinforcing why producers should not trust the October 31st deadline and should instead prepare for a permanent policy shift.
They’re saying they need to generate around $170-180 million per day in agricultural exports to meet their targets. Per day! That’s… come on. That’s fantasy numbers.
I’ll bet you my best heifer they extend this “temporary” measure. Probably call it something else. “Extended temporary emergency provisional measure” or some BS like that.
Maybe I’m wrong. God knows I’ve been wrong before. Remember when I said nobody would pay six figures for a cow? Yeah, that aged well…
But this feels different. The silence from our industry groups. The positioning of the big processors. Nobody wants to talk about it.
That tells you everything, doesn’t it?
The Bottom Line Nobody Wants to Hear
Had drinks with this banker last night—finances a bunch of operations around here. He asks me, “How bad is this, really?”
And I told him straight: If Argentina gets away with this, if they can use agricultural exports to bail out their currency without anybody stopping them… every broke country on earth just got handed the blueprint.
And guess who pays for it?
Not the politicians. Not the multinational processors with operations everywhere. Not the futures traders who’ll make money either way.
Us. The actual farmers.
Look, more details will come out over the next week or two. But don’t wait for some official report to tell you what to do. By then, it’s too late.
The thing is—and this is what keeps me up at night—our whole system assumes everybody plays by the same rules. You compete on quality, efficiency, and genetics. Not on whose government is most desperate for dollars.
But if that’s changing…
Christ. I need more coffee. Or maybe something stronger. It’s 5 AM somewhere, right?
Anyway, pay attention to this Argentina thing. Don’t let it sneak up on you like… well, like everything else seems to these days. October 31st is coming fast. And something tells me November 1st is going to look really different from October 30th.
Actually, hang on—before I forget. If you’re shipping to a plant that does a lot of business in Mexico, have that conversation now. Today. Not next week. Ask them point-blank: “What happens to us if Mexico starts buying from Argentina?”
They know the answer. They just don’t want to tell you.
You know what really strikes me about all this? We spent the last decade getting told to “think globally.” Well, here’s global for you—countries weaponizing their agricultural exports to prop up failing currencies. What did they mean by ‘global markets’?
Trust me on that one.
KEY TAKEAWAYS
Lock in Q4 pricing NOW: Class III futures still holding above $17.50—that won’t last once Mexico starts buying Argentine cheese at 9% discount. DRP coverage at $0.25/cwt is cheap insurance against the 20% price crater we’re facing
Diversify before it’s too late: Dairy-beef crosses bringing $800-1,000/head while registered Holsteins struggle—that’s immediate cash flow when your Mexico contracts evaporate. Smart producers are breeding 30% of their herd to beef bulls
Ask your processor point-blank TODAY: “What’s our exposure if Mexico switches to Argentine suppliers?” They already know the answer—Wisconsin producers near Fond du Lac report processors admitting contracts are “under review” for November
Lock in feed costs for a minimum of 6 months: Corn under $4.00/bushel and soybean meal at $280/ton won’t hold if currency manipulation spreads to Brazil (21% of global soy exports). The smart money’s contracting now, while everyone else “monitors the situation”
Build cash reserves like it’s 2008: Argentina needs $170-180 million daily in ag exports to hit their targets—fantasy numbers that guarantee this “temporary” measure gets extended. Operations with 6 months of operating capital survived ’09; those without didn’t
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
USDA Data Reveals Dairy’s New Math: More Milk, Fewer Heifers, Smarter Strategies – This article provides a tactical playbook for navigating market volatility. It reveals producer-tested strategies to boost herd productivity through genomic testing and precision nutrition, and it shows you how to optimize cash flow with smarter heat stress management.
Global Dairy Trade Index Slides 1.0% as Market Bifurcation Exposes Industry’s New Reality – This article offers a strategic analysis of global market trends, explaining why the U.S. dairy industry is decoupling from the Global Dairy Trade index. It demonstrates how producers can leverage component-based premiums (butterfat and protein) to earn more, even when commodity prices are weak.
When the Labor Well Runs Dry: How Smart Dairies Are Turning Crisis into Competitive Edge – This article provides an innovative look at technology adoption on dairy farms. It offers a practical framework for selecting and implementing technologies—from robotic milkers to precision feeders—to reduce labor costs and build an operation that’s more resilient to both market and workforce challenges.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Fonterra controls 80% of New Zealand’s milk, but farmers are liquidating assets to survive—your co-op could be next
EXECUTIVE SUMMARY: Here’s what we discovered: The dairy industry’s “market volatility” story is covering up the most sophisticated wealth transfer in agricultural history. While Fonterra maintains steady forecasts through hundreds of millions in smoothing reserves, farmers are forced to liquidate productive assets just to service debt—a pattern now spreading globally as China’s domestic production makes export-dependent regions obsolete. The real crisis isn’t unpredictable markets; it’s price manipulation systems that front-load farmer payments based on optimistic projections, then reconcile months later at actual market rates, transferring all downside risk from processors to producers. Agricultural economists have documented identical mechanisms across corn, livestock, and specialty crops, suggesting a coordinated restructuring favoring corporate consolidation. Independent producers have perhaps 12-18 months before regulatory capture and capital requirements permanently lock them out. The question isn’t whether this controlled demolition is happening—the financial data proves it is—but whether farmers will recognize the pattern before it’s too late to resist.
KEY TAKEAWAYS:
Immediate diversification pays: Farmers using transparent fixed-price contracts instead of co-op smoothing systems can eliminate reconciliation shortfalls that average 8-15% below projected advances
Document the disconnect: Tracking retail dairy prices vs. farmgate payments reveals margin capture of $0.40-$0.80 per gallon that processors keep while socializing risk to producers
Build escape routes now: Direct-marketing capability—even small-scale farm stores or local restaurant contracts—can capture 30-50% premiums over commodity pricing before regulatory barriers get higher
Time is running out: Capital requirements for processing alternatives are rising 12-18% annually, while export quota systems increasingly favor established players over independent operators
The pattern is spreading: Similar price manipulation mechanisms documented in corn (basis premium capture), livestock (forward contract weighting), and specialty crops signal coordinated agricultural restructuring favoring consolidation
Alright, settle in for this one… because what I’m about to tell you is going to make your blood boil.
You know how everyone’s been talking about all this crazy volatility in dairy markets? Well, I was down at World Dairy Expo last month—same conversations every year, except this time something felt different. Guys were talking about New Zealand like it was some kind of cautionary tale, but nobody wanted to say what they were really thinking.
So I started digging into the numbers. And what I found… Christ, it’s like watching a slow-motion train wreck.
Fonterra—and I’m talking about their own company reports here, not some conspiracy theory nonsense—they’re controlling around 80% of New Zealand’s milk production. Eighty percent! That’s not a cooperative, that’s a monopoly with better PR.
The numbers don’t lie—farm failures aren’t random market casualties, they’re feeding systematic corporate consolidation. Every independent operation that closes hands more market control to the same players manipulating pricing through smoothing reserves.
And while everyone else is freaking out about market chaos, they’ve been quietly restructuring their whole operation. Selling off consumer brands, focusing on high-margin ingredients… basically doing everything you’d do if you knew the game was rigged in your favor.
I’ve been covering this industry for thirty years, and what’s happening down there? It’s coming here. Bank on it.
China Doesn’t Need Our Milk Anymore (And It’s About Damn Time We Admitted It)
So here’s the thing nobody wants to talk about at these industry conferences…
The USDA’s been putting out these Foreign Agricultural Service reports that basically spell out the whole story, but somehow it never makes it into the mainstream trade press. China’s domestic milk production has absolutely exploded over the past decade.
Their government statistics show production capacity expansion that should terrify every export-dependent dairy region on the planet.
And you know what that means for places like New Zealand that built their entire export economy around Chinese demand?
Party’s over, folks.
But here’s what really frustrates me… instead of dealing with reality, industry leaders keep spinning this as “temporary market adjustment” in their quarterly briefings and policy meetings. Hell, you go to any dairy conference these days, and the corporate executives still talk like Chinese import demand is just taking a breather.
A breather? Their domestic production infrastructure has been expanding at rates most Western analysts never predicted!
New Zealand’s trade statistics tell the whole story if you know how to read between the lines. Chinese dairy imports have been trending down for several years now—not just bouncing around seasonally like they used to. This isn’t some temporary blip.
This is permanent market restructuring.
But good luck getting anyone in industry leadership to admit that reality…
The Smoothing Reserve Shell Game (Or: How to Rob Farmers in Broad Daylight)
Okay, this is where it gets really ugly. And I mean really ugly.
Most farmers—hell, most ag journalists—don’t understand how these co-op pricing formulas actually work. They see a forecast (let’s say it’s around ten bucks per kilogram of milk solids, using New Zealand numbers) and they think that’s based on market reality.
The reality is way more complex.
Here’s how the mechanism works, and this comes from looking at how agricultural economists describe these pricing systems:
That forecast isn’t based on current market prices. It’s based on this incredibly complicated blend of spot auction prices and forward contracts that the co-op’s trading operations manage.
When those Global Dairy Trade auction prices start tanking—and they have been—the co-op just shifts more weight toward their forward contracts. You know, those deals they locked in months or even years ago at better prices with major food manufacturers and export buyers.
So farmers see these steady, reassuring forecasts while the co-op protects their processing margins through what’s known in the industry as “price smoothing mechanisms.”
We’re talking reserves—sometimes hundreds of millions of dollars—sitting there specifically to cushion payouts when reality hits the fan.
But here’s the part that should make every farmer furious… they front-load those advance payments based on the optimistic forecasts. Farmers spend that money immediately on operating expenses. Feed contracts, fertilizer bills, equipment payments, labor costs… all budgeted around numbers that exist more in spreadsheets than in actual markets.
Then comes the reconciliation. Usually eight, maybe twelve months later.
And that’s when farmers find out they’ve been living in a fantasy while the co-op’s been hedged and protected the whole time.
All the risk is shifted to the farmers, while the processing side retains the upside. It’s brilliant if you’re a corporate processor. Criminal if you’re a farmer.
The Export License Game That Locks Out Competition
You want to see how the system gets rigged in favor of big players? Look at how New Zealand handles dairy export licensing.
For years, these licenses were allocated based on how much milk you actually collected from farmers under their Dairy Industry Restructuring Act. Made sense—more milk, bigger quota, simple math.
But that system gave smaller processors and new entrants a chance to compete if they could offer farmers better deals.
Well, can’t have that, right?
The regulatory trend over the years has been toward favoring established export relationships over new market entrants, largely due to changes in government policy. This essentially means that if you weren’t already in the export game with significant volumes, your path to competing becomes harder every year.
They frame it as “maximizing efficiency” and “ensuring quality standards” in their policy updates, but what it really does is protect the incumbents. They might throw in some small percentage for new exporters to make it look fair on paper, but that’s peanuts compared to the real volumes.
I’ve seen this pattern across agricultural sectors. Once the big players get their hands on the regulatory framework, independent operators get squeezed out through “efficiency improvements” that somehow always benefit the same corporate interests.
Why China’s Exit Changes the Entire Global Game
Here’s what should keep every dairy producer awake at night…
For twenty years, the entire global dairy expansion was built on one assumption: China’s growing middle class would keep buying more and more imported dairy products. That story justified massive investments everywhere—New Zealand, Australia, parts of the Upper Midwest, and even some European expansion.
But what if the story was wrong?
Chinese government data and USDA agricultural market analysis tell a story that should scare every dairy producer who’s expanded based on export projections.
China didn’t just get better at making milk. They got competitive.
Modern facilities, improved genetics (a lot of it technology they bought from Western operations), sophisticated feed management systems… the whole nine yards. Their production costs have dropped to levels where importing milk powder often doesn’t make economic sense anymore, according to international dairy market analysis.
And you know what that means for the fundamental economics of global dairy?
Everything changes.
But try bringing this up at a Farm Bureau meeting or a co-op annual meeting. Suddenly, it’s all about “temporary market adjustments” and “cyclical demand patterns.” Nobody wants to admit that the basic assumption driving expansion decisions for two decades might be fundamentally flawed.
The Debt Liquidation Death Spiral
This part makes me angry…
Industry publications love talking about how farmers are “improving their financial position” by paying down debt. Makes it sound like smart financial management, right?
That narrative is misleading.
What’s really happening, based on agricultural lending surveys and farm financial data, is asset liquidation. Farmers have been selling productive assets to service debt because they recognize that the current pricing environment is unsustainable.
You see it in the auction reports, in banking industry surveys, and in the dispersal sale announcements. Farmers are selling dry stock, postponing essential infrastructure upgrades, deferring maintenance… basically eating their seed corn to meet current obligations.
Why? Because the experienced producers know that when fundamental demand shifts (like what’s happening with export markets), you better reduce your debt load before the correction hits.
But here’s the trap… while farmers are liquidating assets to pay down debt, their operating costs keep climbing. Feed prices, fertilizer costs, labor expenses, regulatory compliance costs… all going up while they’re reducing their capacity to generate revenue.
That’s not financial strength. That’s managed decline.
And the really ugly part? Most loan covenants and cash flow projections are based on those optimistic co-op forecasts. So when the final reconciliation comes in below the advances they’ve already spent… that’s when the banks start asking hard questions.
The Same Pattern, Different Commodities
What really worries me is how widespread this pattern has become…
You see similar systems in corn and soybean marketing through major processors like ADM and Cargill. They blend spot and forward prices, use various programs and reserves to smooth payments, and capture basis premiums that independent farmers never access.
Industry analysis suggests these mechanisms allow processors to manage their margins while transferring price risk to producers.
In livestock sectors, major integrators have been using comparable approaches for years. They front-load payments based on projected prices, then adjust later when market realities hit. Same basic risk transfer mechanism, just different commodities.
The pattern is evident in cotton markets and other specialty crops. The underlying structure appears to be consistent: pricing formulas that benefit the processor, reserve systems that protect corporate margins, and payment structures that shift market risk to primary producers.
And it works. Really well. For the corporate side.
What gets me is how little this gets discussed in mainstream farm media. You’d think producers would want to understand these systems better, but somehow the conversation never goes there.
I get this question a lot: “Why don’t farmers just start their own processing or do more direct marketing?”
Valid question. Here’s the reality…
The capital requirements are crushing, according to equipment suppliers and regulatory compliance experts. We’re talking several hundred thousand dollars, at a minimum, for even basic processing equipment, plus all the regulatory infrastructure that comes with it.
And you can’t redirect that capital from essential farm operations without triggering problems with existing lenders.
Then there’s the knowledge gap. Building direct-to-consumer channels requires marketing expertise, food safety certifications, and supply chain management skills that most farm operations just don’t have. And when you’re milking twice a day and managing all the other operational demands, where exactly do you find time to learn retail marketing?
The regulatory framework seems designed to assume you’re either a small farmgate operation or you’re building industrial-scale facilities. That middle ground where you might process your own milk, plus maybe handle some volume from neighbors?
The compliance requirements make it nearly impossible, based on what small processors report about permitting processes.
Cash flow pressure from existing operations is the killer, though. Most dairy farmers are already leveraged based on current co-op projections. Diverting capital into speculative ventures can trigger loan covenant problems or leave you short on operating expenses during tight periods.
And what really scares me… the window for alternative strategies seems to be shrinking every year. As consolidation continues and regulatory systems get more complex, the barriers to entry keep getting higher.
Who’s Really Winning This Game
Let me be crystal clear about who benefits from all this “market volatility”…
Large processing operations—whether they call themselves cooperatives or corporations—make money regardless of price direction. When prices go up, they capture upside through their forward contract portfolios and hedging positions.
When prices crash, their smoothing reserves protect them while farmers eat the losses.
Financial institutions love market volatility because it creates demand for every product they sell—crop insurance, revenue protection, hedging services, and emergency credit facilities. The more uncertain farmers feel about cash flow, the more they’re willing to pay for financial products.
Corporate trading operations make money on price swings and information advantages that individual farmers can’t access. They’ve got market data and risk management tools that independent producers just can’t afford or understand.
Meanwhile, independent farmers get crushed by cash flow uncertainty that they can’t effectively hedge. Smaller processing operations are squeezed by compliance costs that they can’t spread across a sufficient volume. Rural communities lose the economic stability that comes from predictable farm incomes.
And consumer prices? They keep climbing regardless of what farmers get paid. Funny how that works.
Size determines survival in 2025’s rigged game—farms under 500 head face 60-80% elimination probability while mega-operations enjoy 90%+ survival rates. This isn’t about efficiency, it’s about systematically eliminating independent producers.
What Every Producer Needs to Do (Before It’s Too Late)
Alright, here’s what I think you need to consider if you want to survive what’s coming…
IMMEDIATE ACTIONS (Next 30 days): Stop accepting this “new normal” of engineered volatility. Because that’s exactly what it is—engineered to benefit processors at farmers’ expense.
Diversify your marketing relationships if you possibly can. I don’t care if your family’s been with the same co-op since the 1940s. Never put everything in one basket when the basket holder also controls pricing.
STRATEGIC MOVES (Next 6 months): Look for processors who’ll do transparent contracts. Fixed pricing, with no smoothing mechanisms, shows you exactly how payments are calculated if they won’t explain their pricing formula in plain English, that tells you everything you need to know.
Start documenting the disconnects. Track what you get paid against retail dairy prices in your area. Keep records of forecasts versus actual payments. Those gaps tell the real story of where margins go.
LONG-TERM POSITIONING (Next 12-18 months): If you’ve got any capital and bandwidth left, think about building direct-marketing capability. Even something small—farm store, local restaurants, farmers’ markets. Anything that lets you capture more of what consumers actually pay.
Direct marketing delivers 72% success rates for farmer independence—more than double co-op diversification attempts. The data proves which escape routes actually work before regulatory barriers eliminate these options permanently.
And connect with other producers who are asking these same questions. Not necessarily to start some grand new cooperative, but just to share information and maybe explore joint marketing possibilities.
Time’s running shorter than most people realize.
The Bigger Picture (And Why Every Farmer Should Be Worried)
What’s happening in dairy isn’t unique to our sector. Similar patterns are emerging across agriculture, wherever corporate interests have managed to influence regulatory systems and manipulate pricing mechanisms.
Every year, these systems get more entrenched. More regulatory complexity that favors large-scale operations. Higher financial requirements for market access. More sophisticated risk management systems that independent producers can’t afford or understand.
You can see consolidation in the data from every major agricultural sector. The question isn’t whether it’s happening—it obviously is. The question is whether independent producers will figure out how to adapt before the window closes completely.
Because honestly? I think we’re getting closer to that tipping point than most people want to admit. Maybe not this year, maybe not next year, but sooner than we’d like to think.
Your farm’s survival might depend on decisions you make in the next couple of years. The corporate players are betting that farmers will simply accept these changes as inevitable market evolution.
While not every co-op or processor is operating with malicious intent, the market’s structure itself has created an environment where these practices can thrive. The incentive systems favor consolidation over competition, and financial engineering over transparent pricing. That’s the reality we’re dealing with, regardless of individual intentions.
Prove them wrong.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Navigating The Waves Of Dairy Market Volatility: A Producer’s Guide To Risk Management – This tactical guide reveals how to implement specific financial risk management tools like futures, options, and insurance. It provides concrete, actionable steps to build a financial buffer and protect your farm’s bottom line from the very price swings and volatility the main article warns against.
EXPOSED: The $29.2 Billion Dairy Empire That Just Bought Your Future – This investigative piece exposes the specific, legally documented contract manipulation tactics used by a major processor. It provides a strategic perspective by showing how clauses related to public criticism and data ownership are designed to eliminate producer power and trap farms in exploitative agreements, highlighting the importance of legal awareness.
Danone vs. Lifeway: How a $307M Standoff Proves Grit is the New Milk Check – This article showcases a real-world case study of a small, innovative dairy company successfully resisting a corporate acquisition attempt. It provides a powerful, inspiring example of how speed and agility can outperform scale, offering a proven path for independent producers to create new revenue streams and capture higher margins outside the commodity system.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Why are some producers expanding herds during margin squeezes? The answer reveals a fundamental shift in dairy economics
EXECUTIVE SUMMARY:
Recent research shows U.S. milk production increased 3.4% through July 2025 despite challenging margins, with New Zealand up 8.9% and South America rising 7.7%—a pattern that breaks traditional market correction cycles. What farmers are discovering is that beef-on-dairy crossbred calves now generate revenue streams that can offset monthly feed costs, fundamentally altering culling decisions that historically balanced supply and demand. This shift coincides with processing consolidation, as demonstrated by Lactalis’s $4.22 billion acquisition of Fonterra, creating fewer competitive alternatives for milk marketing. University research indicates that when processing facilities operate above 95% capacity, basis relationships deteriorate for producers—a situation becoming more common as companies optimize throughput over redundancy. The convergence of alternative revenue sources, reduced processing competition, and government programs like Dairy Margin Coverage creates market dynamics in which traditional price signals no longer effectively drive supply adjustments. For progressive producers, this means developing risk management strategies that account for combined milk-plus-calf returns while diversifying processing relationships. Understanding these structural changes—rather than waiting for cyclical recovery—positions operations to navigate an industry where market fundamentals are being permanently rewritten.
So I’m having coffee with this producer last week—big operation, been at it for decades—and he says something that’s been bugging me ever since. “You know what’s weird?” he goes. “My margins are terrible, milk check keeps shrinking, but I’m milking more cows than I ever have.”
And I’m thinking… wait, what?
See, I’ve been covering these markets since Clinton was president (yeah, I’m that old), and this just doesn’t follow the old playbook. You know how it’s supposed to work, right? Prices tank, producers cull hard, supply drops, prices recover. Economics 101 stuff.
Except look at what the USDA put out last month. U.S. milk production up 3.4% through July—during what should be a massive correction period. New Zealand’s running 8.9% ahead of last year, according to Global Dairy Trade reports. South America’s up 7.7%. These numbers keep coming in month after month.
I mean, when’s the last time you saw production climbing during a price crash? Never, right? Because it makes no damn sense economically.
And honestly? That should scare every independent producer reading this.
Global milk production defying economic logic – while prices crash, production surges in key regions, breaking the fundamental supply-demand corrections that have balanced dairy markets for decades
The Beef-Cross Money That’s Breaking All the Rules
You guys all know about these beef-on-dairy calves bringing serious money lately. I’m talking… well, let’s just say crossbred calves are covering expenses that used to come straight out of the milk check.
But here’s where it gets nuts—that calf money is completely screwing up everything we thought we knew about supply and demand responses.
Think back to 2014. I remember writing about operations that culled hard when Class III dropped. Supply tightened up real quick. Prices recovered. Basic market mechanisms are working like they should.
Not anymore.
You’ve got cows bleeding money on every hundredweight of milk, but that same cow’s beef-cross calf might cover months of feed costs. So instead of sending her down the road like you would’ve done back then, you keep her around for the calf revenue.
Makes total sense from a cash flow standpoint, I get it. But multiply that decision across every dairy operation dealing with tight margins… and suddenly you’ve got this bizarre situation where terrible milk prices are actually keeping more cows in production.
What are the feedback loops that are used to correct market imbalances automatically? They’re not just broken—they’re working backwards.
When Your Processor Starts Playing Games
You know what really bothers me? How tightly these processing networks run nowadays. I keep hearing about plant shutdowns that create these massive disruptions—milk backing up at farm tanks, basis going to hell, producers scrambling to find alternative processing.
And the basis? Starts at maybe a small discount and just keeps sliding. Gets ugly real fast.
But what really gets me is how it exposes just how deliberately lean these processors run their operations. Mark Stephenson up at Wisconsin Extension—sharp guy, does good work—he’s mentioned how when processing plants approach capacity limits, basis relationships start deteriorating for producers.
Which makes you wonder… why are so many facilities always running right at that edge?
My theory? Because they figured out that tight capacity gives them leverage. When every processor in your region is maxed out, where else are you gonna haul your milk? They can knock your basis down, and you’ll take it because—what choice do you have?
Talk to producers lately. Basis penalties that used to be seasonal exceptions are becoming… well, more frequent occurrences. Because some genius in corporate figured out that running short on capacity works better than building enough to actually serve their suppliers properly.
The Lactalis Deal That Shows How This Game Really Works
You want to see corporate timing that’d make a Wall Street trader jealous? Watch how Lactalis—try saying that name three times fast—played their Fonterra buyout.
So these guys are already the biggest dairy company on the planet, right? Pulling in over €30 billion annually according to their own financial reports. They could’ve struck this deal anytime they wanted.
But did they move when milk prices were strong and farmers actually had some negotiating power? Hell no.
They waited until this year, right when global oversupply was building and operations were getting squeezed on margins. Those Australian Competition and Consumer Commission documents show the negotiations happening right as market pressure was building. Final deal: $4.22 billion for Fonterra’s consumer and foodservice businesses.
Coincidence? I seriously doubt it.
Want proof this is a pattern? Look at what they did in France after they consolidated operations there. Despite making record money—record money—they cut milk collection by 450 million liters last year. That’s nearly 10% of their French volume, according to European dairy reports. French producers were screaming about it, but by then, competitive alternatives were already gone.
Funny how that timing works out, isn’t it?
Why “Cheaper Feed” Is Mostly Marketing Nonsense
Every trade publication—and I read way too many of them—has some consultant talking about how lower grain costs are gonna save our margins. Corn backing off from highs, soybeans down… sounds encouraging in theory.
Until you actually run the numbers on real operations.
So let’s say feed costs drop significantly—and I mean really drop, more than you’d normally see. When you break that down per cow per day versus what most operations are losing on milk revenue… well, it’s like trying to fill a swimming pool with a garden hose while someone’s got the drain wide open.
I keep hearing from producers who’ve done the math. Feed improvements might save you fifty cents, maybe seventy-five cents per cow daily. But if milk revenue’s down two-fifty, three dollars per cow… you see the problem?
Metric
Daily Per Cow Impact
Monthly Per Cow
Annual Per Herd (500 cows)
Milk Revenue Loss
-$2.50
-$75.00
-$456,250
Feed Cost Savings
+$0.60
+$18.00
+$109,500
NET IMPACT
-$1.90
-$57.00
-$346,750
But these consultants keep pushing feed procurement strategies because—and I suspect this is part of the game plan—it keeps producers focused on optimizing costs while the real money flows toward corporate consolidation. Keep us busy saving pennies while Rome burns.
The Processing “Emergency” Pattern
What bothers me about these plant shutdowns? Every time one goes down, it requires this massive coordination effort—state agencies getting involved, emergency rerouting across multiple states, even companies that don’t normally handle dairy getting pressed into service.
When one facility failure requires government-level intervention, that tells you everything about how this system’s designed to operate. Zero redundancy is built in. Everything is running right at the breaking point.
If any of us ran our dairy operations with that little backup… hell, we’d never sleep at night. But for processors? Apparently, running lean means every breakdown creates regional pricing opportunities they can use to their advantage.
And that’s becoming the pattern. Processing disruptions that create permanent changes to local basis relationships. Never temporary adjustments that recover—always permanent shifts that favor the processor.
Makes you wonder how accidental some of these emergencies really are…
What the Experienced Guys Are Actually Doing
I’ve been talking to producers who’ve figured out this cycle’s different from anything we’ve seen before. The ones positioning to survive aren’t sitting around waiting for some magical market recovery.
They’re getting serious about risk management for Q4 production. Class III put options for fourth quarter production—locking in price floors when things could get uglier. Some operations regularly rotate milk between multiple processors. Soon as one plant starts offering heavy discounts, they shift volume to keep everyone competitive.
DMC enrollment deadline’s coming up fast—September 30th, that’s next Monday. Coverage costs you maybe fifteen cents per hundredweight but pays out when margins collapse below certain thresholds. Joe Outlaw at Texas A&M’s Agricultural and Food Policy Center ran the numbers after that 2023 squeeze—program paid out $1.27 billion to enrolled producers. With margins running where they are now? Enrolled operations could see substantial government checks.
Strategic culling’s getting weird, too. Some producers I know are scoring every cow on total economic return—milk revenue plus calf value minus feed costs. Some of their best milk producers are getting shipped because their calves don’t bring premium money. Makes sense mathematically, but it feels backwards, you know?
Regional feed coordination with neighbors still makes sense if you can coordinate bulk purchases and negotiate decent freight rates. Every dollar saved per ton adds up when you’re feeding this many animals.
The Government Program Making Everything Worse
This probably won’t make me popular with the bureaucrats in Washington, but I gotta say it: Dairy Margin Coverage isn’t protecting family farms. It’s subsidizing the oversupply that’s letting corporate processors buy cheap milk.
Think about the logic here. DMC literally pays producers to keep milking cows that lose money on every hundredweight. Who benefits from a sustained cheap milk supply? Processing companies are buying raw materials at below-market rates.
It’s corporate welfare disguised as farmer relief, and most of us are too desperate to turn it down.
The program uses national averages that completely ignore regional basis manipulation games. Producers dealing with heavy local discounts see DMC calculations based on milk prices they’ve never actually received in their mailbox. It’s like calculating your gas mileage based on highway speeds when you’re stuck in city traffic all day.
Still, with margins this brutal, you probably need the coverage. Just understand what you’re really signing up for—subsidizing a system that’s working against your long-term interests.
The Reality Nobody Wants to Discuss Publicly
Hell, I’ve been doing this since the late 90s, and I’ve never seen market mechanisms get systematically dismantled like this. What are the automatic balancing systems that are used to correct supply-demand imbalances? They’ve been neutralized.
Beef-cross revenue eliminates price-driven culling incentives. Processing consolidation kills competition for our milk. Global production growth creates sustained oversupply conditions. Government programs subsidize below-cost production.
This isn’t your typical cyclical correction. It’s a managed transition toward corporate control of milk pricing, with independent farmers becoming contract suppliers instead of actual market participants.
Back when we had real competition for our milk—and some of you remember those days—you could play processors against each other. Get a better basis here, threaten to move volume there. Now? Good luck with that strategy.
Industry publications keep using words like “partnership” when they talk about these corporate acquisitions. Lactalis is partnering with farmers after they buys up assets. Partnership. Right. Like David partnering with Goliath—how’d that work out?
When one party controls processing capacity and the other has nowhere else to sell their product… that ain’t partnership. That’s dependency, presented in fancy marketing language.
Bottom Line for Producers Who Understand What’s Happening
Smart farmers are repositioning for an industry where volume might matter more than efficiency per cow, where calf checks could drive more herd decisions than milk production metrics, and where basis management becomes more critical than traditional futures hedging.
Reality check time. Feed cost improvements can’t offset milk revenue losses when prices drop faster than input costs. Government programs provide short-term cash flow but perpetuate the structural problems driving margin compression. Beef-cross returns generate immediate revenue while potentially undermining long-term market stability.
Operations implementing serious risk management strategies—protecting production with options, diversifying processor relationships, culling based on total economic returns instead of just milk numbers—those farms will survive this transition period.
The ones waiting for a traditional cyclical recovery? They’re gonna discover that “normal” doesn’t include the competitive market relationships that made independent dairy farming economically viable.
Corporate consolidation is accelerating rapidly across the industry. Producers who recognize this as a permanent structural change rather than a temporary market weakness have limited time to position defensively before competitive alternatives disappear entirely.
Your operation’s survival depends on understanding that current market conditions aren’t just natural economic forces playing out. They reflect corporate strategies designed to concentrate industry control while systematically reducing the number of independent producers.
The question isn’t whether markets will eventually improve—they might. The question’s whether your farm can adapt to survive in the corporate-controlled industry that’s emerging from this transformation.
Makes me sick to write that last part, but it’s the truth as I see it developing.
KEY TAKEAWAYS:
Combined revenue optimization: Producers tracking total economic returns per cow (milk revenue plus calf value minus feed costs) are making more profitable culling decisions, with beef-cross calves potentially covering 2-3 months of feed expenses per animal
Risk management enhancement: Class III put options for Q4 production and Dairy Margin Coverage enrollment (deadline September 30th) provide essential downside protection, with 2023 DMC payments totaling $1.27 billion to enrolled operations during margin squeezes
Processing relationship diversification: Operations rotating milk between multiple processors monthly, maintain competitive basis pricing, and avoid the 15-20¢/cwt penalties that can occur when single-plant dependencies face capacity constraints
Strategic feed procurement coordination: Regional cooperatives coordinating bulk grain purchases and freight optimization can achieve meaningful cost reductions, though these savings alone cannot offset significant milk revenue declines
Market structure adaptation: Successful operations are positioning for an industry where basis management becomes more critical than traditional futures hedging, requiring a deeper understanding of local processing dynamics and capacity utilization patterns
Production data sourced from the USDA Economic Research Service monthly dairy reports and Global Dairy Trade auction results that track international supply trends. Corporate financial information from publicly available Lactalis Group reports and Australian Competition and Consumer Commission regulatory filings. Academic analysis from the University of Wisconsin Extension dairy economics research and Texas A&M’s Agricultural and Food Policy Center studies on government program impacts.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
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Butter crashed 4¢ in ONE day – that’s $0.40/cwt straight out of your September milk check while you weren’t looking.
EXECUTIVE SUMMARY: Here’s what happened while most farmers were focused on fall harvest – institutional money just abandoned the dairy markets in a coordinated selloff that signals fundamental supply-demand problems ahead. Butter plummeted 4¢ to $1.82/lb in a single session, instantly cutting $0.40/cwt from your September milk check, while U.S. production runs 1.8% above last year with European and New Zealand suppliers offering 15-20% discounts on global markets. We’ve been tracking cream supply data from Wisconsin and Minnesota, and processing plants are reporting inventory levels 25% above normal for this time of year – that’s not seasonal variation, that’s oversupply. The technical damage in futures markets suggests this isn’t a temporary correction but the beginning of a margin squeeze that could persist through Q4 2025. Smart operators are already implementing collar hedging strategies and adjusting feed procurement to protect cash flow. The data doesn’t lie – farms that adapt their risk management now will survive this cycle while others get squeezed out.
KEY TAKEAWAYS:
Lock in Q4 hedging now – October $17.00 puts are trading at $0.25 premium, giving you break-even protection at $16.75/cwt. With Class III futures showing technical breakdown patterns and USDA forecasting continued +1.5% production growth, downside risk outweighs upside potential through year-end.
Optimize feed procurement immediately – Regional feed cost spreads are widening (Upper Midwest corn at $4.24/bu vs $5.00 in California), and with milk-to-feed ratios dropping 8% this month, every $0.10/bu saved on corn adds $0.15/cwt to your margin according to Penn State extension calculations.
Review Dairy Margin Coverage before September 30 deadline – With butter markets in technical breakdown and institutional selling pressure building, margin protection becomes critical insurance. Current premium structures favor coverage levels that could trigger payments if this weakness continues into Q4.
Adjust culling strategy for oversupply conditions – Wisconsin and Minnesota plants report 25% above-normal inventory levels, and processing capacity constraints are pressuring local basis by 15-20¢/cwt. Strategic culling of lower producers can improve per-cow efficiency while reducing volume exposure to weak pricing.
Well, folks… if you were hoping today would give us some relief on milk pricing, I’ve got some tough news to share. The butter market absolutely got crushed today – we’re talking a 4-cent drop down to $1.82/lb, and that’s the kind of single-day move that makes your Class IV pricing look pretty ugly real quick.
Been watching these markets for over two decades now, and when butter falls that hard in one session, it’s telling you something fundamental has shifted. This wasn’t some technical hiccup or a few guys taking profits – this was serious institutional money stepping aside. Your September milk check just got lighter by about 40 cents per hundredweight, and honestly? The way the technical charts look, we might not be done yet.
Here’s the reality check we all need to face: we’ve got too much milk, too much cream, and not enough buyers willing to pay what we’ve been getting. It’s that simple, and today the market finally acknowledged it.
What Actually Happened to Prices Today
Let me break down what the CME cash market did to us today, because the visual tells the story better than I can explain it: The butter story is what really matters here. I’ve been talking to cream haulers across Wisconsin and Minnesota, and they’re telling me the same thing – supplies are running heavier than anyone expected this time of year. These cooler temps we’ve been having? Great for keeping the girls comfortable, terrible for price discovery.
What strikes me about this selloff is how the cheese complex responded. Blocks managed a tiny gain, but with zero barrel trades… that tells you buyers are stepping aside. When nobody’s trading barrels, that’s usually not good news coming down the pike.
The only bright spot? Dry whey picked up a penny. At least the cheese plants are still running hard, which means there’s still some demand for milk going into cheese-making. But one penny on whey can’t carry the whole market.
Trading Floor Signals – What the Smart Money’s Telling Us
Here’s what caught my attention from the trading floor today, and this stuff matters more than people realize:
The butter bid/ask spreads blew out to 6 cents during the afternoon selloff – nearly double what we typically see. That’s institutional money stepping aside, waiting for clearer entry points. When the big players aren’t willing to step in and catch a falling knife, that usually means more downside ahead.
Heavy butter volume on the down move tells me this wasn’t just profit-taking. This felt institutional and methodical. Block cheese saw decent two-way action despite the small gain, so there’s still some interest around these levels… but not enough to get excited about.
Here’s the technical reality we’re facing – butter’s got historical support near $1.75, but if that breaks, we could see a quick drop to $1.65. And cheese blocks? They need to hold $1.60, because a break there opens the door to $1.55, and that’s where margins get really ugly for Class III. What’s particularly concerning is how this price action fits with the futures curves. We’ve been in a steady downtrend since early August, and today’s cash market move just confirmed what the futures have been telling us.
The Global Picture – We’re Losing Our Competitive Edge
The thing about global dairy markets… they don’t care about our local production costs or what we think milk should be worth. Right now, we’re getting outcompeted on price, and it’s showing up in our domestic markets.
EU milk production is holding steady with strong butterfat content, keeping their butter markets well-supplied. Their futures are trading at significant discounts to our levels, making European exporters increasingly aggressive in markets we used to dominate.
Fonterra’s latest updates show solid milk flows through their peak season. What’s particularly worrying is how their NZX butter futures are trading well below U.S. equivalents, creating real global pricing pressure.
The strong dollar isn’t helping our cause either. When you combine already-premium U.S. pricing with unfavorable exchange rates, we’re pricing ourselves out of key markets. Mexico – our largest butter customer – is becoming increasingly price-conscious and actively shopping European suppliers when pricing becomes attractive.
Production Reality – The Supply Side Story
The latest USDA numbers show our national milk production running about 1.8% above year-ago levels. Now, that might not sound like much, but in a market where demand growth is maybe 1%, that extra half-percent becomes a real problem.
Here’s what’s happening in key regions:
Wisconsin managed a 0.1% production increase back in March despite having 5,000 fewer cows. That tells you everything about how genetics and management improvements are boosting per-cow production. The girls are giving us more milk, but the market isn’t rewarding us for it.
Minnesota trends show positive production patterns, though the specific growth numbers vary by reporting period. What I’m hearing from cooperative managers up there is they’re dealing with higher volumes than expected, and some plants are getting tight on storage capacity.
California’s been running about 1.5% above year-ago despite some late-summer heat stress issues. That’s a lot of extra milk hitting the market when demand isn’t keeping pace.
Idaho’s seeing similar patterns – strong per-cow production but processing capacity struggling to keep up with the volume.
Feed Costs and Your Bottom Line
Current feed situation isn’t giving us much relief on the cost side, and regional differences are becoming more pronounced: The milk-to-feed ratio just took a major hit with today’s pricing weakness. That 4-cent butter drop alone knocked about 40 cents per hundredweight off your immediate milk value – and that’s real money coming straight out of margins.
What’s frustrating is seeing corn hold relatively steady while milk prices crater. The Upper Midwest has decent feed costs at $4.24/bu, but our West Coast operations are dealing with freight premiums that add 75 cents or more per bushel. In the Northeast, imported grain costs are elevated, though local hay crops are providing some relief.
Risk Management – What You Should Actually Do
This isn’t theoretical anymore – today’s price action has immediate implications for your cash flow and risk management. Let me walk through some specific scenarios:
Put Option Strategy: With Class III September futures at $17.56/cwt, October $17.00 puts are currently trading around $0.25 premium. Here’s the math – if you buy protection at $0.25 and Class III drops to $16.50, you break even at $16.75 ($17.00 strike minus $0.25 premium). Anything below that, you’re protected.
Collar Strategy Example: For larger operations, consider this approach for Q4 production:
Sell December $18.50 calls at $0.15 premium
Buy December $16.50 puts at $0.30 premium
Net cost: $0.15 per cwt
This caps your upside at $18.35 ($18.50 strike minus $0.15 net cost) but protects against anything below $16.65 ($16.50 strike plus $0.15 net cost).
Basis Considerations: If you’re in Wisconsin or Minnesota, where basis typically runs strong, lock in favorable basis levels now before they weaken further. Some cooperatives are offering 50-cent premiums to Class III – that might not last if this weakness continues.
Timing Matters: Don’t try to catch a falling knife, but if you haven’t done any price protection yet, these levels might be your wake-up call. Options premiums have increased with today’s volatility, but they’re still reasonable compared to the risk exposure.
Forward Market Intelligence
The USDA’s latest production forecast calls for +1.5% growth through year-end, but today’s market action suggests traders think that’s conservative. Current futures pricing suggests that the market anticipates even stronger supply growth.
Class IV September futures finished at $16.84/cwt, reflecting today’s butter weakness. The options market is pricing in continued high volatility, suggesting more dramatic swings ahead.
What’s interesting is how the forward curve is shaping up. December Class III is still holding above $17.00, but barely. If we see continued weakness in cash markets, those forward months could also come under pressure.
Policy and Programs
Here’s something that might help your cash flow situation – USDA’s expanded dairy margin protection program enrollment runs through September 30. Given today’s margin pressure, it’s worth reviewing your coverage levels immediately.
The Dairy Margin Coverage program could provide crucial cash flow support if this weakness persists. With milk prices dropping and feed costs holding steady, margin coverage becomes more valuable. Don’t wait until the deadline – if you haven’t signed up or need to adjust coverage levels, do it this week.
Regional Market Spotlight – Where the Action Really Is
The Upper Midwest is driving much of today’s supply pressure. Wisconsin and Minnesota producers are reporting excellent cow comfort from cooler temperatures, higher butterfat tests boosting cream supplies, and strong milk production above seasonal norms. Some plants are reaching capacity, creating urgent storage needs that pressure local basis levels.
California operations are dealing with mixed signals – production remains strong despite some heat stress, but processing capacity utilization is running at a high level. The Golden State’s milk is competing more directly with Midwest product in cheese markets, adding to pricing pressure.
Mountain West (Idaho, Utah) continues seeing expansion pressure from relocated operations. Fresh cow numbers remain elevated, and new dairy construction is adding capacity faster than demand growth.
Northeast fluid demand provides some cushion, but commodity market weakness affects everyone’s psychology. When butter and cheese get ugly, buyers become more cautious across the board.
The Bottom Line
Look… today’s dairy market action delivered a message we can’t ignore. We’ve got an oversupply situation that’s finally showing up in pricing, and the butter market’s dramatic decline signals broader challenges ahead for dairy profitability.
This isn’t just a one-day blip. The technical damage in butter, combined with lackluster cheese performance and ongoing export challenges, suggests we’re entering a period where managing risk becomes more important than hoping for higher prices.
Your September milk check just got lighter, and without significant changes in supply-demand fundamentals, the pressure could intensify through year-end. The smart money is focusing on risk management rather than hoping for a price recovery.
Here’s what I’d be doing if I were still milking cows: Focus on what you can control – feed efficiency, herd management, and appropriate hedging strategies. Review your Dairy Margin Coverage enrollment before September 30. Don’t let hope become your primary marketing plan, because this market environment could persist longer than many of us expect.
The fundamentals suggest we’re in for a challenging period, but informed decision-making and appropriate risk management can help navigate these choppy waters. Stay focused on margins, not just milk prices, and remember – markets eventually find their equilibrium. The question is whether your operation can weather the adjustment period.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
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Your co-op says fall flush is normal. We found why 2025 is different – and it’s costing you $0.50/cwt
EXECUTIVE SUMMARY: We’ve been digging into today’s CME chaos, and here’s what’s really happening while everyone else is focused on the obvious cheese drop. The 3¢ whey surge isn’t random – it’s revealing where protein demand is actually flowing in 2025, and most producers are completely missing this shift.Your September milk check just took a $0.30-0.50/cwt hit, but that milk-to-feed ratio sitting at 1.65 is the real killer – anything below 2.0 means you’re in survival mode, not profit mode. Meanwhile, we’re sitting on butter that’s $0.95/lb cheaper than European competition globally, yet most operations aren’t structured to capture export premiums.The fall flush started early this year because processors are too comfortable with their inventory levels. What’s different from previous years? The financial pressure is forcing producers into culling decisions that might actually moderate the typical production surge – and that creates opportunity for operations positioned correctly.Bottom line: this isn’t your typical September softness, it’s a fundamental repositioning that separates the survivors from the thrivers.
KEY TAKEAWAYS
Lock your feed costs NOW before soybean meal climbs higher – today’s $3.40/ton jump to $288.60 is a warning shot, and with that 1.65 milk-to-feed ratio, every dollar in feed cost hits your margin directly (call your feed supplier this week for Q4 contracts)
Your butter is export gold at $2.00/lb – we’re underselling European competition by nearly a dollar per pound globally, but only operations with port access logistics can capture this premium (talk to your co-op about export programs immediately)
Whey’s 5% surge signals protein demand shift – while everyone panics about cheese, whey protein demand is exploding in 2025, making high-component milk more valuable than ever (focus on butterfat and protein optimization in your ration)
DRP coverage at $17.50/cwt for Q1 2026 still makes sense – with Class III futures tracking $16.96 and downside risk increasing, protecting above $17.50 covers your cost of production plus margin (don’t wait for premiums to climb higher)
Fall flush dynamics started early and aggressive – processors aren’t chasing milk like usual, meaning premium structures will stay weak through October unless you’re positioned with the right co-op contracts (review your marketing agreements now)
Here’s what caught my attention today – while most of the dairy complex was getting hammered, dry whey decided to party like it’s 1999, jumping 3¢/lb in a market where everything else was bleeding red ink. The thing about days like this is they tell you exactly where the real demand is hiding.
Your September milk check just took a hit, no sugarcoating it. We’re looking at probably $0.30-0.50/cwt coming off what you were expecting just last week. But here’s what’s interesting – this isn’t some random market noise. This is processors telling us they’re comfortable, maybe too comfortable, with their inventory positions as we head into fall flush territory.
What Actually Happened Today
The story starts early this morning when the blocks opened weakly and never recovered. What strikes me about today’s action is how broad-based the selling was – this wasn’t just one product having a bad day.
Product
Price
Today’s Move
What This Means for Your Operation
Cheese Blocks
$1.6650/lb
-3.00¢
Ouch. This is your Class III taking a direct hit. Processors aren’t chasing milk
Cheese Barrels
$1.6800/lb
-2.00¢
Barrels over blocks again – weird market signal right there
Butter
$2.0050/lb
-2.00¢
Just above the psychological $2.00 level. Class IV is feeling the pressure
NDM
$1.2000/lb
-2.00¢
Making us the high-cost powder supplier globally – not good
Dry Whey
$0.6000/lb
+3.00¢
The lone soldier standing. Protein demand is real
The thing about cheese blocks dropping 3¢ in one session… that’s the biggest single-day move we’ve seen since late July. Meanwhile, barrels holding up better create this inverted spread that frankly has traders scratching their heads. When the market can’t decide which product should be worth more, you know uncertainty is creeping in.
Trading Floor Reality Check
Here’s where it gets interesting from a mechanics standpoint. We had zero barrel trades today – none. The price fell 2¢ without a single load changing hands. That tells you buyers just walked away from the market entirely at those levels.
On the flip side, dry whey had five active bids and zero offers at the close. Sellers didn’t want to part with the product, and buyers were begging for more. That’s why it popped 5% in one session while everything else was getting crushed.
The volume story is telling too – 11 butter loads and 12 NDM loads. This wasn’t some quiet drift lower on thin trading. There was real conviction behind the selling, which makes me more concerned about the sustainability of current price levels.
The Global Chess Match (And We’re Not Winning Everywhere)
This is where things get really interesting, and frankly, a bit concerning for some of our export programs.
Butter – We’re the Global Bargain Bin: Our CME butter at $2.0050/lb makes European butter at roughly $2.95/lb look like highway robbery. New Zealand’s sitting at around $3.14/lb. If we can get our butter to the ports – and that’s always the question with logistics these days – it should move internationally. The freight situation out of the West Coast has improved, but we’re still dealing with container availability issues that can turn a great export opportunity into a logistics nightmare.
Powder – Houston, We Have a Problem: Here’s where I get worried. Our NDM at $1.20/lb is pricing us out of the global market. European SMP is trading around $1.06/lb, New Zealand’s at $1.18/lb. That 6-14¢ premium we’re carrying is massive in commodity terms. I’ve been talking to export traders, and they’re basically shut out of new business except for some specialty applications.
What’s particularly troubling is the South American situation that’s not getting enough attention. Argentina and Uruguay have been quietly building their powder capacity, and they’re starting to compete directly with us in key markets like Southeast Asia and North Africa. Their cost structure, especially with favorable exchange rates, is putting additional pressure on global pricing.
The Asian Demand Picture: Speaking of Southeast Asia… the demand patterns we’re seeing out of Vietnam, Thailand, and Indonesia are shifting. These markets are becoming increasingly price-sensitive, opting to shop globally rather than remaining loyal to traditional suppliers. China’s still playing games with import timing – they’ll go months without buying, then suddenly need massive quantities. Makes planning impossible for our exporters.
Feed Costs and the Margin Squeeze
The math on feed costs is getting ugly, and today’s action made it worse. Soybean meal jumped hard – up $3.40/ton to $288.60 for December – while corn eased slightly to $4.1950/bu.
Here’s the calculation that’s keeping me up at night: with Class III futures at $16.96/cwt and current feed values, we’re looking at a milk-to-feed ratio of about 1.65. Anything below 2.0 means you’re in survival mode, not profit mode.
What’s particularly challenging is the regional variation in feed costs. Talking to producers in the Northwest, they’re dealing with drought-related hay costs that are astronomical. Meanwhile, parts of Wisconsin are seeing decent local corn prices, but their basis to futures is still wide due to transportation bottlenecks.
The currency angle isn’t helping either. The strong dollar makes our exports less competitive, but it also makes imported feed ingredients more affordable. It’s a mixed blessing that currently feels more of a curse than a blessing.
Production Patterns and Seasonal Reality
The fall flush is happening right on schedule, maybe even a bit early in some regions. I’m hearing from Wisconsin and Minnesota that milk is flowing freely – heat stress is gone, cows are comfortable, and production is ramping up just as it should this time of year.
But here’s what’s different this year compared to recent falls: the financial pressure on producers is more intense. With these tight margins, some operators are making hard decisions about culling and herd management that might actually moderate the typical fall production surge. It’s early to call this a trend, but it’s worth watching.
California’s telling a slightly different story. Central Valley producers are seeing more normal seasonal patterns, but they’re also dealing with feed cost pressures that are keeping some milk in the fluid market rather than going to manufacturing. The Class 4b premium for fluid milk is looking pretty attractive compared to manufacturing returns right now.
What’s Really Moving These Markets
Domestic Side of Things: Retailers finished their back-to-school cheese promotions and frankly don’t seem eager to reload aggressively. Food service demand always hits a lull in September – it’s as predictable as sunrise. The surprising thing is how comfortable processors seem with their inventory positions. Usually by now we’d see some restocking ahead of Q4 holiday demand, but that’s not happening yet.
Export Markets – The Full Story: Mexico remains our most reliable customer, but even they’re starting to shop around when our premiums get too wide. I’m hearing reports of Mexican buyers testing European suppliers for powder programs, which should be a wake-up call for our pricing.
The Middle East and North Africa markets are evolving rapidly. These regions are growing their import needs, but they’re also becoming more sophisticated buyers. They’ll take advantage of global price differentials in ways they didn’t five years ago.
Currency Impact Deep Dive: The dollar’s strength is a double-edged sword that’s currently cutting us more than helping. Yes, it makes feed imports cheaper, but it’s pricing us out of competitive export situations. A 5% move in the dollar can easily swing export profitability from positive to negative, and that’s exactly what we’re seeing in some markets.
Futures and Forecasting (With Some Healthy Skepticism)
The futures market’s reaction to today’s weakness was muted, which suggests that traders believe this might be overdone. September Class III settled at $16.96/cwt, up slightly, while Class IV dropped to $16.92/cwt.
Now, about those USDA forecasts everyone quotes religiously… their latest work suggests Class III averaging $17.25 for Q4 2025. Here’s the thing, though – their methodology tends to smooth out the kind of volatility we’re seeing right now. They use models that assume rational market behavior, but markets aren’t always rational, especially when seasonal patterns collide with global trade disruptions.
The confidence intervals on these forecasts are wider than USDA typically admits. I’d put real money on Q4 Class III being anywhere from $16.50 to $18.00/cwt, depending on how export demand develops and whether this fall flush is as pronounced as expected.
Hedging Reality Check: With this volatility, Dairy Revenue Protection (DRP) premiums are climbing. What cost you $0.25/cwt to ensure last month might run $0.45/cwt today. But given the downside risk we’re seeing, those premiums might be worth it for Q1 2026 coverage.
Put options on Class III futures are getting expensive, too, but they’re still cheaper than the potential losses if this downtrend continues. I’m particularly interested in the $17.00 puts for December and January contracts.
Regional Market Deep Dive: Upper Midwest Dynamics
Let’s talk about what’s happening in America’s dairyland, because it’s telling a broader story about supply and demand dynamics.
Wisconsin and Minnesota are experiencing what I’d call a “comfortable flush” – production is up, components are good, and there’s no shortage of milk for processors. But here’s the catch: local basis levels are weaker than usual because co-ops and processors don’t feel pressure to bid aggressively for supply.
Feed costs tell a mixed story across the region. Local corn basis is reasonable in areas with good crops, but transportation to deficit areas is keeping overall feed costs elevated. Hay prices are all over the map – some areas with decent alfalfa crops are seeing reasonable prices, while drought-affected regions are paying premium rates for imported feed.
The exciting development is how some producers are adjusting breeding and culling decisions based on margin pressure. Instead of the traditional fall breeding programs, some operations are being more selective, which could moderate the typical spring freshening surge.
Currency and Competitive Positioning
This doesn’t get talked about enough, but exchange rate movements are having a huge impact on global dairy competitiveness. The dollar has been strong against the currencies of most major dairy-producing countries, which makes our exports more expensive and their imports to our markets cheaper.
Here’s a concrete example: when the dollar strengthens 5% against the Euro, European butter becomes roughly 10¢/lb more competitive in Asian markets than it was before the currency move. Multiply that across multiple products and markets, and you’re talking about significant trade flow shifts.
Look, I’m not going to sugarcoat this – the margin picture is challenging, and today’s price action made it worse. Here’s what needs to happen:
Feed Management (This Week): Get quotes on your next 90 days of feed needs. Today’s soybean meal surge is a warning sign that costs could rise further. Some nutritionists are recommending adjustments to rationing to reduce meal dependency where possible, without compromising production.
Price Risk (This Month): Your September milk check is tracking in the $16.90-17.00 range based on today’s action. If you haven’t locked in some Q4 and Q1 2026 protection, now’s the time to get serious about it. DRP coverage at $17.50/cwt for Q1 2026 still makes sense, even with higher premiums.
Cash Flow Planning (Immediate): With milk-to-feed ratios this tight, cash flow timing becomes critical. Know exactly when your milk checks arrive and plan feed purchases accordingly. Some producers are finding success with split deliveries to smooth out cash flow timing.
Production Decisions (Next 60 Days): This might not be the year for aggressive expansion plans. Focus on maximizing efficiency from your current operation rather than adding capacity in a tight margin environment.
Industry Intel You Need to Know
Processing Capacity News: Saputo’s expansion at their Turlock facility is ahead of schedule, adding whey protein concentrate capacity that should support stronger whey pricing in the long term. This is actually bullish for Class III calculations, since whey is carrying more weight in the formula.
Regulatory Developments: USDA’s Milk Production report drops September 19, and early indications suggest August production was up 1.8% year-over-year nationally. That’s in line with seasonal expectations, but doesn’t help the supply-demand balance in the short term.
Technology Trends: More operations are investing in precision feeding systems to optimize ration costs. With margins this tight, the technology that seemed nice-to-have last year is becoming essential for survival.
Putting Today in Historical Context
Today’s 3¢ drop in cheese blocks was the largest single-day decline we’ve seen in six weeks. But here’s the thing – we’re still trading 8-10¢/lb above the spring lows, so this isn’t exactly crisis territory yet.
September typically brings seasonal price pressure – that’s nothing new. What’s different this year is how quickly processors seem willing to step back from aggressive milk procurement. Usually, we see more of a gradual transition into fall patterns.
The technical picture on the charts is also becoming concerning. Cheese blocks broke below what had been solid support around $1.70/lb, and the next meaningful support level doesn’t appear until the $1.60-1.65 range.
Bottom Line Reality Check:
This market is telling us that fall flush dynamics are asserting themselves earlier and more aggressively than usual. The global competitive situation for some products is challenging, particularly powder, while others like butter remain attractively priced for export.
Your operation needs to be prepared for a potentially prolonged period of tight margins. This isn’t necessarily a crisis, but it’s definitely not a time for complacency. The producers who manage feed costs aggressively and protect downside price risk are going to be the ones still standing when margins improve.
The good news? Milk demand fundamentals remain solid, and we’re still the most efficient dairy production system in the world. This too shall pass… but it might take a while.
Market conditions as of 4:00 PM CDT, September 9, 2025. As always, consult with your risk management team before making marketing decisions – this market is moving fast enough to make yesterday’s strategy obsolete by tomorrow’s close.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
5 loads. That’s all that traded across the entire CME dairy complex Monday. We haven’t seen markets this dead since..
EXECUTIVE SUMMARY: Monday’s CME session was a wake-up call we didn’t see coming. With only five loads trading across the entire dairy complex, we’re witnessing market apathy that should terrify anyone counting on Class III recovery. But here’s what caught our attention… while domestic cheese markets flatline, U.S. butter is trading at a staggering $1.16/lb discount to Europe – creating the biggest export arbitrage opportunity we’ve seen in years.The math is brutal right now: milk-to-feed ratios sitting at 1.85 mean most operations are bleeding money, especially with September Class III stuck below $17.00/cwt. Yet Upper Midwest producers showing 2.8% production growth are doubling down on component optimization, shifting focus from protein to butterfat as global markets signal where the real money is.Private forecasters we track are more pessimistic than USDA projections, suggesting Q4 won’t bring the relief everyone’s expecting. The smart money is already repositioning for a prolonged margin squeeze – and the producers who adapt their component strategies now will be the ones still profitable when this market finally turns.
KEY TAKEAWAYS:
Butter export goldmine hiding in plain sight: U.S. butter at $2.02/lb vs Europe’s $3.18/lb creates immediate opportunities for Class IV premiums – work with your co-op now to capture export demand before competitors catch on
Component strategy pivot pays off: Upper Midwest producers optimizing for butterfat over protein are seeing $0.50-$0.75/cwt premiums in current market conditions – review your ration with your nutritionist this week to maximize the butter advantage
Risk management isn’t optional anymore: With milk-to-feed ratios below 2.0 and December Class III futures only 50¢ higher than September, LGM-Dairy or DRP protection is the difference between surviving and thriving through Q4
Feed cost window is closing: December corn at $4.21/bushel offers reasonable entry points, but harvest volatility could push prices lower – lock in winter feed now while you can still pencil out positive margins
Production moderation signals coming: Private sector forecasts suggest tighter supplies ahead as 47-year low heifer inventory and margin pressure force culling decisions – position for the recovery that always follows these cycles
You ever have one of those days where you check the CME numbers and think… “Did everyone just decide to take a nap?” That was today, folks. I mean, we’re talking five total loads across the entire dairy complex. Five! I’ve seen more action at a church social.
But here’s the thing that’s keeping me up at night – this isn’t just market noise. The underlying weakness in cheese prices keeps putting a ceiling on our Class III potential, and with September futures stuck below $17.00/cwt, we’re looking at margin pressure that’s making a lot of us seriously uncomfortable.
What’s fascinating, though… and I keep coming back to this… is how ridiculously cheap our butter has gotten compared to the rest of the world. I’m talking almost embarrassingly cheap. That might actually set up some interesting export opportunities for Class IV down the road, but we’ll see.
What These Numbers Actually Mean When You’re Writing That Feed Check
Let me break this down like we’re sitting around the kitchen table after chores:
Product
Closing Price
Today’s Move
Month Trend
What This Really Means
Cheese Blocks
$1.6950/lb
+0.50¢
-2.4%
That tiny bump? Can’t overcome the monthly slide that’s capping your Class III
Cheese Barrels
$1.7000/lb
Flat
-2.9%
Zero trades today… processors just aren’t interested
Butter
$2.0250/lb
+0.25¢
+0.5%
Modest strength, but we need bigger moves to really help Class IV
NDM
$1.2200/lb
Flat
-1.3%
International buyers see fair value, not a steal
Dry Whey
$0.5700/lb
+0.50¢
+0.3%
Welcome news – helps offset some cheese weakness
The story here isn’t about these tiny price moves… it’s about what didn’t happen. Five loads total – three blocks, one NDM, one whey. That’s it. Compare that to a typical busy day when we might see 20-25 loads change hands, and you start to understand why I’m concerned.
What’s particularly telling is that barrels are trading at a half-cent premium to blocks right now. That’s backwards, and anyone who’s been watching these markets knows it. Typically, blocks carry the premium because grocery store demand for natural cheese stays pretty steady. This flip suggests food service demand (which uses more processed cheese made from barrels) might be holding up slightly better. But honestly, with zero barrel trades today… even that signal is pretty weak.
When Nobody Shows Up to the Party
I reached out to a few contacts on the floor today – you know how it is, sometimes you need to hear it straight from the people actually making the trades. The consensus was pretty clear: this market is stuck in neutral, and nobody wants to be the first to make a move.
Zero registered bids in the barrel market against a single offer. That’s not panic selling, folks. That’s apathy. When buyers are sitting on their hands like this, waiting for something – anything – to give them a reason, you know confidence is running pretty thin.
Market technicians are suggesting spot blocks have support around $1.68/lb, with resistance near $1.75/lb. But honestly? Getting to that resistance level feels like wishful thinking given what we’re seeing in terms of buying interest. If we break through that $1.68 support on any real volume… well, let’s just say it could get interesting in a hurry.
The Tale of Two Dairy Markets – And It’s Getting Weird
This is where things get really interesting, and frankly, a bit frustrating if you’re trying to make sense of what’s happening in dairy right now. We’re essentially operating as two completely different exporters.
On the butter side… guys, we’re practically giving it away. Our cash butter at $2.0250/lb compares to about $3.18/lb equivalent in Europe and $3.14/lb in New Zealand. That’s not a small discount – that’s a “buy American or you’re crazy” kind of price gap.
The powder game? That’s a street fight. Our NDM at $1.22/lb ($2,690/MT equivalent) is right in the thick of it with European SMP around $1.15/lb and New Zealand SMP at $1.17/lb. We’re competitive, sure, but we’re not cheap. Every international sale requires aggressive marketing and sharp pencils.
What this means for your milk check is pretty straightforward – the butter discount should provide some decent support for Class IV pricing, but in the powder arena, we’re going to earn every export sale the hard way.
Feed Costs and the Math That Actually Pays Your Bills
Let’s talk about the numbers that really determine whether you’re making money or just keeping busy. Current feed landscape has December corn sitting at $4.2150/bushel and December soybean meal at $285.20/ton. Those aren’t terrible numbers, honestly.
The problem? It’s not feed costs killing us. It’s the milk price.
The milk-to-feed ratio right now is sitting around 1.85. For those keeping score at home, that’s using September Class III at $16.90/cwt against a standard dairy ration cost. Anything below 2.0 means your margins are getting squeezed, and we’re well into that territory.
Here’s what’s really frustrating – feed costs have actually been relatively manageable. But when milk is bringing what it’s bringing… your income over feed costs stays uncomfortably tight. That’s putting a lot of operations in tough spots for cash flow planning, especially heading into fall when you’re thinking about winter feed purchases.
What’s Really Moving These Markets (Or Not Moving Them)
Industry reports suggest the domestic demand story is fairly straightforward. We’re in that post-Labor Day sweet spot where retailers are stocking up for back-to-school lunch programs. That provides a steady baseline for cheese demand, which is good… but it’s not great.
Food service appears to be in one of those transition periods between the summer travel season and the year-end holiday push. You know how it goes – hotels and restaurants are kind of in limbo right now.
What’s become clear from conversations with industry sources is that processors seem pretty comfortable with current inventory levels. Nobody’s scrambling to buy milk or build cheese inventory, which explains the lackluster bidding we’re seeing in spot markets.
On the export side, Mexico continues to be our rock. They’re consistent buyers of U.S. cheese and skim milk powder, though their 2025 milking herd forecast at 6.8 million head means their production growth could displace about 100 million pounds of our NFDM exports – roughly 11% of what we send them. That’s… not ideal.
But here’s where the butter story gets interesting. The Middle East imported 99,000 tons of butter in 2024, with Saudi Arabia taking 53,000 tons. With U.S. butter this competitively priced, market analysts are suggesting we could see some significant sales announcements in the coming weeks. That would be a game-changer for Class IV.
Looking Ahead – And the Forecasts Are All Over the Map
The futures market isn’t painting a rosy picture right now. September Class III at $16.90/cwt pretty much reflects the weakness we’re seeing in spot cheese markets. But here’s what’s interesting – when you compare the CME futures to various forecasts, there’s quite a spread.
The USDA is projecting 2025 milk production at about 228 billion pounds with increased commercial dairy exports. Their Q3 average projection for Class III sits around $17.50/cwt. But private sector analysts like those at StoneX and Rabobank are being more cautious, suggesting Q3 averages closer to $17.20/cwt based on current demand patterns and production trends.
What’s particularly noteworthy is that some private forecasters are suggesting we might see production moderation as margins stay tight – especially in regions dealing with higher feed costs or labor challenges. That could provide some underlying support, but timing is everything in this business.
Class IV futures at $17.03/cwt are holding that slight premium over Class III, and that’s entirely due to butter and NDM strength relative to cheese. The forward curve suggests more stability in Class IV than Class III, which makes sense given our export positioning.
What People Are Actually Saying
Industry sources report that market sentiment remains… well, let’s call it cautious. One longtime trader I know mentioned that “the market feels dead in the water right now. Nobody wants to be a hero buying cheese at these levels, but there aren’t any aggressive sellers either. We’re basically stuck until we get a catalyst.”
A processing plant manager up in Wisconsin told contacts that “inventories are in good shape. We’re filling our regular orders without any issues, but we don’t see any reason to chase milk prices higher or build extra inventory right now. If prices dip, we’ll buy. But we’re not driving this market higher.”
What’s particularly interesting is hearing from dairy economists who are really focusing on this split between Class III and Class IV. As one analyst put it: “The world clearly wants our butter at these price levels, but the domestic cheese market is struggling to find its footing. Producers with flexibility in component management should really be focusing on butterfat optimization right now.”
Regional Reality Check – What’s Happening in the Heartland
For those of us in Wisconsin and Minnesota, today’s cheese market action hits pretty close to home. The Upper Midwest is showing milk production growth of about 2.8% with processing plants running at full capacity. When you consider that the majority of milk in our region flows into cheese vats, that sub-$1.70 block price translates directly into pressure on milk checks.
I’ve been talking to producers across southern Wisconsin, and the story is pretty consistent. Plants are running full schedules – that’s the good news. There’s no shortage of homes for milk. But the value proposition… well, that’s tied directly to a spot cheese market that’s showing zero ambition right now.
What strikes me is how many producers are starting to work with their nutritionists to optimize for butterfat rather than just protein, given the relative strength we’re seeing in butter markets. Others are looking more seriously at forward contracting opportunities, even at these lower levels, just to establish some cash flow certainty going into fall.
The thing about our region is that we’ve got the infrastructure and the cow comfort systems to maintain production even when margins get tight. But that doesn’t make the tight margins any easier to live with.
What You Should Actually Do Right Now (And I Mean This Week)
Look, I’m not going to sugarcoat this – if your cost of production is anywhere near these Class III levels, you need to be thinking seriously about risk management. Like, this week. The December Class III contract is only trading about 50 cents higher than September, which doesn’t give you much cushion for improvement.
Risk management tools worth considering: Dairy Revenue Protection (DRP) can help establish price floors without limiting your upside potential. If you want to lock in a specific margin level, Livestock Gross Margin (LGM-Dairy) might make sense for your operation. And don’t ignore forward contracting opportunities with your co-op or milk buyer – even at these levels, certainty has real value when you’re trying to manage cash flow.
Feed cost management: Today’s corn and meal prices offer reasonable entry points if you still need to cover fall and winter feed needs. With the uncertainty we’re seeing in milk prices, locking in your biggest expense provides some certainty. Several analysts I follow are suggesting corn could test the $4.00 level if harvest proceeds smoothly, but that’s not guaranteed.
Component optimization: This might be the most important near-term strategy. With cheese prices this weak, maximizing butterfat and protein content becomes critical for milk check improvement. Work with your nutritionist to fine-tune those rations – even small improvements in component levels can add meaningful dollars to your monthly check.
Industry Intel That’s Actually Worth Knowing
The cooperative landscape continues to evolve, with major co-ops significantly expanding their sustainability programs this fall. They’re working to secure “green” premiums from food companies for producers who can document environmental stewardship efforts. It’s not huge money yet, but every little bit helps when margins are this tight.
On the regulatory front, those Federal Milk Marketing Order reforms that went into effect June 1 are still working their way through the system. The updated make allowances and composition factors are gradually impacting regional price relationships, though it’s too early to see the full effects.
We’re also dealing with some production challenges that could eventually provide market support. H5N1 avian flu continues impacting California dairy production, and dairy replacement heifer inventory hit a 47-year low at 3.91 million head as of January. These supply-side factors could eventually tighten things up, but timing… well, timing is everything in this business.
Putting Today in Context – And Looking for Light at the End of the Tunnel
Here’s the bottom line – today’s quiet session wasn’t a turning point, it was just another day in what’s become a fundamentally challenging pricing environment. That spot block price of $1.6950/lb is a far cry from the $2.00+ levels we were seeing this time last year.
The market has basically repriced cheese lower due to ample milk supplies meeting good, but not great, demand. Until we see a meaningful shift in that supply/demand balance, this challenging environment will likely persist.
What I’m watching for as potential catalysts: the next USDA Milk Production report, any significant export sale announcements (particularly in butter), weather developments that could affect either feed costs or production, and early holiday season demand patterns.
Markets like this… they don’t turn on a dime. When we do see a shift, it’ll likely be gradual at first. But the thing about dairy markets is they always turn eventually. They have to.
For now, focus on what you can control – production efficiency, component optimization, cost management, and smart risk management strategies. The producers who position themselves well during tough periods are usually the ones who benefit most when conditions improve.
And they will improve. This industry has been through tougher times, and we’ve always come out the other side. The key is making sure you’re still in the game when things turn around.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
The Dairy Market Shift: What Every Producer Needs to Know – This article explores the innovative, future-oriented opportunities in exports. It details the explosive growth in global demand, helping producers understand the long-term value of positioning their operation to meet the quality and consistency demands of international buyers.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
What if I told you the producers making money in 2026 aren’t the ones celebrating the highest today? Rabobank’s warning changes everything.
EXECUTIVE SUMMARY: You know what caught my attention? While everyone’s busy counting their milk checks, Rabobank’s quietly warning about a 2026 market correction that could separate the survivors from the casualties. Here’s the thing—they’re forecasting NZ milk prices at $20.50 per hundredweight (record highs) for 2025, but smart producers aren’t just celebrating. They’re using these margins to invest in tech that’s delivering 18% better reproduction rates and cutting vet costs by $285 per cow. European farms already banking an extra $1,200 per cow annually through carbon programs… and that’s coming our way fast. Cornell’s data shows diversified operations weathered the last market chaos 23% better than commodity-only farms. The window for strategic positioning won’t stay open forever. Time to decide: are you building a bridge over the next downturn, or hoping the water doesn’t rise?
KEY TAKEAWAYS
Tech isn’t a luxury anymore—it’s survival gear. AI lameness detection achieves 85% accuracy, and farms investing $ 180,000 in monitoring experience an 18% increase in reproduction. Start with activity monitors if you’re under 200 cows—payback in 3-4 years with current labor costs.
Regional feed costs are your hidden profit killer. While corn averages $4.20 nationally, you’re paying $5+ in California versus $4 in Iowa. Lock feed contracts now while financing rates sit at 6.5-8.5%—both won’t last.
Carbon programs aren’t feel-good farming anymore—they’re cash flow. European operations pocket $1,200+ per cow annually through emission reductions. California’s LCFS credits are already worth $85-120 per metric ton. Start your footprint assessment before programs fill up.
China’s the wildcard that could flip everything. Their imports are up 2% while production drops 2.6%—but weak demand keeps it unpredictable. Diversify your risk, as when China moves, global prices tend to follow.
Equipment financing window is closing. Rates at 6.5-8.5% won’t hold with 2026 uncertainty looming. Complete tech installs by year-end to catch 2025 tax advantages while building cash reserves during strong margins.
You know how it goes in this business—just when you think you’ve got the market figured out, it throws you a curveball. Right now, everyone’s talking about Rabobank’s record-breaking milk price forecasts for 2025, but here’s what’s keeping me up at night: their quiet warning about 2026.
While most folks are busy counting their milk checks, the sharp operators I know are already using these fat margins to build their defenses. The question isn’t whether the storm’s coming—it’s whether you’ll be ready when it hits.
What strikes me about this whole situation is how easy it would be to get comfortable with these margins and forget that dairy markets… well, they don’t stay comfortable for long.
AI systems detecting lameness with 85% accuracy—that means catching problems before they cost you serious money. I’m seeing farms cut vet bills significantly while keeping their cows healthier.
This represents an aggregate analysis of multiple University of Wisconsin Extension case studies: farms investing approximately $180,000 in monitoring tech typically see reproductive performance improvements of around 18% and veterinary cost reductions of $285 per cow annually. Individual farm results vary significantly based on management practices, herd genetics, and local conditions. Producers should conduct farm-specific economic analysis before investment decisions.
The economics break down like this (and this varies quite a bit by region):
Technology Investment by Farm Size:
Under 200 Cows: $60,000-120,000 investments with 3-4 year paybacks. In states like Wisconsin, where corn’s running $4.10 delivered, the feed efficiency gains alone can justify the use of activity monitoring systems.
200-500 Cows: $200,000-350,000 for robotic milking and precision feeding. Takes 5-7 years to pay back, but in places like Pennsylvania, where labor’s hitting $16-18/hour, the math works.
500+ Cows: Full automation packages run $500,000 and up, but with 4-6 year paybacks. Out in California, where you’re paying $20+ for milking labor, these systems aren’t luxury—they’re survival.
This divide? It’s only going to matter more when margins tighten in 2026.
“Production’s dropping faster than consumption, but weak demand’s still holding back any big surge.”
Chinese pricing has exerted competitive pressure on global markets, with complex regional dynamics that make predictions nearly impossible. If China’s economy rebounds faster than expected right when Rabobank’s predicting our structural issues… that could get messy fast.
The Great Analyst Split—And Why It Matters to Your Bottom Line
Here’s what caught my attention in Cornell data: farms with diversified income streams weathered the 2020-2022 chaos 23% better than commodity-only operations. That’s not theory—that’s documented survival advantage.
I’m hearing about operations over there where carbon credit payments represent real money. Precision feeding reduces emissions by 30%, and methane capture generates additional revenue streams.
California’s LCFS credits are already worth $85-120 per metric ton. Northeast carbon markets are expanding into agriculture. Early adopters are positioning themselves for competitive advantages.
Feed Costs—The Variable That Changes Everything
Don’t underestimate what’s happening with feed prices. Sure, corn futures are around $4.20 nationally, but add transportation and regional basis, and suddenly you’re looking at:
Regional Feed Cost Reality (as of Q3 2025):
Iowa: $3.95-4.15 delivered
Wisconsin: $4.10-4.25 delivered
Pennsylvania: $4.60-4.75 delivered
California: $5.10+ delivered
Those differences completely change your feeding strategies and technology ROI calculations.
Complete tech installations to catch 2025 tax advantages
Secure feed contracts for the next growing season
Build cash reserves during strong margins
Start carbon footprint assessments now
Regional Reality Check—What Works Where
Corn Belt (Iowa, Illinois, Indiana): Feed costs are stable, so focus on precision feeding systems with rapid paybacks through improved conversion efficiency.
Northeast (Vermont, New York, Pennsylvania): Your seasonal operations face unique timing risks if spring freshening hits during price corrections. Flexibility in milking systems matters.
Western Dairies (California, Idaho, Washington): High labor costs make automation economics work regardless of milk prices. Robotic milking pencils out in 4-5 years, even with conservative assumptions.
Southeast Expansion (Texas, Tennessee, Georgia): Rapid herd growth is creating infrastructure bottlenecks. Get scalable tech in place before you grow into problems.
What Does This All Means for Your Operation
Look, whether Rabobank’s 2026 warnings prove accurate or StoneX’s optimism carries the day, one thing’s certain: this industry’s changing faster than ever, and preparation beats reaction every single time.
The producers who thrive through whatever comes next will be those using today’s strong margins for strategic investments in efficiency, technology, and risk management—not just production expansion.
Your checklist isn’t complicated: Audit technology gaps and calculate region-specific ROI. Build cash reserves during strong margin periods. Diversify revenue streams beyond commodity milk. Create hedging strategies for key input costs. Start carbon footprint reduction programs before they’re mandatory.
The profits rolling in today are real, but they won’t last forever. The question every producer needs to answer: Will you use these margins to build a bridge over the next downturn, or will you hope the water doesn’t rise? Because in this business, hope’s never been a strategy that pays the bills.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Unlocking Dairy Efficiency: The Ultimate Guide to Improving Cow Traffic – This guide offers practical strategies for designing efficient cow traffic systems. It demonstrates how to maximize your technology investments by ensuring smooth animal flow, which directly translates into higher milk production and a healthier, less stressed herd.
The 3 Financial Ratios Every Dairy Farmer Should Be Tracking – Move beyond milk price and dive into the numbers that truly drive profitability. This piece provides the tools to measure your farm’s financial health, helping you identify vulnerabilities and make strategic decisions to withstand the market volatility this article warns about.
The Genetics Of Sustainability: Breeding For A Better Future – Explore a key strategy for tackling the carbon economics challenge head-on. This article reveals how strategic breeding for sustainability traits can create a more efficient and resilient herd that is positioned to capitalize on emerging low-carbon milk premiums.
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Your October milk check just got $91 million lighter thanks to Washington’s latest “reform.” Here’s what smart farmers are doing about it.
Quick Market Snapshot (2-minute read)
Today’s Reality Check: Post-Labor Day weakness pressured dairy markets. Butter fell a sharp 3.25¢ to $2.0125, and cheese blocks dropped 1¢ to $1.7650.
Your Milk Check: Cooperatives report varied impacts—Wisconsin producers are seeing 15-25¢/cwt declines, while others with better hedging face smaller hits.
Key Levels: Watch butter at $2.00 and cheese blocks at $1.75—breaks below these on heavy volume signal more pain ahead.
Action Items: Consider Class III puts around $17.90; lock 25-50% winter feed; focus rations on protein over butterfat.
EXECUTIVE SUMMARY: Look, I’ve been tracking dairy markets for years, and what happened after Labor Day isn’t your typical seasonal dip. The FMMO “reforms” just shifted $91 million annually from your milk check straight into processor pockets—and December’s component changes will hit even harder. Here’s the kicker, though… while everyone’s focused on butter dropping 3.25¢ and cheese falling a penny, feed costs are sitting at the most favorable levels we’ve seen in months. Your milk-to-feed ratio’s still healthy at 3.8, but that window won’t stay open forever. Smart operators in Texas are riding 10.6% production gains thanks to new processing capacity and mild weather, while California struggles with H5N1 costs. The global picture? We’re selling butter 37% cheaper than Europe, but somehow still can’t move product. Time to get defensive with your pricing strategy and lock in those feed costs before this window closes.
KEY TAKEAWAYS
Lock Your Feed Now: December corn at $4.23/bushel won’t last—Texas producers who secured 60% of winter needs at $4.15 are already seeing the payoff as milk prices soften
Get Defensive on Pricing: Class III put options at $17.50-$17.00 are lighting up for good reason—October milk checks are tracking 15-25¢/cwt lower depending on your cooperative’s risk management
Focus on Protein Over Fat: With FMMO component changes hitting December 1st (protein factor jumping to 3.3%), shift your ration strategy now—butterfat premiums are getting crushed while protein holds steady
Watch Those Technical Levels: Butter support at $2.00 and cheese blocks at $1.75—if these break on heavy volume (5+ loads butter, 8+ loads blocks), we’re looking at July lows and even tighter margins
Regional Reality Check: California producers need milk-to-feed ratios above 4.2 just to match Midwest profitability due to hay costs running $45-65/ton higher—adjust your expectations accordingly
When Labor Day’s Over, Reality Hits Hard
You know that sinking feeling when you walk into the parlor on Monday morning and your milk hauler is shaking his head? That’s exactly what happened to dairy markets today.
Butter fell a sharp 3.25¢ to $2,0125, and cheese blocks dropped a full cent to $1.7650—and here’s what’s going to sting your wallet.
Regional Milk Check Reality Check
Don’t believe anyone giving you generic projections. The impact on your October milk check depends entirely on where you’re milking and who you’re shipping to:
Wisconsin cooperatives: Reporting 15-25¢/cwt declines depending on marketing strategies
California operations: Seeing varied impacts based on risk management programs
Texas producers: Geographic premiums providing some buffer against spot weakness
Northeast fluid markets: Class I differentials offering partial protection
“We’re seeing milk that used to command a 50¢ premium now at 25¢ over Class,” a Fond du Lac County producer told me yesterday. “When the plants are full and you’ve got extra milk looking for a home, that local basis gets pressured fast.”
Supply Pressures Hitting the Market
Processors came back from the break with cream tanks topped off and zero urgency to chase milk. Here’s why:
The USDA’s Supply-Side Shift: August 12th WASDE report bumped 2025 milk production to 228.3 billion pounds—up 500 million from July’s estimate. That’s 3.4% year-over-year growth, hitting an already saturated market.
Where The Milk’s Coming From
Texas leads the charge: 4% annual growth, with some counties posting spring gains as high as 10.6% thanks to mild winter weather and new processing capacity.
California struggles: Production is down 1.2% amid battles with H5N1 and heat stress, with new biosecurity costs adding $0.15-0.25/cwt for some operations.
Wisconsin and Minnesota are up 2.8%, but regional plant capacity maxed out, pressuring local premiums.
A Deep Dive into the CME Cash Session
The CME cash session told a crystal-clear story if you know the signs:
Butter Market Breakdown
7 offers vs. 3 bids = Sellers desperate to move product
All damage from 1 trade = Either forced liquidation or buyers vanished
Critical level: $2.00 support—5+ loads trading below triggers $1.95 test
Cheese Block Pressure Mounts
13 loads traded down = Real commercial selling, not spec money
Volume with decline = Sustained weakness likely
Key support: $1.75—break on 8+ loads targets July lows at $1.70
The Protein Bright Spot
Dry whey showed three bids, zero offers for the third straight session—protein demand holding steady while fat markets crater. While the revenue side of the ledger faces pressure, the expense side offers a critical silver lining for managing margins.
Feed Costs: Your Margin Lifeline
Here’s the silver lining keeping margins alive:
December corn: $4.23/bushel
Soybean meal: $283.30/ton
Milk-to-feed ratio: 3.8
But regional variations are significant:
Midwest Advantage
“We locked 60% of our winter corn at $4.15 back in July,” an Iowa producer shared. “That forward thinking’s paying off now with milk prices softening.”
Western Challenges
California dairies face hay costs $45-65/ton higher than Midwest operations, plus water expenses adding $1.20/cwt. UC Davis Extension data show that Western producers need ratios of 4.2 or higher to match Midwest profitability.
Key On-Farm Strategies
Protein Optimization: Beyond The Buzzword
With FMMO protein factor changes hitting December 1st, smart producers are already adjusting:
What Wisconsin Nutritionists Recommend
Balance third-cutting alfalfa quality with commodity proteins
Target rumen-degradable vs. undegradable protein ratios
Hit 16.8% crude protein without over-supplementing
“We’re shifting from chasing butterfat premiums to optimizing protein yield,” explains a Lancaster County producer running 800 head. “With the December component changes, protein’s where the money is.”
FMMO Now: What Farmers Need To Know
June 1st’s Federal Milk Marketing Order reforms created the biggest structural change in a decade:
What Changed
Class I skim pricing returned to “higher-of” Class III or IV
Make allowances updated: cheese to $0.2519/lb, butter $0.2272/lb
Net effect: $91 million annually transferred from producer checks to processor margins
Who Gets Hit Hardest
Order 5 regions with manufacturing-heavy operations feel the biggest squeeze. December’s component factor changes (protein to 3.3%, nonfat solids to 9.3%) will create another pricing shift (USDA AMS, Bullvine analysis).
Options Market Signals Caution
On the futures board, September Class III settled at $17.94 and October near $17.84 — a backward curve, meaning the market expects prices to rebound over the coming months. But, with today’s cash price moves, that hope might be premature (CME Group).
Class III put options at $17.50 and $17.00 strikes are lighting up—volume spikes showing producers getting defensive fast. Implied volatility jumped 15% last week, making hedging more expensive but potentially more valuable (CME data).
Smart Hedging Moves
Put options around $17.90-$18.00 to establish minimum milk prices
Call spreads on feed protect against crop weather surprises
Timing matters: Wait for volatility dips to reduce option costs
The Big Picture: Global Markets and Tomorrow’s Level
Global Export Disconnect
Here’s the head-scratcher: U.S. butter at $2.01/lb trades 37% below EU prices ($3.18/lb) and 36% under New Zealand ($3.14/lb).
That massive discount should drive explosive exports, but Global Dairy Trade’s September 1st auction saw its overall price index drop 4.3% to an average of $1,209/MT—international weakness removing any upward price pressure from world markets.
Tomorrow’s Critical Levels
What I’m Watching At 10:00 AM
Butter: Support test at $2.00—more than three loads below triggers $1.95 target
Cheese blocks: $1.75 line in sand—heavy volume break signals July lows retest
Dry whey: Bid strength continuation could support protein complex recovery
Volume Thresholds That Matter
Butter: >5 loads confirms directional moves
Blocks: >8 loads breaks technical levels
Any NDM volume signals export developments
Your Regional Action Plan
Upper Midwest Producers
Immediate: Review cooperative marketing agreements for basis risk
Feed strategy: Lock winter corn before harvest pressure lifts futures
Component focus: Optimize protein rations for December changes
Growth management: Balance herd expansion with local milk demand
Weather hedge: Prepare for potential winter weather disruptions
The Bottom Line
This isn’t just market noise—it’s structural change happening in real time. The supply situation is strong, demand is cautious, and FMMO reforms are reshuffling who gets what from every hundredweight.
What Winners Are Doing Now
✓ Locking feed costs at current favorable levels ✓ Getting defensive with put options on Class III ✓ Focusing on protein over butterfat in ration management ✓ Managing cash flow for smaller October checks ✓ Planning component strategies for December FMMO changes
The margin squeeze is real, but it’s not panic time. Producers with solid risk management, flexible feeding programs, and tight cash flow control will weather this downturn better than those hoping for a quick recovery that might not come.
Feed costs are still your friend. Protein optimization is becoming crucial. And regional differences matter more than ever in determining who stays profitable through this challenging period.
Smart money is getting defensive now—not waiting to see how much worse it gets.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Navigating the Volatile Dairy Market: Essential Risk Management Strategies for Farmers – This article provides a practical framework for implementing the hedging strategies mentioned in our report. It breaks down how to effectively use futures and options to protect your operation from the exact price volatility seen today, reducing risk on future milk checks.
The Future of Dairy: Innovations in Processing and Product Development – To understand where the market is heading long-term, this piece unpacks the strategic trends in dairy processing and consumer demand. It offers insights into how new products and technologies will create future revenue streams beyond today’s commodity market pressures.
The Genetic Revolution: How Marker-Assisted Selection is Reshaping Dairy Herds – This report reveals how to boost profitability from within the herd using advanced genetics. It details innovative selection methods for improving feed efficiency and component yields, offering a powerful, long-term strategy to counter the margin squeeze discussed in today’s market analysis.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
New Zealand’s crushing it with 8.9% milk solids growth while Australia bleeds 4%—same region, different worlds.
Executive Summary: Here’s what’s happening—the dairy world’s splitting right down the middle, and it’s messing with everything we thought we knew about global markets. New Zealand farms are banking serious cash with an 8.9% milk solids surge and farmgate prices dancing between NZ$7.25-$8.75 per kilo, while their Aussie neighbors are getting hammered by drought—down 4% in July with feed costs that’ve literally doubled in some regions. What’s wild is European butter futures are trading €452 below spot prices, which usually means a correction’s coming, and the US keeps playing price anchor with dairy products running $2,000+ per tonne cheaper than Europe. The bottom line? Feed costs are crushing margins everywhere, labor’s getting expensive, and the smart money is spreading sales and hedging positions right now before these market splits get worse.
Key Takeaways:
Lock in your milk solids advantage—New Zealand’s 8.9% jump shows how seasonal tracking can boost cash per liter when you time it right
Beat the butter price drop—stagger your fat purchases over 60-90 days since European futures are screaming “correction coming”
Survive the feed cost explosion—Australian operators facing doubled hay costs need alternative feed strategies and tighter budgeting now
Watch tomorrow’s GDT auction like a hawk—21,145 tonnes of powder hitting the market will tell you where prices are headed
Find your niche before the US flood hits—with American exports running $2,000/tonne under Europe, you need value-add products to stay competitive
The thing about markets right now—it feels like the dairy world’s split in two. Down in Canterbury, farmers are pushing the limits, pumping out record milk solids. Just a couple of thousand kilometers (“klicks”) away, mates in Australia are making some of the toughest calls of their careers.
I caught up with a few operators in Canterbury who say this winter’s milking stretch is longer than ever. And why not? Fonterra’s latest report shows that milk solids in July jumped 2.2% from the same period last year, and the season-to-date increase is 8.9%. They’re banking serious cash with farmgate prices floating between NZ$7.25 and $8.75, even as feed supplies grow tight.
But hop across the ditch and it’s a different story entirely. Australia’s milk production in July dropped 4%, with Victoria down 5.1%, South Australia experiencing a 9.6% decline, and Tasmania not far behind at 6.1% lower. Farmers around Shepparton are getting squeezed, with feed costs shooting up—hay’s doubling to A$350–$400 per tonne, water’s scarce, and every single day’s a math puzzle on whether to keep cows or not.
This split isn’t just a geographical quirk… it’s rewriting the global playbook.
The Market’s Tale of Two Hemispheres
Last week, the European Energy Exchange saw over 3,000 tonnes of dairy futures change hands, with butter alone accounting for half of that volume, according to EEX trading data. The September butter futures settled at €6,658 per tonne—that’s a hefty €452 below the current spot price of €7,110, signaling markets are bracing for a fall.
For processors, that’s your cue. Prices tend to soften heading into autumn as milk components normalize. If you’re buying big fat volumes—say anything over 50 tonnes a month—consider staggered purchases over the next 60–90 days. Don’t bet on the dip being deeper.
Meanwhile, the Singapore Exchange showed Whole Milk Powder slipping $60 to $3,835 a tonne. With the big Kiwi spring flush looming, buyers remain cautious about China’s appetite for New Zealand’s products. That said, Fonterra has just lifted restrictions on its Instant Whole Milk Powder sales from October onward—a smart move, given it fetches about $95 a tonne more than standard powder.
America Holds the Line
Stateside, it’s full steam ahead. July production climbed 3.4%—the herd actually grew by 14,000 cows that month—with better yields thanks to genetics and feed management. StoneX data points to a 4.7% rise in component-adjusted milk solids.
The knock-on? US cream and cheese products trade at a steep discount—over $2,000 per ton cheaper than European counterparts, according to CME data. That pricing is driving exports and helping prop up US milk prices.
Producers at the Wisconsin Cheese Makers Association are experiencing a surge in exports, with some, such as Ellsworth Cooperative Creamery, reporting international volumes up 23% year-over-year. But counterparts in Canada are feeling the heat—competition is fierce and margins are tighter.
Europe’s Mixed Bag: Regulation, Weather, and Red-Hot Cheese Markets
UK dairy is holding pace—with volumes up 4.4%, butterfat at 4.15%, and protein climbing to 3.36%, per AHDB data.
However, the story is more complex on a continental scale. The Netherlands faces setbacks due to regulation and bluetongue, capping output, while Poland is up and running, boosting yields amid fewer restrictions.
Italy wasn’t spared summer’s wrath. Heat waves reduced production by 10–15%, resulting in approximately 1.8 million litres lost daily, as confirmed by ISTAT data.
Cheese and whey prices are surging: Cheddar’s up 17%, Edam 10%, Gouda 12%, and whey a staggering 18% year-over-year, European Commission reports reveal.
Some Friesland producers are scrambling to secure milk, paying premiums to keep plants humming.
What It Means for Your Milk Check
Butter’s in tight supply, pushing prices up, while protein is squeezed by global supply and discounting. Cheese producers are bidding fiercely to grab milk flows.
Tomorrow’s Global Dairy Trade auction will be telling, with 21,145 tonnes of Whole Milk Powder and 9,700 tonnes of Skim Milk Powder on offer.
Watch participation carefully—bidder count and volume will tell if demand’s holding or fading.
Play It Smart This September
If you’re buying fat, especially over 20 tonnes per month, start hedging now in tranches. That backwardation in European butter suggests prices will soften soon, but don’t wait to lock in a deal.
Powder producers should brace for pressure when volumes from New Zealand and Argentina hit. Focus on higher-margin streams.
If you’re servicing Australia, watch for supply gaps turning into import opportunities—high-value ingredients are the smart spot.
Beyond The Percentages: The Real Cost Behind Production
Victorian producers aren’t just losing volume; they’re getting hit by a surge in input costs, as documented by Dairy Australia:
Quality Hay: A$350–$400 per tonne (up from A$180–$200)
Water Allocation: Prices are 250% above 2024 levels
Grain Supplements: Costs have risen 20–30% across most categories
Meanwhile, Kiwi operators report wage pressures of more than 15% as they stretch labor through extended milking seasons.
Weather’s Still a Wild Card
La Niña may prolong Aussie droughts, while early autumn chills might boost European butterfat and protein.
Stay Sharp, Stay Connected
Markets are messy and fractured. What works for your mate 10 klicks away might not fit your setup.
Keep your ear to the ground, watch feed costs, labor, and weather, and know when it’s time to make moves.
September will be the month to separate the clever from the late movers.
Look, I’ve been tracking dairy markets for decades, and this September split is something else entirely. The full analysis breaks down exactly which regions are winning, which are losing, and most importantly—what you should be doing about it right now.
Don’t get caught flat-footed when these market shifts hit your milk check.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Tackling High Feed Costs: 5 Unconventional Strategies That Actually Work – This article provides immediate, practical tactics to combat the rising input costs mentioned in the market report. It details actionable methods for optimizing rations and sourcing alternative feeds to protect your margins when market volatility hits your bottom line.
Genetics In A Volatile Market: Breeding For Resilience, Not Just Raw Production – Shift your focus from short-term market swings to long-term stability. This piece outlines a strategic breeding philosophy for creating a resilient, efficient herd that can maintain profitability even when feed costs are high and milk prices are unpredictable.
Beyond The Robots: How AI Is Quietly Revolutionizing Dairy Herd Management – To gain an edge in the fractured market described above, you need better data. This article explores how top producers are using AI and predictive analytics to optimize health, reproduction, and component yields, future-proofing their operations against market uncertainty.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
71¢ Class III–IV spread today; that’s real money on the milk check—don’t leave it on the table.
Executive Summary: Here’s the short version, neighbor: barrels jumped 4¢, blocks gained 1.5¢, and that tugged September Class III up to $18.64/cwt while butter slid 5.5¢ and pinned Class IV at $17.93/cwt, which is exactly why the spread matters right now. The math flows through the Federal Order formulas—protein and fat convert those spot moves into pay price—so a penny on cheese isn’t just trivia, it’s mailbox money when USDA posts the monthly Class and Component prices. Globally, EEX and NZX boards keep saying the same thing: U.S. butter looks cheap on a $/lb basis, but EU SMP keeps leaning on our NDM rallies, and that’s why Class IV keeps lagging in 2025’s shoulder season. The practical takeaway: a staged Class III hedge at $18.64 can stabilize revenue while waiting for powders to stop leaking—start with 20–30% of Q4 and adjust if barrels hold $1.80 support for a few more calls. On feed, DEC corn near 4.09 and DEC meal around 293 make the milk-to-feed ratio workable, not wild, which argues for ration tweaks that buy components rather than adding fresh cows just to chase volume. According to the USDA’s pricing framework, small spot shifts compounded over a few weeks can swing component checks more than most people admit—so timing hedge windows to the monthly announcement cycle is just good housekeeping. Bottom line: optimize for component value and hedge the cheese strength now—waiting for Class IV to do the heavy lifting in this setup isn’t a strategy.
Key takeaways
Capture the spread: Locking 20–30% of Q4 at $18.64 can lift revenue stability by roughly $0.20–$0.30/cwt versus staying fully floating if barrels hold $1.80 support this week; stage in, don’t chase.
Component over volume: With Class IV at $17.93 and powders capped by EU SMP, focus on protein/fat yield—USDA’s formula turns small spot gains into real dollars when the monthly bulletin posts.
Global read-through: EEX/NZX signals indicate that U.S. butter is export-competitive, but SMP pressure persists; stay nimble on IV hedges and prioritize cheese-led coverage until FX or SMP shifts the tone.
Practical step today: Re-run rations with DEC corn ~4.09 and DEC meal ~293 to see if a half-point bump in components beats paying up for spot milk basis in the Upper Midwest this week.
Process discipline: Time pricing decisions to the CME spot call cadence and USDA announcement schedule—microstructure and release timing drive how quickly the math hits the milk check.
The split was remarkably clean today: barrels popped 4¢ and blocks added 1.5¢, pulling September Class III to 18.64/cwt. In contrast, a 5.5¢ butter dump leaned on Class IV at 17.93/cwt, so component value steered the check more than the headline average—and it showed on the tape and the settle screen. Here’s the thing, though: cheese strength like this often shows up in near-term checks if it sticks for a few sessions, but butter’s slide is still the ceiling for Class IV-heavy pools until either NDM or butter flips the tone, which the market didn’t hint at today.
What moved—and why it matters
Product
Closing Price
Today’s Move
Week-to-Date Context
Real Impact on Farm
Cheese Blocks
$1.8100/lb
+1.50¢
Firm-to-higher
Directly lifts Class III; every penny here shows up in component value
Cheese Barrels
$1.8000/lb
+4.00¢
The day’s engine
Pre-Labor Day restocking and fall foodservice drove bids; the strongest Class III read-through today
Butter
$2.1850/lb
−5.50¢
Slipping this week
Caps Class IV until fat or powder firm; 4a/4b pools feel it first
NDM Grade A
$1.2525/lb
−0.50¢
Flat-to-softer
Global SMP pressure is still capping rallies; IV math notices
Dry Whey
$0.5700/lb
NC
Stable
Quiet but real Class III support in the background
The thing about barrels today—no trades, higher anyway—was a dead giveaway that bids did the work. Buyers wanted just-in-time coverage during the Labor Day stretch, when school menus and pizza/c-store pulls come back in full force, which is exactly the late-August pattern we tend to see on the call. Butter felt like a motivated-seller tape with nine offers stacked against eight bids, and that’s how a 5.5¢ air pocket prints on light flow when buyers don’t need to chase at the offer—more tone setter than trend by itself, but Class IV still hears it.
Trading mechanics—why cheese felt “real” and butter felt “order-driven”
Barrels showed buyer initiative with two bids versus one offer, while butter flipped that script with offers in control; on a one-lot kind of day in butter/blocks/NDM, that imbalance is all it takes to move price without proving depth beyond the call’s short windows. A caution worth underlining on light-activity days: one-lot prints can stretch price without confirming follow-through. Better question before bigger moves on the basis or spot milk tied to a single call: “Do those bids stick tomorrow?”.
Support and resistance looked straightforward: barrels built a psychological floor at 1.80, while butter’s first test is whether 2.15–2.18 holds as a landing zone or if sellers press again into the next call—that’s the zone to watch for stop-and-reverse behavior midweek.
Microstructure Benchmarks (4-week rolling averages; pilot scaffold)
Product
Trades (4-wk avg)
Bids (4-wk avg)
Offers (4-wk avg)
Blocks
Publishing begins next report (CME Spot Call baseline)
Publishing begins next report
Publishing begins next report
Barrels
Publishing begins next report
Publishing begins next report
Publishing begins next report
Butter
Publishing begins next report
Publishing begins next report
Publishing begins next report
NDM
Publishing begins next report
Publishing begins next report
Publishing begins next report
Today’s read: barrel bidding was noticeably active relative to a “normal” balanced call, while butter offers were roughly in line with what plants expect on a motivated-seller Tuesday heading into late August.
Options Watch: Front-month Class III options implied volatility tracking launches here; the initial read is steady day-over-day, with a verifiable CME-sourced series to be displayed alongside settlements, beginning with the next report, to maintain this signal’s audibility for risk books.
Global landscape—U.S. butter looks cheap; powder lanes are crowded
What’s interesting is how the global board lines up: EEX nearby butter in the mid-€6.6-6.7k/MT neighborhood and NZX butter in the high-$6.6-7.1k/MT range convert into the low-to-mid $3s per lb at today’s euro reference rate. As a result, U.S. butter, currently priced at $2.18 and in the low $2.30s, looks export-competitive once spreads, capacity, and freight align with buyer coverage windows again. SMP remains the street fight—EEX SMP sits near the mid-€2.4-2.5k/MT band while U.S. NDM holds near $1.25/lb, which is exactly why Class IV can’t catch a sustained bid until either EU prices lift or FX swings back our way for several sessions in a row, a dynamic exporters are managing daily. Oceania boards show AMF/butter is firm enough to keep New Zealand competitive in Southeast Asia, so U.S. powder wins are more likely to be tactical cargoes into timing gaps than a sustained flow until pricing or currency tilts our way—classic shoulder-season behavior.
Global Price Conversions: European (EEX) and Oceania (NZX) prices are converted to a comparable $/lb basis. Formula: €/MT to $/lb = (€/MT × USD/EUR) ÷ 2204.62; same-day euro reference rate drawn from central-bank publication for USD/EUR comparisons.
Feed and margins—workable, not wild
December corn closed 4.0925/bu and December soybean meal 293.10/ton, putting a standard 16% protein ration in the zone where a Class III 18.64/cwt check creates a workable income-over-feed, but not an “open the fresh-cow floodgates” setup, especially where hay quality took a heat hit and needs ration tweaks to keep butterfat numbers honest. Keep the milk-to-feed ratio simple for planning: today sits shy of the “3.0 feels green-light” rule of thumb, so the play is tightening rations for efficiency rather than expansion—the same counsel most nutritionists are giving across Wisconsin’s cheese alley and California’s 4a country this week. And a mechanical reminder: the USDA Class & Component formulas serve as guardrails that transmit these spot/futures moves into the monthly pay price, which is why hedge windows should be sequenced around those releases.
Forecast anchors—official releases and what the strip is saying
USDA’s Class & Component Prices are published monthly and anchor pooled milk checks, so cash-flow planning and hedge windows should live on that cadence—it’s unglamorous, but it prevents mailbox surprises when settlement math hits the statement. The strip is saying the quiet part out loud: September Class III settled 18.64 while Class IV sat 17.93, and until fat and powder firm together, expect the III–IV spread to keep signaling which pools are advantaged on component value as late-summer checks settle. For hedge books, the straightforward read is to layer some Q4 milk on cheese-led strength and keep IV hedges opportunistic on rallies until powders stop finding sellers—the same pacing plant buyers tend to use ahead of fall promos when barrels are doing the heavy lifting.
Regional color—Upper Midwest feels the lift first; California minds the butter
Upper Midwest plants are pulling hard into fall cheese demand, and that’s where the 4¢ barrel print does the most good immediately for mailbox checks and short-haul spot milk premiums for weekend pasteurizer runs—one extra clean load more than earns its keep in late August. California’s story is different—4a math feels the butter slip directly, even as Westside feed costs eased a touch with corn drifting and meal not spiking, so cash-flow planning favors steady, not sprinting, while processors manage butter stocks and churn time into early fall. In both regions, the same operational refrain kept coming up: keep components tight, watch the call, and don’t let a one-lot Tuesday swing the pricing plan without a second day of confirmation on the spot tape and the futures close—it’s just good discipline in August.
What to do now—moves that travel from barn to boardroom
Price risk: Consider layering 20–30% of Q4 Class III at or above today’s settle to lock cheese-led strength; keep Class IV hedges opportunistic on rallies until NDM stops leaking.
Feed check: Re-run ration economics with DEC corn at ~$ 4.09 and DEC meal at ~$ 293; can a ration tweak buy a half-point of component cheaper than chasing the spot basis this week?
Premiums & formulas: Call the plant to confirm how barrels/blocks roll into the pay price and whether fall-promo premiums are available for consistent loads and quality in a ~71¢ III–IV spread world.
Market voices—how participants read the day
Floor chatter after the call: “barrels are doing the heavy lifting,” which fits a two-bid/one-offer setup and a no-trade uptick that tells you buyers are leaning—when that starts pre-holiday, it often carries a few sessions if fundamentals hold. The processor from the Midwest said fall promos are real on the books, and butter coverage feels adequate for immediate needs—which is exactly the kind of split that prints a cheese-up/butter-down Tuesday in late August. From a risk seat, the guidance was to respect the spread: hedge the thing the market is rewarding (cheese) and avoid forcing the thing it’s discounting (powders) until the global board and FX stop rewarding Europe and Oceania for more than a day or two at a time.
Bottom line—the component mix did the talking
Cheese strength nudged near-term checks higher, while butter softness reminded everyone that Class IV can cap upside until powders and fat firm together, which argues for managing risk by class instead of treating “the milk price” as one big number this week. One cue into tomorrow’s call: let the 1.80 barrel floor dictate whether to add a little Class III protection, and don’t chase Class IV until the powder board, FX, and U.S. spot stop pulling against each other for more than a day or two—it’s the patient money that tends to stick into October.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Milk prices held steadier than expected last week — but the underlying pressures are real. Here’s what smart producers are doing.
EXECUTIVE SUMMARY: Listen up — there’s some serious turbulence brewing in dairy markets right now. The Global Dairy Trade auction saw just a 0.3% price dip, but don’t let that fool you — U.S. cheese prices plummeted nearly 4% in one week, and China’s still pulling back hard from imports while Europe floods the market with surplus milk. Here’s what caught my attention… the producers who are thriving right now aren’t the ones with the most cows — they’re the ones milking smarter, not harder. We’re talking about farms that can break even at $17/cwt, while others are scrambling at $20. The difference? They’ve got their feed costs locked down, they’re culling strategically, and they’re using risk management tools that most farmers ignore. This isn’t just a rough patch — it’s a fundamental shift separating the wheat from the chaff.
KEY TAKEAWAYS:
Lock in your downside with Dairy Revenue Protection — it’s not just insurance, it’s profit protection when milk hits $16-17/cwt (and with current trends, that’s not fantasy anymore)
Feed strategy wins are real money — producers locking soybean meal contracts now are saving $30-50 per cow monthly compared to spot pricing
Strategic culling delivers 5-12% efficiency gains — removing the bottom 20% performers can boost your per-cow average by 200+ pounds monthly
Lender relationships matter more than ever — proactive communication about cash flow keeps credit lines open when markets get ugly (and they’re getting ugly)
Market intelligence pays — tracking Global Dairy Trade auctions and China’s import data gives you a 2-3 week advance warning on price moves that can make or break your quarter
We get it. You see those market signals, and it makes your stomach drop.
Let’s sit down with a coffee and unpack what’s really going on with the dairy market in 2025—and what you can do on your farm to face these times head-on.
The Numbers Don’t Lie — And They’re Talking
Here’s what the latest data tells us:
U.S. milk production in July 2025 hit 19.23 billion pounds, up 3.3% from last year, with nearly 9.47 million cows and average milk per cow climbing about 1.7% to over 2,000 pounds monthly. What’s particularly noteworthy is that producers across the Midwest are crediting better herd management and refined feeding programs with driving these gains.
Meanwhile, European producers aren’t sitting idle. EU milk production reached 160.8 million tonnes in 2023, marking steady growth driven by favorable weather conditions and lower feed costs.
Now here’s the kicker: China, our longtime dairy superconsumer, has pulled back hard. Multiple industry reports confirm that they’ve dramatically scaled back imports due to high inventories sitting in warehouses, as well as economic headwinds that aren’t expected to subside anytime soon.
Look at the Global Dairy Trade auction on August 19—prices declined just 0.3%, suggesting some market stabilization after months of volatility. To put that in perspective, Fonterra’s benchmark unsalted butter sold for $7,175 per tonne, while their key Whole Milk Powder product fetched $4,025 per tonne.
But closer to home? CME cheese prices tell a different story.
Block cheddar dropped from $1.83 to $1.76 per pound (a 3.8% decline), while barrel prices took a 5% hit over the week ending August 22. Meanwhile, the European Mild Cheddar index is holding firmer at €4,435 per tonne, showing some regional price differences. That’s your classic foodservice demand warning signal right there.
What You Need to Do Right Now
If you can’t break even with milk around $17/cwt, it’s time for a hard look at your cost structure. Here’s what smart producers are focusing on:
Get serious about risk management. Tools like Dairy Revenue Protection aren’t just government programs—they’re lifelines when markets get nasty.
Optimize your feed strategy. With grain markets looking somewhat friendlier than last year, this might be your chance to lock in favorable contracts, especially on soybean meal. But don’t get greedy—flexibility has value too.
Make tactical culling decisions. I know it’s painful, but removing your lower-performing cows earlier can save serious feed costs and help you right-size production for market realities.
Don’t ghost your lender. Keep that relationship strong. Share your numbers, explain your plan, and show them you’re thinking ahead.
The Big Picture — Supply, Demand, and Reality
Here’s what’s fascinating about this cycle:
Europe’s creating what everyone’s calling a “wall of milk,” with massive volumes getting processed into skim powder. The U.S. is steadier but still quietly adding volume through those productivity gains I mentioned.
Add in the Southern Hemisphere’s seasonal flush—New Zealand’s spring milk is just starting to ramp up—and you’ve got a supply picture that’s, frankly, overwhelming.
But demand? That’s where things get interesting.
China’s absence has left this massive hole that nobody else can fill. This is creating some interesting trade shifts. For example, with European products needing a home, recent shipments of EU butter to the U.S. surged by over 80%. At the same time, China has been taking advantage of lower tariffs to buy huge volumes of whey from the U.S., even while shunning milk powder.
Southeast Asia and the Middle East are buying, sure, but they’re opportunistic and price-sensitive. They’ll nibble at the edges, but they can’t absorb the surplus.
Technology in Tough Times
What strikes me is how many producers continue to invest in automation, despite tight margins.
Robotic milking systems are now operating on about 20% of Canadian farms, and I get why—better consistency, reduced labor headaches, more detailed cow monitoring.
But let’s be real: these aren’t magic bullets. Recent industry analysis indicates that while efficiency improvements can be substantial, success ultimately depends on how effectively you manage both the technology and your operations. In this market, you’d better have rock-solid numbers before making that kind of investment.
Eyes on the Horizon
Mark your calendars for a few key dates:
The next Global Dairy Trade auction, scheduled for September 2, will reveal whether the price stabilization holds. China’s August import data (due in mid-September) could be a real game-changer if it signals a resumption of buying. Europe’s production report in late September will tell us if their supply surge is finally moderating.
And here’s something most folks miss: keep an eye on the U.S. Restaurant Performance Index. It’s your early warning system for foodservice demand, which drives a huge chunk of cheese consumption.
Bottom Line — Tough Times, Tougher Farmers
This industry has weathered brutal cycles before, and this time will be no different.
The producers who stay sharp on their numbers, utilize available safety nets, and make tough decisions now will be the ones who emerge stronger. This downturn won’t last forever, but the choices you make today will define your operation tomorrow.
The bottom line? While everyone else is complaining about prices, savvy operators are positioning themselves to emerge from this downturn stronger than when they entered.
What strategies are working on your farm to weather this storm? Share your insights in the comments below.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Dairy Farming’s Brutal Reality: The Cold Hard Truth About the Cost of Production – This article provides a tactical masterclass in cost management. It reveals practical methods for analyzing your true cost of production, helping you identify immediate opportunities for efficiency gains that are crucial for profitability in a down market.
The ROI of Dairy Automation: Is It Worth the Investment? – This piece examines the real-world return on investment for the technologies mentioned in the main article. It demonstrates how to evaluate if automation is the right fit for your operation, ensuring your capital investments directly translate into measurable cost savings.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Margins are locked up tight—did you know Midwest IOFC is hovering just above breakeven, with Class III nearly $0.60/cwt squeezed by feed costs?
EXECUTIVE SUMMARY: Hey, here’s what’s really going on—everyone talks about cheese leading the market, but it’s feed costs and weak powder exports that’ll make or break your milk check. Look at today’s numbers: block cheese up $0.02/lb, sure, but butter dropped to $2.32/lb and dry whey sank to just $0.59/lb. IOFC ratios in Wisconsin and California are pinched, with some herds seeing margins slip below $1.50/cwt profit. Globally, the U.S. still undercuts Europe on butter, but powder competition from New Zealand is brutal. That’s why the big co-ops are hedging feed like crazy… and pushing for forward risk programs. If you’re not watching both Class III futures and your soybean meal contract, you could be missing real opportunities for profit. Try this: reset your hedging—lock in a milk floor, book feed when it dips, and don’t sleep on export chatter. That combo could easily put an extra $4,000–$7,000 in your pocket this quarter.
KEY TAKEAWAYS
Cheese blocks are propping up Class III, but dry whey at $0.59/lb wipes out up to $0.40/cwt from your pay price. Check your monthly USDA checkoff for the hit.
Soybean meal hit $295.70/ton—a 7% rise over summer—so locking feed early could save you thousands on IOFC alone. Talk to your nutritionist before the next rally.
Export butter opportunities remain strong, but logistics will decide whether U.S. product actually clears the dock. Watch USDA and trader calls for trends.
Culling’s picking up across Midwest dairies due to heat and feed pressure; monitoring herd health now means less risk come fall. Review your cow records and adjust if needed.
Don’t wait for whey or powder prices to rebound—use DRP or puts on Class III while the floor’s holding at $18.86, lock in margin, and keep cash flow steady.
That’s what I’m seeing out here—dairy’s never just the spot cheese price. If you want paychecks that translate to growth, watch those feed numbers and export flows like a hawk. Seriously, try these tweaks. They’re what the progressive outfits are doing… and they’re seeing the difference right in their milk checks.
What’s happening in the CME dairy pit today? If you blinked, you might’ve missed it—cheese blocks put on a small rally ($0.02/lb up), but everything else? Butter nudged lower, NDM keeps feeling soft, and dry whey? It’s almost like nobody showed up to buy. That’s the sort of start that gets barn conversation rolling: “Are the cheese buyers trying to lift this whole market on their own?”
What strikes me about today’s story isn’t just who’s leading, but who’s dragging. Block cheese is standing up—anyone milking for Class III is grateful for it. But whey’s like that last stubborn heifer—won’t budge, and until she does, Class III just can’t run.
Here’s a quick scan of the numbers that hit your milk check:
Product
Price
Move
Key Driver
Short-Term Outlook
Farm Impact
Cheese Block
$1.85/lb
+2.00¢
Food Service Demand
Slightly Bullish
Shoring up your next Class III check.
Cheese Barrel
$1.81/lb
Flat
Retail Packager Demand
Neutral
No change, but block strength helps.
Butter
$2.32/lb
-1.25¢
Export Pricing Gap
Tentative
Softens Class IV—needs global pull.
NDM Grade A
$1.265/lb
-0.50¢
Export Competition
Weak
Squeezes Class IV, flattens margins.
Dry Whey
$0.59/lb
-1.50¢
Oversupply
Heavy
The biggest drag on Class III right now.
What This Means for Your Milk Check
Class III September futures parked at $18.86/cwt; Class IV, $18.42/cwt. If you’re hedging next month’s milk, the window sits around $18-$19/cwt—solid, not a home run, but block cheese is your best friend. A floor trader mentioned, “Everybody’s selling butter; nobody needs it now.” With nine open offers and zero bids at the close, it’s like waiting for rain when you’ve got hay stacked high. Butter barely moved (just two trades all day), and the rest just marked—to market. Low conviction leads to wide spreads, and that usually means volatility is waiting in the wings if traders wake up.
The Squeeze at Home: Feed Costs & Herd Health
If you’re watching feed costs, there’s good news and bad. December corn trickled down to $4.03/bu (small win), but soybean meal surged to $295.70/ton. IOFC ratios in Wisconsin and upstate New York are not great. We’re seeing a 2.15 ratio; guys feeding fresh cows in California say their basis is even hotter. One Chippewa Falls producer texted, “Block numbers look strong, but feed costs have us on edge.” Midwest cows aren’t showing peak yield, culling’s ticking up, and if prices don’t turn, regional supplies could tighten come September. Northeast producers echo the same sentiment: young cows are keeping up, but older cows are dropping off.
The Global Wild Card: Will Exports Show Up?
Here’s the thing, though—exports are the wild card. U.S. butter is a steal compared to European or New Zealand products. Export brokers expected a flood of outbound loads, but freight and logistics are real headaches, and some are starting to wonder if it’ll get solved this season. Processors in the Southwest are amped for exporting butter if logistics open up—“Asia wants the fat, but we need more trucks than we’ve got,” said one plant manager. NDM and powders? We’re still getting undercut by Europe on SMP, and New Zealand’s pricing is tough. Southeast Asia’s buying, but every contract feels like a knife fight. Mexico’s steady, but picky.
A look at the IOFC numbers for August (see the chart at the end of this article) shows margins in the Midwest remain tight, and with feed options limited and meal basis burning out west, everyone’s feeling the pinch.
Actionable Strategy: Farmer’s Short List
Here’s what I’d do (and what I’m hearing from guys across the belt):
Lock a floor with DRP or put it in if Class III fits your cost structure; don’t wait for the whey.
Hedge soybean meal, especially if your ration’s heavy.
Keep your cash flow plan on a tight leash. Sideways checks for September; don’t overlever if whey and powder keep softening.
Watch export chatter and FMMO headlines—basis changes next season could change the local payout picture.
Industry Pulse and Final Insights
The FMMO reform discussion is currently trending. Webinar feedback suggests that Southwest and Northeast producers should watch how test formulas play out. Regulatory changes are coming—could be a game changer for your Class III/IV checks if the USDA gets its way.
If there’s one theme, it’s balance—cheese blocks are trying to hold margins, but the rest of the barn’s getting squeezed. Export prospects are real but fragile, and feed is where next month’s check could get eaten up. If you haven’t dialed in a risk plan, don’t wait. And if you want the real scoop, check those IOFC visuals—sometimes the charts say as much as any table.
Stay loose, ask around, and keep sharing what’s happening at your place—the smartest moves come from what we learn off each other’s experience.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Unlocking Dairy Profitability: Mastering Margin Management and Risk Mitigation – This article provides a step-by-step guide to the risk management tools mentioned in the report. It details practical strategies for using DRP and hedging to protect your bottom line against the exact market volatility analyzed above.
Navigating the Tides of the Global Dairy Market: A 2024-2025 Outlook – Go beyond the daily numbers with this strategic outlook on the global dairy market. This piece analyzes the broader economic forces and long-term trends shaping prices, helping you make more informed decisions for future planning and investment.
The ROBOT REVOLUTION: How Automation is Reshaping the Modern Dairy – Explore how leading dairies are using automation to combat the margin pressure discussed in the report. This article showcases how robotic technology can boost efficiency and lower production costs, offering a proactive strategy to improve profitability.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Think the market’s stable? Think again — this plateau might be a trap!
EXECUTIVE SUMMARY: Look, I’ve been watching this industry long enough to know when something doesn’t smell right. Everyone’s talking about market “balance,” but history shows these calm periods usually end badly. Debt levels are climbing — many producers are sitting above 40% debt-to-asset ratios — while replacement heifers have skyrocketed from $1,600 to over $4,000 in just 18 months. Meanwhile, processing capacity is expanding faster than the milk supply can keep up, creating pockets of oversupply that could drive down local prices. Dr. Nicholson’s economic models at Wisconsin aren’t pretty — they show potential milk price drops of $1.90 per hundredweight and export losses hitting $22 billion. Here’s the thing: smart producers aren’t waiting around to see what happens. They’re tightening their belts, building cash reserves, and hedging their bets right now.
KEY TAKEAWAYS:
Debt management is critical — keep your debt-to-asset ratio below 35% to avoid getting squeezed when markets turn
Build liquidity like your business depends on it — aim for six months of operating reserves because cash creates options when others are forced into crisis decisions
Start hedging now while you can — use Class III futures or feed cost hedging to lock in margins before volatility hits
Diversify your buyer relationships — don’t put all your eggs in one processor’s basket, especially with new capacity coming online everywhere
Focus on operational efficiency ruthlessly — every dollar you save on feed conversion or labor costs today becomes margin protection when prices drop
The chatter in the dairy industry is all about “market balance.” Prices have plateaued, and many believe this stability will last. But here’s the thing — this perceived comfort might just be setting you up for a devastating fall.
History is littered with periods where seemingly stable prices plunged unexpectedly, catching producers completely off guard. Think back to the early 2000s and the 2014-2015 cycles — long stretches of steady pricing that lulled producers into aggressive expansion and debt accumulation. When the market suddenly shifted, those who had leveraged too heavily saw their equity vanish overnight.
Current Warning Signs Are Flashing Red
Today, multiple vulnerability indicators are blinking simultaneously, and frankly, they’re being ignored by too many operators who’ve bought into the “balanced market” narrative.
Debt levels are rising across the industry, with many producers carrying debt-to-asset ratios exceeding 40% — a historically critical stress marker that has preceded major financial casualties in previous downturns. Cash flows are being squeezed by stubbornly high feed and input costs that refuse to come down despite commodity corrections.
Interest rates are hovering near 5% for qualified operations, making expansion financing and debt refinancing particularly costly propositions. Add persistent policy uncertainties — from potential trade disruptions to shifting immigration and labor regulations — and you’ve got a perfect storm brewing beneath the surface calm.
The Economic Modeling Says It All
Crucially, recent economic modeling from Dr. Charles Nicholson at the University of Wisconsin-Madison isn’t speculative forecasting — it’s hard data analysis. His research reveals specific scenarios where various trade and policy shifts could result in milk price reductions of up to $1.90 per hundredweight and cumulative U.S. dairy export value decreases of $22 billion over a four-year period.
That’s not a theoretical risk — that’s economic modeling based on current market structure and realistic policy trajectories.
The replacement cattle market tells an even more dramatic story. Replacement heifers have surged from around $1,600 per head in mid-2023 to over $4,000 by late 2024 — a 150% spike driven by inventory scarcity and the beef-on-dairy trend. When input costs are exploding while revenue streams remain stagnant, that’s a classic vulnerability setup.
Meanwhile, dairy processing capacity has been expanding aggressively, with new mega-plants coming online across multiple regions. But milk production growth isn’t keeping pace uniformly, creating potential pockets of oversupply that could hammer local pricing.
Are You on This List? Identifying the Most Vulnerable Operations
Are the operations walking the tightrope right now? Those who expanded aggressively during recent favorable periods, especially in high-cost regions where water, feed, and regulatory pressures add operational complexity. Small to mid-size operations with thin margins and limited cash reserves are particularly exposed.
The highest-risk profiles include:
Operations with debt-to-asset ratios above 40% and debt service coverage below 1.25
Producers dependent on single-buyer relationships or concentrated market exposure
Facilities in regions facing water restrictions, increased regulatory pressure, or limited processing alternatives
Operations that banked on continued export market stability without downside protection
Here’s what really concerns me: the early warning signs I’m seeing mirror patterns from previous market corrections. The disconnect between soaring replacement costs and stagnant milk premiums? That’s a classic vulnerability indicator that preceded past crashes.
Your Defensive Playbook: Strategic Protection Plan
Market turbulence isn’t a question of if — it’s when. Smart operators aren’t sitting around hoping this plateau continues. They’re actively building defensive positions while opportunities still exist.
Diversification isn’t optional anymore. Don’t put your operation’s future on a single buyer or market channel. I’m seeing forward-thinking producers develop relationships with multiple processors, exploring emerging opportunities in specialty markets and value-added product streams.
Risk management tools deserve serious consideration. Whether through Class III milk futures, options contracts, or cross-hedging strategies for feed costs, you need downside protection. Recent analysis shows that effective hedging strategies can significantly manage margin risk during volatile periods.
Cash reserves aren’t a luxury — they’re survival insurance. Target at least six months of operating reserves. Operations with strong liquidity positions will have options when others are forced into crisis decisions.
Financial discipline matters more than ever. Aim for debt-to-asset ratios below 35% and debt service coverage ratios above 1.25. These aren’t arbitrary benchmarks — they’re financial stress indicators that historically separate survivors from casualties.
Take Action Now — Your 4-Step Priority Plan
If I were making decisions on your operation tomorrow, here’s my immediate action checklist:
1. Get a Real-Time Financial Snapshot. Immediately calculate your actual debt-to-asset ratio and debt service coverage. If you’re above 40% and below 1.25, respectively, you need a deleveraging plan now, while milk prices still provide some flexibility.
2. Lock In Your Risk Management. Don’t gamble with your operation’s future. Whether it’s forward pricing a portion of your production, establishing feed cost hedges, or negotiating flexible supply agreements with multiple buyers, your goal is to minimize as much uncertainty as possible from your profit and loss (P&L) statement.
3. Hunt for Efficiencies Ruthlessly. Every dollar you save in feed conversion, labor productivity, or operational costs today becomes a dollar of margin protection when the market turns. This requires disciplined focus on measurable improvements.
4. Hoard Cash Like Your Business Depends on It. If that means pausing expansion plans or selling non-core assets to build liquidity reserves, do it. In a downturn, cash creates options, and options are the difference between survival and failure.
The Bottom Line
Don’t be lulled into complacency by the current price plateau. This “market balance” narrative is dangerous precisely because it breeds the kind of strategic inaction that destroys operations when cycles inevitably turn.
The dairy industry’s current stability might be real, but it’s also fragile. External shocks — whether from trade policy changes, weather events, disease outbreaks, or broader economic disruption — could unravel today’s equilibrium faster than most producers realize.
The next market cycle isn’t coming someday — it’s building momentum right now, beneath the surface of this apparent calm. The question isn’t whether it will arrive, but whether your operation will be positioned to weather it when it does.
Will you be ready?
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Profit and Planning: 5 Key Trends Shaping Dairy Farms in 2025 – While the main article advises hunting for efficiencies, this piece provides a tactical roadmap. It details five specific areas, from data integration to sustainability, where you can find cost savings and boost operational resilience against market volatility.
USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers – This article provides the official market analysis to balance the main piece’s warning. It breaks down the USDA’s forecasts on milk production, pricing, and exports, giving you the hard data needed to assess opportunities and validate your risk management strategy.
The $8 Billion Infrastructure Trap: Why America’s Dairy Boom Could Become Its Biggest Bust – For a deeper dive into the processing capacity risk mentioned in the main article, this piece is essential. It explores how the massive infrastructure buildout could create regional oversupply and price pressure, revealing the mechanics behind the potential market trap.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Milk prices drop 4.1% but your feed bill’s the same—here’s how smart producers are still making money
EXECUTIVE SUMMARY: Look, here’s what’s really happening out there—the old “more cows, more money” playbook is broken. I’m talking to producers from Ontario to Idaho, and the ones still making decent money aren’t the guys with the biggest herds. They’re the ones pushing butterfat above 4.1% and protein over 3.3%, which can mean an extra $2 per hundredweight when milk prices are getting hammered.The Global Dairy Trade took a 4.1% hit in July, and powder prices dropped 5.1% to $3,859 per metric ton—but here’s the thing. Feed costs are actually holding steady around $4.50 for corn and $350 for soybean meal, so if you’re smart about efficiency, your margins don’t have to tank.China’s cutting back on imports by 12-15%, Europe’s drowning in €850 per cow compliance costs, and everyone’s scrambling to figure out what’s next. Meanwhile, the producers who maintain 60-90 days of operating cash and hedge 40-60% of their production are sleeping soundly at night. Stop chasing volume and start chasing components—that’s where the money is in 2025.
KEY TAKEAWAYS
Lock in Feed Cost Savings: Target feed costs under $9.50/cwt by tracking your receipts against USDA data on a monthly basis. Every dollar you save here goes straight to your bottom line when milk prices are soft.
Component Premium Strategy: Push for butterfat over 4.1% and protein above 3.3%—this can net you an extra $2/cwt in premiums. Pull your latest DHIA report and see where you stand right now.
Smart Risk Management: Hedge 40-60% of your milk production through DMC or forward contracts. With China backing out and market volatility hitting hard, unprotected milk is a gamble you can’t afford to take.
Cash Flow Defense: Build and maintain 60-90 days of operating cash reserves. Call your lender this week and ask for their benchmark data on what successful operations are keeping liquid.
Strategic Market Timing: Use 2025’s feed cost stability (corn near $4.50/bu) to improve feed conversion ratios. Wisconsin Extension trials show 4-6% improvements are realistic with better TMR protocols.
The thing about this market? It feels like watching fresh cows trickling into a dry lot on a chilly morning—uneasy, unpredictable, and every farmer feeling it a bit differently. I’ve received quite a few calls lately from folks in Ontario to Idaho, and the question is always the same: how do we handle falling milk prices amid rising input costs?
At the July 15, 2025, Global Dairy Trade event, the index slid 4.1%, with whole milk powder easing 5.1% to $3,859 per metric ton. For those of you in cooler climes like the northern U.S. or Canada, this slump echoes in your contracts too—European futures have their own skirmishes with skim milk powder and butter prices wavering, though sometimes not as sharply as headlines might suggest.
However, here’s the thing—if your nutritionist isn’t providing you with data, ask for it. Wisconsin Extension trials showed that herds implementing TMR protocols saw a 4–6% improvement in feed conversion ratio. That’s real fuel for boosting milk production without breaking the bank. With feed costs holding steady—corn is hovering near $4.50 per bushel and soybean meal is under $350 per ton, according to the USDA’s June 2025 Feed Grains Outlook—your margins depend heavily on capturing these efficiencies.
Herd Growth: More Cows, But Are We Making More Money?
However, let’s be clear about what the headlines often overlook: more milk doesn’t automatically translate to higher margins. Yes, U.S. dairies increased cow numbers by more than 45,000 head since July 2024, with rolling averages inching up—some hitting 24,000 pounds per cow or better. However, sharp operators I know keep a close eye on component checks, pushing to keep butterfat above 4.1% and proteins above 3.3%. That’s becoming a critical tactic, especially as risk management becomes a staple, not an option.
And what about the Australians and Kiwis? While Fonterra reports a 1.5% increase in collections, places like Gippsland in Australia actually saw a 2% drop in production year-over-year, due to dry weather. The growth we’re seeing isn’t universal—it’s pockets of efficiency, careful grazing, and smart tech upgrades keeping some farms afloat.
China’s Changing Game—Buying Less Powder, Investing More at Home
One of the game-changers in this market is China. Market analysts project a 12-15% decline in China’s whole milk powder imports for the latter half of 2025, driven by an estimated $5 billion state-backed investment in domestic processing capacity—including robotics, new plants, and larger herds—which is reshaping global trade.
This is why you’re hearing about hedging at every co-op meeting. If your risk advisor suggests hedging half of your production, don’t just nod—ask them for the Rabobank or USDA FAS data they’re using. Tools like the Dairy Margin Coverage (DMC) program are experiencing unprecedented use.
Europe’s Compliance Crunch and Margin Squeeze
For European producers, the mountain to climb looks steeper. The European Agricultural Fund for Rural Development recently estimated that environmental compliance costs could reach as high as €850 per cow, and the European Dairy Farmers’ Association confirms that margins have dipped below 3%. The price per hundred kilos may hover near EUR53, but when you factor in growing paperwork and strict audits, chasing component premiums is the real strategy to keep things running.
Herd managers across northern Europe are doubling down on ration tweaks just to eke out extra euro per tank, especially on butterfat numbers, which remain the shining stars in this squeeze.
The Bottom Line: Managing Break-Even and Cash Flow in Bumpy Markets
Farm finances are front and center. With feed costs workable near $9.50 per hundredweight (cwt) but becoming a stretch above $11/cwt, the risk is high. Add new barn debts or payments on robot leases, and that margin tightens fast, especially if you’re caught unprepared. For cash flow, lenders I trust in Ohio say surveys show 80% of stable operators keep 60–90 days’ operating cash in reserve. Don’t take my word for it—call your farm credit rep and ask for their 2025 Small Farm Panel data.
The old “expansion is the answer” mantra isn’t holding water anymore—unless you’re securely hedged and have a plan to manage feed costs, holding steady or trimming non-critical expenses might be your best move. That could mean swapping hay varieties, leaning more on home-grown silage, or revamping ration strategies—all of which are trending upward these days.
Tactics That Survive (According to Real Data)
So, what separates the survivors from the rest in 2025? It comes down to executing these data-driven best practices:
Target Key Feed Cost Metrics: Aim for a rolling average under $9.75/cwt, verifying your monthly receipts against USDA and CME records.
Verify Component Premiums: Use your DHIA test sheets to confirm eligibility. An average butterfat content of over 4.0% typically qualifies for processor incentives—check your contract for the exact rate.
Audit Your Risk Coverage: Ensure 40–60% of your production is covered by hedging or margin protection. Use the report from your processor’s portal, not just a broker’s pitch.
Benchmark Your Payout: Compare your monthly net milk check to regional averages for similarly sized operations.
Monday Morning Actions
Pull your July DHIA test sheet. Log your herd’s butterfat, protein, and SCC in your farm software. Know your numbers cold.
Calculate your current feed cost/cwt using your latest invoice data. Compare it directly with the USDA’s monthly outlook.
Cross-check your export contract details with the latest Rabobank and USDA FAS trends. Confirm your risk coverage is adequate for the current market.
Schedule a 30-minute call with your ag lender. Review your current compliance and operating costs against their official benchmarks.
What’s the takeaway? This market’s testing every assumption we had about volume, efficiency, and hedging. The operators who continually adapt—looking both backward at lessons learned and forward to technological advances—will be the leaders when the turning point arrives. And if you want the nitty-gritty regional detail or a gut check on your numbers, well, you know The Bullvine’s got your back. This ride? We’re all in it together.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Everything Dairy Farmers Need to Know About Residual Feed Intake – This article provides a tactical deep-dive into feed efficiency, revealing practical strategies for measuring and improving Residual Feed Intake (RFI). It’s a perfect complement for producers wanting to execute on the main article’s advice about managing feed costs.
Profit and Planning: 5 Key Trends Shaping Dairy Farms in 2025 – For a strategic, market-focused view, this piece explores the long-term trends in processing capacity, component values, and technology adoption. It expands on the main article’s market analysis, helping you position your operation for future profitability and stability.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Think all milk markets move together? Think again. It’s a split, and you need to know why.
EXECUTIVE SUMMARY: Here’s the deal: dairy markets aren’t moving as one anymore. Protein prices—think whey and cheese—are surging, up 6.5% in Europe and driving 34% growth in U.S. exports, while butter’s getting hammered despite record production. The USDA’s August forecasts tell the story: the milk supply’s growing, but fat-based prices, such as butter, which recently traded at $2.52/lb, has since slid into the low $2.30s, squeezing margins hard for herds that push butterfat. Meanwhile, Europe’s tightening supplies, combined with a surge in cheese production, are sending whey futures through the roof. For U.S. producers, it’s all about exports now—that engine’s keeping domestic prices afloat. Bottom line? Stop thinking of milk prices as a single number. Your components matter more than ever, and smart hedging based on your herd’s profile can protect real profit in this messy market. This shift isn’t temporary—it’s the new reality, and you need to act on it.
KEY TAKEAWAYS
Whey futures jumped 6.5% in Europe as processors prioritize cheese over butter—track EEX weekly to catch these protein signals early and adjust your marketing timing
U.S. cheese exports hit 52,191 metric tonnes in June, a 34% surge that’s reshaping global trade flows—use this momentum if you’re naturally high-protein to capture better pricing
Component-specific hedging is now essential: Class III (cheese/whey) vs Class IV (butter/powder) pricing can swing your margins by hundreds per cow—know your herd’s profile and hedge accordingly
Currency and export dependency create new risks—a stronger dollar could torpedo U.S. competitiveness overnight, so monitor USDEC trade data monthly to stay ahead of shifts
European supply constraints mean cross-border milk flows are increasing—if you’re near processing regions, this volatility creates arbitrage opportunities for savvy producers
A significant shift is occurring in dairy markets that is impossible to ignore. Protein components—think whey and cheese—are charging upward, driven by tightening milk supplies and serious export momentum. But flip the coin, and fat components, especially U.S. butter, are getting hammered by record production volumes that just won’t quit. This isn’t some temporary blip we can wait out. It’s fundamentally changing how we need to think about our operations.
Europe’s Milk Squeeze is Getting Real
Take what’s happening across Europe. France is tightening up—and I mean really tightening. According to FranceAgriMer’s August 2025 data, milk deliveries decreased by 0.7% in the first half of this year, with the dairy herd at a record low, standing at approximately 3.075 million heads as of December 2024. This isn’t just a weather pattern; it’s a structural shift.
But here’s where it gets interesting… Denmark has been holding its own, showing modest gains in milk deliveries, with butterfat numbers around 4.34%—a pretty solid quality indicator. And the UK? They’re pulling off something fascinating: shrinking herds but climbing milk production. AHDB recorded a 5.2% production jump in May 2025 despite fewer cows in the system. Farms over there are really dialing in their genetics and management protocols.
This patchwork means milk is flowing across borders more and more. Processors in tighter regions like France and Germany are relying on surplus milk from Denmark and Poland just to keep their plants running at capacity. This complexity is making spot markets incredibly volatile. If you’re not plugged into these regional flows, you’re basically flying blind.
What stands out is the surge in whey futures on the EEX market, which recently jumped 6.5%, reaching around €967 per tonne. This isn’t just a feed story anymore. It reflects processors prioritizing cheese production, as it’s more profitable when milk is scarce. Whey prices have become a barometer for the health of the European milk pool.
The U.S. Export Engine—Running Hot but Vulnerable
Product
June 2024 Export Volume (MT)
June 2025 Export Volume (MT)
Year-over-Year Growth (%)
Cheese
38,939
52,191
34%
Butter
Baseline
2x Baseline
100.4%
Swing over to the U.S., and the USDA bumped their 2025 milk production forecast to a hefty 229.2 billion pounds. That’s a lot of milk looking for a home. Fortunately, exports are soaking up much of that growth. USDEC reported June 2025 cheese exports hitting a record 52,191 metric tonnes—a 34% jump year-over-year—and butter exports doubled.
The reality is that the export engine is essentially propping up the entire domestic price structure. If those shipments to Mexico, South Korea, and Japan start slowing down… well, farmgate prices could take a serious beating.
On the CME, block cheese prices climbed near $1.85 per pound in early August while butter prices slid into the low $2.30s. That spread is complicating margin calculations for many producers, especially those naturally high in butterfat.
Metric
July 2025 Forecast
August 2025 Forecast
Change
Impact
Milk Production (Billion lbs)
228.9
229.2
+0.3
More supply pressure
Butter Price ($/lb)
$2.565
$2.520
-$0.045
Bearish for fat-focused herds
Class IV Price ($/cwt)
$19.05
$18.95
-$0.10
Lower margins
Class III Price ($/cwt)
$18.50
$18.50
Unchanged
Stable for protein producers
Oceania’s Playing Defense
In New Zealand and Australia, the mood is cautious. Whole milk powder futures barely budged—up just 0.2%—while skim milk powder is getting pounded by competition from both U.S. and European suppliers. Fonterra’s making moves, though, increasing the availability of their Instant WMP to chase premium market segments. Smart play, considering standard WMP is turning into a commodity slugfest.
Supply-Side Risks to Watch
European drought conditions remain unresolved. The 2024 Bluetongue outbreak is still constraining replacement heifer availability. U.S. feed costs remain elevated, which could eventually pressure production growth.
Systemic & Technical Risks: As the recent cancellation of a GDT Pulse auction—one of the key platforms for short-term price discovery—demonstrated, the industry’s reliance on digital platforms introduces new vulnerabilities. Technical failures at critical moments can instantly disrupt price discovery and procurement strategies.
Any one of these factors flipping could shift supply-demand dynamics significantly.
Your Action Plan: How to Thrive in a Split Market
For those of us actually running operations, here’s the bottom line: treating dairy as one big bucket isn’t going to cut it anymore. Fat and protein components behave like completely separate markets.
Know exactly where your herd’s component yields sit. If you’re naturally high-protein, keeping a close eye on Class III market pricing will better protect your bottom line than Class IV prices. Conversely, if you’re pushing butterfat numbers, you need to watch CME butter futures like a hawk and consider some hedging strategies.
Currency movements? They’re not background noise anymore. A strengthening dollar can quickly torpedo U.S. export competitiveness, and that impact is felt at the farm gate.
Keep track of the major export buyers. Mexico’s price sensitivity, South Korea’s import patterns, Japan’s product quality demands—these aren’t vague global forces; they shape what lands in your milk check.
Weekly monitoring isn’t optional. Watch EEX whey futures for protein market signals. Track CME block cheese and butter for U.S. component pricing. Check GDT auction results every two weeks for Oceania’s direction—that influences global powder markets. A monthly deep-dive into USDEC trade data will tell you if the U.S. export story is holding up.
Tailor your hedging strategy to match your herd’s component profile, not some generic industry average. A 4.2% butterfat herd has a very different risk profile than a 3.2% protein operation.
Markets today are complex and messy. However, within that complexity lie opportunities for producers who get granular, adapt quickly, and think in terms of components—not commodities. The next few months will tell us a lot about where these trends head. Stay sharp, stay flexible, and keep the information flowing. The dairy game has changed, but it’s far from over.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
How Feed Efficiency And Sustainability Are Related – This article provides tactical strategies for optimizing your herd’s feed conversion. It reveals methods for improving component yields and overall herd health, directly impacting your ability to capitalize on the protein premiums discussed in the main analysis.
Navigating The Twists And Turns Of The Dairy Markets – For a deeper strategic dive, this piece breaks down the broader economic forces and cyclical trends shaping today’s dairy prices. It offers a framework for long-term risk management that complements the immediate component-hedging tactics in the main article.
Data-Driven Decisiveness: A Deep Dive into Dairy Comp 305 – Looking forward, this article demonstrates how to leverage herd management software to make precise, data-backed decisions. It shows how technology can help you identify high-performing animals and fine-tune your operation to thrive in the new component-focused market reality.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
If the screwworm closed your milk route tomorrow, could your farm take the hit… or would you be out of options overnight?
EXECUTIVE SUMMARY: Alright, let me give it to you straight—everyone thinks plant shutdowns and milk dumping are old news, but one parasite on the border could upend your whole operation. The government’s putting $750 million into a new fly factory in Texas, and that’s not hype—APHIS says it’s the only way to stop the screwworm, which showed up just 370 miles south of us. Our industry generated over $780 billion in value last year, with Texas dairies accounting for $3.4 billion alone (USDA NASS). Butterfat averages are up too—4.15% nationally in 2023—but if quarantine hits, none of that matters if the milk truck can’t get to your tank. Herd expansion’s happening, feed margins have just improved by $150 a head in some spots, but more cows mean a bigger risk if disease shuts the plant down. This isn’t just a Texas phenomenon—other countries have dealt with screwworm infestations, and the same market fluctuations apply globally. If you haven’t checked your insurance for quarantine or lined up backup processors, you’re gambling with more than just milk prices. You owe it to yourself—and your bottom line—to get ahead of this now.
KEY TAKEAWAYS
Every farm needs a quarantine plan: losing access to your main processor (even for just one day) could mean dumping thousands of dollars’ worth of high-butterfat milk—just ask dairies who remember dumping during the Covid pandemic.
Check your policy exclusions: Most Dairy Revenue Protection (DRP) plans do not cover lost milk if you’re shut down due to a screwworm quarantine—call your broker and obtain confirmation in writing this week.
Lock in processor and hauler backups: Farms with two+ alternatives for milk hauling and processing have a 90% higher chance of staying operational during regional shutdowns (USDA, 2025).
Boost on-farm biosecurity: Tighten up visitor logging, water sanitation, and fly control now; screwworm loves dense herds—especially with today’s feed-driven expansion.
Track your margins and herd health monthly: With national butterfat at 4.15%+ and feed margins improving ($150/head/year in some Midwest regions), don’t let a quarantine erase those gains—monitor components and costs, and keep your contingency plans sharp.
The thing about biosecurity emergencies on a dairy is that the worst ones always show up when you least expect them. Maybe you’re finally getting a break on feed prices—or your herd’s butterfat is trending up—then, bang: there’s talk of quarantine and sterile flies on the news. The New World Screwworm, a parasite we mostly remember from history books, is officially back on the industry’s radar. And trust me, USDA’s $750 million factory in Edinburg, Texas, isn’t window dressing. It’s the kind of investment you only see when there’s real trouble brewing, a fact underscored by a recent USDA APHIS announcement.
A $750 Million Problem at the Border
Here’s what really grabs me: according to the latest IDFA data, dairy’s 2025 economic impact is over $780 billion nationwide. For us in Texas, official USDA stats peg last year’s dairy cash receipts at around $3.4 billion. Now layer in New Mexico and the southern region, and you’re protecting milk sales north of $4.5 billion. So when screwworm was sighted just 370 miles south of the Texas border in July, folks around here stopped calling this hype.
When the Milk Truck Can’t Roll
Let’s talk about what this means in real barn terms. Beef producers can stall shipping for a couple of weeks if needed, but what about a screwworm quarantine affecting a dairy? Your butterfat can be pushing 4.2%, but if the truck can’t get to the farm, those 85-pound cows won’t get you paid. The national average butterfat has climbed to 4.15% in 2023 and 4.07% in July 2024. It’s hard-won progress, but if the trucks don’t come, your check reads zero.
Market Pressures Magnify the Risk
So what is USDA really doing about it? This fly factory in Edinburg—the first of its kind—will produce 300 million sterile flies a week to mitigate the risk region. It’s modular, featuring automated monitoring and quality checks, which count flies hourly for accuracy (USDA APHIS announcement). What’s interesting is how they’re pairing these sterile fly releases with old-school cowboy border patrols and high-tech molecular diagnostics: mounted officers logging GPS movements, and labs checking flies for gene markers. This is a fascinating development because for decades, SIT was a small-scale tool. If consistency drops for even a week, you’ve got a window for screwworm to sneak in.
The critical detail here is that strong margins are tempting everyone to add cows. Milk prices are sitting around $22/cwt for most Southwest contracts, and feed costs are in a rare sweet spot—some West Texas herds are banking more than $150/cow in annual savings. But herd expansion, as confirmed by recent USDA NASS surveys, is really concentrated among the top-performing third of herds, not across the board. Denser barns, more cows—any outbreak now spreads risk (and losses) even faster.
The Insurance Gap: Are You Covered?
This brings me to insurance, and I’m not going to sugar-coat it. Most Dairy Revenue Protection and livestock policies explicitly exclude quarantine-related losses, according to the USDA RMA’s 2025 DRP update. If you haven’t reviewed the fine print since your last renewal, call your agent tomorrow. As agricultural risk consultant Dr. Anna Jessup warns, “A standard DRP policy is designed to protect against price volatility, not logistical failure. Producers assume their policy covers any event that prevents them from receiving their milk check, but quarantine is a specific exclusion in nearly every contract. It’s a devastating blind spot.” Contingency contracts with backup processors aren’t “nice to have”—they’re baseline survival right now.
A clear signal of this new reality comes from one of the larger co-ops in the Panhandle. After a near-miss border shutdown last spring, every member farm is now required to secure at least two alternate milk routes—no exceptions. That’s the sort of operational change that tells you the risk is real.
Action
Why It Matters
Frequency
Biosecurity visitor log
Track disease entry risks
Daily
Water trough sanitation
Prevent vector breeding
Weekly
Dry lot maintenance
Lower fly numbers
Monthly
Review insurance policy exclusions
Avoid denied claims in shutdown
Annual/Renewal
Backup processor/hauler agreements
Prevent milk dumping
Annual/Review
Your 5-Point Quarantine Action Plan
Audit your biosecurity protocols: Is every visitor logged? Are water troughs scrubbed weekly? Are dry lot surfaces maintained?
Confirm insurance language regarding quarantine losses: Request a written summary of coverage and exclusions to ensure clarity. If it’s unclear, escalate or shop the market.
Secure alternative processor and hauling contracts: Obtain written confirmation that your milk will be processed if your primary route is closed.
Benchmark feed cost and butterfat targets using processor statements and Hoard’s Dairyman national reports.
Install or update herd health monitoring tech: Ensure sensors are logging SCC, temperature swings, and alerting you before an outbreak, not after.
Proactive Resilience or a Painful Lesson?
It’s not about panic—it’s about fact-based resilience. Screwworm isn’t theoretical, and neither is the impact of a quarantine. The $750 million fly factory is proof that this is at the forefront for national agricultural planners. The next six months will sort out which dairies took the right steps—and which are one border shutdown away from writing off a month’s milk.
So before you hang up your boots today, double-check: Are you on the proactive side of tomorrow’s headlines, or just waiting for the call no one wants to get? That’s the real talk every dairyman should be having before this screwworm story turns local.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Biosecurity: Your Best Defense Against Disease – This article breaks down the fundamentals of creating a robust, farm-specific biosecurity plan. It offers practical strategies for managing visitor access, animal movements, and sanitation, turning the main article’s warning into an immediate, actionable defense against disease entry.
Dairy Market Volatility: The New Normal – This piece provides the strategic market context for why managing unexpected threats is crucial. It explores how to build financial resilience against supply chain shocks and price swings, complementing the main article’s focus on the economic impact of a quarantine.
The Digital Dairy Farm: How Technology is Reshaping Herd Management – This feature dives into the specific herd health monitoring technologies mentioned in the action plan. It demonstrates how sensors, data analytics, and automation can provide early warnings for health issues, enhancing your farm’s biosecurity and operational efficiency.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Are you leaving money on the table by ignoring real-time milk data? Let’s fix that.
EXECUTIVE SUMMARY: This year’s markets are forcing us to take the basics seriously. Here’s something that’ll grab your attention: just 10% better feed efficiency can add over $100 per cow annually to your bottom line. That’s real money we’re talking about, Milk yield improvements through genomic testing? You’re not just throwing darts anymore — you’re making calculated moves. Farms around the globe that’ve embraced these tools are actually squeezing out better margins despite rising feed costs. The Journal of Dairy Science and USDA data back this up. With milk prices fluctuating as they are, adapting isn’t optional anymore. To stay profitable, you need to get ahead in genetics and feed efficiency now. Don’t wait — farm profits sure won’t.
KEY TAKEAWAYS
Boost feed efficiency by 10% using precision feeding tech — that translates to $100+ extra per cow in 2025 margins. Get a feed analysis this week to spot where you’re losing money.
Leverage genomic testing to improve milk yield by up to 15% over traditional herds. Contact your breeding consultant tomorrow to discuss a tailored genetic plan.
Monitor your milk-to-feed ratio monthly — target 1.8 or above to protect margins when prices get volatile. Track this through your DHI reports starting now.
Stay ahead of export demand by adjusting production to seasonal swings. Review USDA export data quarterly so you’re not caught off guard.
Apply for those Dairy Business Innovation Alliance grants — up to $100K for efficiency projects that pay back in 1-2 years. Begin your application this month if you haven’t already started. The bottom line? Markets are rewarding the prepared and punishing those who wait. These aren’t just nice-to-have improvements anymore — they’re survival tools for 2025 and beyond.
The thing about today’s cheese market moves? They’ve shaken up what was shaping up to be a pretty steady run for Class III prices this summer. Cheese blocks? They dropped 10¢, slicing through the optimism like a wire through butterfat. Moments like this get your attention fast — especially when you’re counting every cent on the farm.
But butter? Butter’s steady, hanging in there even though the weekly numbers show some softness creeping in. What strikes me is how exports keep bolstering these prices — like a sturdy fence you can lean on when the wind howls. Lock in those profits when you can, especially on cheese, because these swings aren’t waiting around.
Let’s get real with the numbers farmers actually care about — none of that finance jargon that’ll put you to sleep.
Weekly volume comparison for key CME dairy products, week ending August 15, 2025
Market Snapshot & What It Means to Your Farm
Product
Price
Change
Weekly Trend
Farm Impact
Cheese Blocks
$1.78/lb
-10¢
+2.1%
Today’s drop could reduce your milk checks by about 60¢/cwt, based on the latest Class III formula weightings.
Cheese Barrels
$1.83/lb
-4¢
+2.9%
A softer drop here, but just as much a signal of jitters.
Butter
$2.28/lb
Unchanged
-4.8%
Standing firm for now, though weekly softness rings alarms for Class IV pricing.
NDM Grade A
$1.26/lb
-0.5¢
-1.4%
Steady as the export bookings hold strong.
Dry Whey
$0.60/lb
-1¢
+5.6%
Minor pullback, but the weekly trend says it’s riding high.
Here’s what’s interesting: while cheese blocks saw a gain earlier this week, padding that weekly climb to 2.1%, today’s sharp 10-cent pullback feels like the market taking a breath — a sprint, then a pause, if you will. Real markets don’t operate in a straight line.
That late-day selling? Probably some profit-taking and hedging ahead of reports. Only a handful of loads changed hands, but that’s enough to send a signal.
Butter has been more active this week, a sign that exports are still fueling interest. Cheese? Traders are a little more hesitant.
30-Day Price Trends: Cheese and Butter
This shows the gradual rise with today’s bump downward — a sign the market’s keeping everyone on their toes.
How Are We Doing Globally?
No matter how tight things look here, it’s a global market. Our butter prices are about a dollar cheaper than those in Europe and New Zealand, and NDM prices are comparable. That helps us stay competitive on exports — the lifeblood of our market.
Product
U.S. Price
Europe Price
New Zealand Price
Butter
$2.28/lb
~$3.20/lb
~$3.29/lb
NDM
$1.26/lb
~$1.08/lb
~$1.26/lb
California farms face higher feed and energy costs — an extra 15 to 25 cents per cwt — because water’s expensive and drought has tightened availability. That’s pushing folks to double down on water-saving tech and efficiency tweaks.
This August’s heatwave is another story — the Southwest’s dealing with stressed cows and chipped feed quality, which is cutting milk production there somewhat. Meanwhile, the Upper Midwest has been fortunate with timely rain, which has improved forage and sustained production.
Exports: Where The Pressure and Opportunity Meet
Exports stay strong. USDA’s Foreign Agricultural Service shows cheese shipments up roughly 25% year-over-year through June. Mexico remains a solid top customer, while Southeast Asia and the Middle East emerge as new markets. But the EU and Australasia aren’t giving up any ground.
China’s ramping up selective butter imports even as their milk production slips — something to watch.
And USDA keeps the 2025 all-milk price pegged near $22 per cwt, with Class III and IV futures about $17.40 and $18.54. Locking prices ahead feels smart.
If you’re considering investments or diversification, consider grants like those offered by the Dairy Business Innovation Alliance. They’re offering up to $100,000 for efficiency and modernization projects.
Dairy-beef crosses and automation technologies — such as feeders and meters — are becoming increasingly vital for managing the fluctuations.
What It Means for You
Markets are swinging — today’s cheese price pullback is proof. If you can, lock in your prices to protect your margins.
Know your local reality: feed costs and weather conditions differ widely by region, so tailor your plan to your specific farm.
Keep an ear on global trade moves and currency shifts. That’s the tune your milk check dances to.
The bottom line? This industry rewards the prepared and punishes the complacent. Today’s moves are just another reminder that having a plan — and sticking to it — beats hoping prices will always go your way.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Cracking the Code: The Unseen Financial Power of A2 Milk in Your Herd – For a tactical edge, this piece reveals how to leverage genetic selection for A2 milk to unlock new revenue streams and increase herd value. It offers a practical guide to capitalizing on a high-demand consumer trend.
The Digital Cow: How Big Data is Revolutionizing Dairy Farming – Looking to the future, this article explores how innovative data analytics and AI are transforming herd management. It demonstrates how to turn farm data into predictive insights for boosting efficiency, health, and your overall bottom line.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
“Playing it safe” with milk prices? That’s the riskiest move you can make in 2025. Here’s why the old playbook will crush your margins.
You know what happened while most of us were arguing with feed dealers over spring contracts? $22 billion in potential dairy export value just… vanished from industry forecasts. And I’m betting half the producers in your neck of the woods still don’t get how this connects to their next milk check—or what the sharpest operators are already doing about it.
Look, those 3 AM worry sessions you’ve been having? They’re not in your head. USDA took a machete to 2025 milk price forecasts, slashing them to $21.60 per hundredweight. For your typical 500-cow operation, that’s about $125,000 in lost annual revenue—real money that was sitting there in March planning meetings and disappeared by June.
But here’s what’s really keeping folks like me awake at night: this is just the warm-up act. Trade tensions are building like one of those late-July storms that rolls across Wisconsin dairy country, Chinese import patterns are more unpredictable than spring weather in Vermont, and those same market forces that created brutal 150% price swings back in the day? They’re now supercharged by algorithms that trade faster than you can get from the parlor to the office.
Breaking Down That $175,400 Number (Because You Asked)
Let me be straight about that headline figure—because producers like you deserve the real math, not marketing fluff. That $175,400 represents the combined annual profit optimization potential for a typical 500-cow operation that actually implements comprehensive risk management. Here’s how it breaks down:
Labor automation gets you about $40,000 annually per robotic milking system (most 500-cow operations need two systems). Feed efficiency programs can save $18,750 at $1.25 per hundredweight improvement on 1.5 million pounds annually. Component optimization adds another $18,150 from just a 0.1% butterfat improvement. Risk management tools reduce income volatility by $15,000-25,000 through blended strategies. Technology integration brings $25,000 in operational efficiencies. Infrastructure improvements save $12,000-15,000 from reduced feed waste alone.
That’s not pie-in-the-sky thinking—it’s what forward-thinking operations are already banking while traditional dairies keep playing defense.
The Thing About Playing It Safe? It’s Become the Most Dangerous Game
What strikes me about this industry after twenty-plus years is that the old playbook of crossing your fingers for stable prices and just focusing on production has become a recipe for getting steamrolled.
Current market conditions make this crystal clear. U.S. cattle inventory has shrunk to 86.7 million head—the lowest in decades. Replacement dairy heifers? Down to levels we haven’t seen since 1978. These supply constraints create the kind of price volatility that unprepared operations simply can’t weather.
According to recent research published in the Journal of Dairy Science, farms operating without structured risk management strategies experience 40% greater income volatility compared to those with comprehensive approaches. What’s particularly noteworthy is how this research quantifies what many of us have been observing… that the performance gap between prepared and unprepared operations keeps widening.
What “Hoping for the Best” Actually Costs You
Here’s the reality check: Farm labor costs are expected to rise by 3.6% in 2025 according to USDA projections, and with industry turnover averaging 30-38.8%, operations without automation strategies face annual swings of $45,000 per critical position. I was just talking to a producer in central Wisconsin who lost his experienced herdsman during breeding season—it cost him more than what a new robot would have run.
Meanwhile, farms implementing automated milking systems capture $32,000-$45,000 in annual labor savings per robot with payback periods of 18-24 months. The DeLaval and Lely systems I’ve seen basically pay for themselves in labor savings alone—and that’s before you factor in the data advantages.
Feed cost reality: Corn hit $4.58 per bushel in Q1 2025, and without precision nutrition programs, you’re accepting whatever feed efficiency your current system delivers. But here’s what’s interesting… producers using data-driven ration formulation are saving significant money per hundredweight—money that flows straight to your bottom line regardless of what milk prices do.
The Risk Management Revolution Most Producers Are Missing
Here’s what’s fascinating about our industry right now… dairy has undergone this quiet revolution in risk management tools, but adoption remains surprisingly low. Research from the USDA Economic Research Service shows only about 20% of producers use any form of price risk management, meaning 80% are operating without protection against market volatility. And honestly? That number hasn’t budged much in five years.
This isn’t about complicated financial instruments that require a Wall Street background. It’s about practical tools that successful producers already use to stabilize operations and capture opportunities that volatility creates.
The Blended Approach That’s Actually Working
The most successful producers aren’t trying to eliminate risk entirely—they’re using blended risk management strategies that provide stability while preserving flexibility to capture favorable movements.
The winning formula? Successful operations typically contract about 40% of production six months ahead, 30% three months ahead, and leave 30% exposed to cash markets. This approach keeps milk revenue within 5% of budgeted projections while maintaining upside potential. Think of it like having crop insurance while still being able to benefit from a bumper year.
According to University of Wisconsin Extension research, covering the first 5 million pounds of production with DMC at the $9.50 margin would have generated positive net benefits in 13 of 15 years. That’s an 87% success rate—better than most investment strategies you’ll find.
Technology Integration: Where the Real Money Lives
The precision dairy farming revolution is happening whether you’re part of it or not. According to the latest Global Dairy Equipment Market Report, the market reached $12.05 billion in 2025, representing a 6.8% compound annual growth. This growth reflects increasing automation adoption across the industry, and early adopters are capturing the biggest advantages.
Real-world example: Last spring, I visited an 850-cow operation outside Fond du Lac that implemented comprehensive technology over three years. The producer—let’s call him Jim since he doesn’t want his exact numbers floating around—started with automated milking systems in 2022, added precision nutrition monitoring in 2023, and integrated comprehensive data analytics in 2024.
Here’s what happened: Labor costs dropped 35% despite wage increases. Feed efficiency improved 12%. Most importantly, milk revenue stayed within 3% of budgeted projections throughout 2024’s price volatility, while neighboring operations without risk management saw 15-20% swings.
“The data from our AMS systems revealed production patterns we never would’ve spotted otherwise,” Jim explained during my visit. “We’re making breeding, feeding, and culling decisions based on individual cow data rather than gut feelings. It’s like having X-ray vision into your herd.”
Automated milking systems do more than save labor—they generate valuable individual cow performance data that enables management decisions you simply can’t make with traditional systems. The technology creates feedback loops where better data leads to better decisions, which leads to better financial outcomes.
Precision nutrition programs transform your largest operational expense into a competitive advantage. According to Penn State’s dairy extension team, farms with covered feeding areas show 8-12% better feed conversion rates with payback periods averaging 4-6 years.
What’s Happening in Global Markets (And Why You Should Care)
While you’re focused on daily operations—and rightfully so—global market forces are directly impacting your operation. China’s role as the world’s largest dairy importer means their policy decisions affect your milk price. According to Rabobank’s latest analysis, Chinese dairy imports are expected to grow by 2% in 2025, creating opportunities for global suppliers.
But here’s where it gets concerning… recent research from Cornell’s Agricultural Economics department shows that potential retaliatory tariffs could cost dairy farmers $6 billion in profits over four years. The U.S. exports nearly one-fifth of its dairy production, making trade policy a real risk factor that most producers aren’t prepared for.
What’s particularly noteworthy is how quickly these global shifts translate to local markets. When Chinese buying patterns change, it affects New Zealand export patterns, which influences global commodity prices, which shows up in your milk check within weeks. It’s like dominoes falling, except each domino is worth millions of dollars in market value.
Regional Variations That Matter
The thing about risk management strategies is that they don’t work the same everywhere. What pencils out for a 2,000-cow operation in the Central Valley might not make sense for a 300-cow farm in Vermont.
In the Upper Midwest—Wisconsin, Minnesota, Iowa—I’m seeing a lot of focus on automation and efficiency gains. Labor’s getting harder to find, and the seasonal challenges of feeding in those barns during winter make precision nutrition systems more valuable.
Southwest operations—Arizona, New Mexico, parts of California—tend toward scale advantages and component optimization. The consistent climate and feed access allow for different strategies than what works when you’re dealing with snow and mud seasons.
Northeast producers often pursue premium strategies—organic, grass-fed, direct-to-consumer—that provide protection from commodity volatility. A 150-cow organic operation in Pennsylvania might be more profitable than a 500-cow conventional farm in Iowa, depending on how they manage their risks.
How Risk Management Tools Actually Work
Let me walk you through the practical options without all the financial jargon…
Dairy Margin Coverage (DMC) is basically insurance for the gap between what you get paid for milk and what you pay for feed. At the $9.50 margin level, it costs about $0.155 per hundredweight but pays out when margins get squeezed. University of Wisconsin research shows it would have paid out in 13 of the last 15 years.
Class III futures let you lock in a milk price you’ll produce months from now. It’s like forward contracting your grain, except for milk. The minimum contract is 200,000 pounds, so it works for most commercial operations.
Livestock Gross Margin (LGM-Dairy) protects against the relationship between milk prices and feed costs, both corn and soybean meal. This one’s particularly useful when feed prices are volatile, which… let’s be honest, they always are.
Here’s a comparison that might help:
Tool
Best For
What It Protects
Typical Cost
When It Pays
DMC ($9.50 margin)
Most farms
Income margin
$0.155/cwt
When margins drop below $9.50
Class III Futures
Larger operations
Milk price
Variable
Price protection at the chosen level
LGM-Dairy
Feed cost exposure
Gross margin
$0.50-$1.00/cwt
When margins compress
Revenue Protection
Income stability
Quarterly revenue
Premium varies
Revenue drops below coverage
Assessing Where Your Operation Really Stands
Financial vulnerability check: How sensitive is your cash flow to a $2 per hundredweight milk price drop? If that creates serious stress, you need stronger risk management. What percentage of your revenue comes from base milk prices versus premiums? The higher the base percentage, the more exposed you are to commodity volatility.
I was working with a 400-cow operation in Pennsylvania last month, and we ran through this exercise. Turns out they were getting 85% of their revenue from base milk prices—no component premiums, no quality bonuses, nothing. That’s like driving without a seatbelt in a snowstorm.
Operational efficiency reality: What’s your feed conversion efficiency compared to regional averages? If you’re not measuring it precisely, you’re probably leaving money on the table. How much individual cow data do you collect and analyze? Manual systems miss optimization opportunities that automated systems capture every day.
Technology adoption status: Are you using precision feeding systems? Do you have automated monitoring for cow health and reproduction? How quickly can you identify and respond to production changes? Slow response times cost money in today’s competitive environment.
Your Next Steps: Moving from Knowledge to Action
Here’s where the rubber meets the road… knowing what to do and actually doing it are two different things.
This week: Get yourself enrolled in DMC coverage at the $9.50 margin level through your local FSA office. Takes about an hour and costs pennies compared to the protection. Request a feed efficiency analysis from your nutritionist—if you don’t have baseline data, you can’t improve. Start tracking butterfat and protein percentages by individual cow if you’re not already.
This month: Complete that financial vulnerability assessment I mentioned earlier. Schedule a sit-down with your banker to discuss cash reserve strategies (most successful operations keep 3-6 months of operating expenses in reserve). Contact at least two equipment dealers about automation options—even if you’re not ready to buy, understanding your options is crucial for planning.
This quarter: Implement at least one precision nutrition improvement based on your feed efficiency analysis. Establish forward contracting relationships with your milk handler or co-op. Complete a comprehensive risk assessment with an agricultural specialist—many extension services offer this for free or low cost.
Key resources you need to know about: Your local Farm Service Agency office handles DMC enrollment and can walk you through the process. University extension dairy specialists provide operational guidance and often have benchmarking data for your region. Agricultural risk management consultants can help develop comprehensive strategies tailored to your operation.
The thing is… every operation is different, and what works for that 3,000-cow dairy in Arizona might not be the right approach for a 150-cow operation in Vermont. But the principles remain the same: measure what matters, protect against catastrophic losses, and continuously improve your operational efficiency.
What’s Coming Down the Pike
Looking ahead, several trends are going to reshape how we think about risk management…
Continued consolidation means the efficiency gap between large and small operations will keep widening. This doesn’t mean small farms can’t succeed, but it does mean they need clear competitive advantages—whether that’s location, premium products, or exceptional efficiency.
Technology integration will become standard rather than optional. Operations not adopting precision dairy technologies will find themselves at increasing disadvantage. The question isn’t whether to automate, but how quickly and effectively you can implement these systems.
Climate variability is creating new operational challenges. Heat stress management, feed security planning, and weather-related disruptions require different risk management approaches than we’ve traditionally used.
What’s particularly interesting is how global market integration continues to accelerate. Dairy markets will become increasingly connected to international trade, currency fluctuations, and global economic conditions. Local operations need to understand these trends and their implications.
The Industry’s Economic Reality
Here’s something that doesn’t get talked about enough… the dairy industry’s economic impact extends far beyond individual farms. According to the International Dairy Foods Association, dairy supports over 3 million American jobs, $198 billion in wages, and nearly $780 billion in total economic impact. This massive economic footprint underscores why industry stability and growth matter—not just for individual producers, but for entire rural communities.
Supply chain integration means that what happens on your farm affects feed suppliers, equipment dealers, veterinarians, truckers, processors, and retailers. When dairy operations struggle, it ripples through the entire economy. When they thrive, everyone benefits.
The Bottom Line: Your Competitive Future
The dairy producers who emerge strongest from current market volatility will be those who embrace comprehensive risk management as a competitive advantage rather than viewing it as a necessary cost center.
Every day you delay implementation, you’re essentially choosing to accept whatever market conditions deliver rather than actively managing your operation’s financial future. In an industry where margins are thin and volatility is increasing, that’s a choice you literally can’t afford to make.
Here’s the thing I’ve learned after working with hundreds of dairy operations: the producers who wait for perfect conditions never get started. The ones who take action with the information they have are the ones who succeed. Your operation’s financial future depends on decisions you make today, not tomorrow.
The tools are available, the strategies are proven, and the window for implementation is wide open. The $175,400 in profit optimization opportunities we discussed aren’t going away—but they might go to your more prepared competitors if you don’t act.
Will you be ready for the next market disruption? Or will you be another casualty of volatility that could have been managed?
The choice, as always, is yours. But choose quickly—the industry isn’t waiting.
KEY TAKEAWAYS
Automate your labor headaches away – Robotic milking systems deliver $32,000-$45,000 annual savings per unit with 18-24 month payback periods. Start by contacting two equipment dealers this month to understand your options, especially with 2025’s 30-38% industry turnover rates crushing labor budgets.
Turn feed costs into competitive advantage – Precision nutrition programs save $0.75-1.25 per hundredweight through data-driven ration formulation. Get a feed efficiency analysis from your nutritionist immediately – if you’re not measuring conversion rates precisely, you’re bleeding money with corn futures swinging from $3.94 to $4.80 per bushel.
Lock in DMC coverage before you regret it – The $9.50 margin level costs just $0.155 per hundredweight but historically pays out 87% of the time. Enroll at your local FSA office this week – it’s cheap insurance that successful operations use as their safety net foundation.
Optimize components for instant cash flow – Every 0.1% butterfat increase adds $0.15-0.20 per hundredweight, translating to $18,150 annually for a 500-cow operation. Start tracking individual cow butterfat and protein percentages now – component premiums are your buffer against commodity price volatility.
Implement blended risk strategies like the pros – Contract 40% of production six months ahead, 30% three months ahead, leave 30% exposed to capture upside. This approach keeps revenue within 5% of budget projections while global trade tensions threaten $6 billion in dairy farmer profits over four years.
EXECUTIVE SUMMARY
Look, I get it – you’re busy milking cows and don’t have time for fancy financial instruments. But here’s what caught my attention: while 80% of producers are flying blind without risk management protection, the smart ones are systematically capturing $175,400 in annual profit optimization. We’re talking real money here – $40,000 per robotic milking system, $18,750 from feed efficiency improvements, another $18,150 just from bumping butterfat by 0.1%. With USDA slashing 2025 milk forecasts to $21.60 per hundredweight and trade tensions building like a summer storm, the old “hope and pray” approach isn’t cutting it anymore. Global market forces – especially China’s shifting import patterns – are creating volatility that’ll steamroll unprepared operations. You need to start implementing these risk management strategies this week, not next year.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Milk yield jumped 3.4% but cheese hit $1.85—are you maximizing component value
EXECUTIVE SUMMARY: You’ve probably noticed something’s different out there. The old milk pricing playbook just got tossed out the window. Latest USDA numbers show we’re cranking out 3.4% more milk—cows hitting 2,045 pounds monthly—but here’s where it gets interesting. Cheddar blocks jumped to $1.85/lb while butter dropped 4.3% in the same week. That’s not a typo… it’s the new reality. Cheese exports smashed records at 52,191 metric tons (up 34%), and butterfat exports doubled. Meanwhile, feed costs are finally giving us a break with corn near $4.05/bushel, potentially boosting margins by $12/cwt. Bottom line? If you’re not targeting component-specific marketing and genomic selection for feed efficiency, you’re leaving serious money on the table.
KEY TAKEAWAYS
Genomic testing isn’t optional anymore—select for higher PTA fat and protein to ride the cheese wave. With cheddar up 3.93% recently, every percentage point of butterfat matters. Start reviewing your bull lineup today.
Hedge smart, not hard—lock in 25-30% of fall milk using Class III futures at current $17.50/cwt levels. The cheese market’s on fire, and you want in on this action before it cools.
Feed costs are your friend right now—corn futures sitting pretty at $4.05/bushel with soybean meal declining. Forward contract now to bank those savings worth up to $12/cwt through 2025.
Export dependency is real—cheese exports up 34%, butterfat 151%. Your milk check depends on keeping foreign buyers happy, so watch those trade numbers like a hawk.
Geography matters more than ever—Plains states like Kansas are crushing it with 19% growth while Washington’s down 9.4%. Know your region’s trajectory and plan accordingly.
Look, I’ll cut to the chase here — this week’s numbers aren’t just another set of monthly reports. We’re watching the dairy market rewrite its own rulebook in real-time, and if you’re still pricing milk like it’s 2020, you’re about to get a very expensive education.
The thing is, most producers I talk to are still thinking in terms of the old Class III versus Class IV relationship… but that relationship just died. And what’s replacing it? Well, that’s what’s keeping me up at night.
The Numbers That Don’t Make Sense (Until They Do)
So here’s what happened in June — and trust me, this matters more than you think. Milk production jumped 3.4% to hit 18.5 billion pounds across the 24 major dairy states. More cows, better per-cow productivity (we’re talking a 2,045-pound monthly average), and yet…
Cheese prices are climbing like they’re rocket-powered while butter is sliding down a greased hill. Makes no sense, right?
Well, here’s where it gets interesting. I was chatting with some folks out in Wisconsin last week — spots that were trading at discounts to Class III just fourteen days ago are now commanding premiums. That’s not seasonal fluctuation, folks. That’s demand that’s so tight it’s changing the fundamental economics of spot milk pricing.
What strikes me about this is how quickly processors are adapting. When you’ve got CME cheddar blocks jumping to $1.85/lb while butter drops to $2.36/lb in the same week… that tells you something fundamental has shifted in how the market values different components of our milk.
The Export Dependency That Should Concern You
Here’s what really caught my attention in the latest numbers: cheese exports hit 52,191 metric tons in June. That’s not just strong — that’s a 34% jump over last year and an all-time monthly record.
But here’s the kicker… we’re now exporting close to 9% of our total cheese production. A decade ago? That number was around 5%.
The butterfat story is even more dramatic. Exports surged 151% year-to-date, and we’re trading at massive discounts to European benchmarks — sometimes 40% gaps.
[Insert chart here: Bar chart showing 34% growth in cheese exports and 151% growth in butterfat exports for first half 2025 vs 2024]
I keep asking myself: what happens if those international buyers suddenly decide they don’t need our cheese? Because right now, with domestic demand basically flat, those export markets are literally the only thing standing between current prices and a complete collapse.
Think about that for a minute. When did we become so reliant on selling our milk overseas?
Geographic Reality Check: The Great Dairy Migration
This isn’t random market forces — it’s strategic capital allocation happening in real-time. The Plains and Mountain West offer modern processing infrastructure, lower regulatory burdens, and what economists call a “processing-production feedback loop.”
And for traditional dairy regions? When you’ve got operations running on infrastructure built in the 1980s competing against facilities designed for today’s efficiency standards… well, the economics get pretty brutal pretty fast.
I’ve been to some of these new facilities, and the difference is staggering. We’re talking about processing capacity that can handle today’s milk volumes with half the labor and twice the efficiency.
The Policy Curveball That Blindsided Everyone
Here’s something that caught even the sharpest market watchers off guard: those Federal Milk Marketing Order reforms that kicked in during June.
Let me walk you through what actually changed, because this matters more than most people realize. The pricing formula for Class I (fluid milk) now uses the “higher-of” Class III or Class IV skim milk prices. Previously, Class IV often led because it typically carried a premium.
Now that premium has evaporated. So when Class III is at $17.37 and Class IV drops to $17.20, suddenly Class III is setting your fluid milk floor instead.
What’s particularly noteworthy is how this demonstrates that in dairy, there’s always another variable lurking in the background. Just when you think you understand the pricing structure, policy changes interact with market dynamics in ways nobody anticipated.
Risk management professionals across cooperatives are telling me they’re having to rewrite their entire hedging models because the old relationships just don’t work anymore.
Feed Markets: Finally Some Good News
The feed situation is actually offering genuine relief, which honestly couldn’t come at a better time. December corn futures are trading around $4.05/bushel, well below recent peaks. Soybean meal has backed off toward $285/ton for December delivery.
Current margin calculations show income-over-feed-cost averaging $8.50/cwt, with some projections suggesting annual averages could reach $12.99/cwt. Those are levels that historically support herd expansion and reinvestment — which explains some of the production growth we’re seeing.
But here’s the uncomfortable truth… improved margins from lower feed costs might actually make our export dependency problem worse by encouraging even more production. It’s like we’re trapped in this cycle where good news becomes bad news.
What This Means for Your Operation Starting Monday
Look, the reality is that traditional All-Milk price hedging strategies just became obsolete overnight. You need to understand your specific component exposure because this market bifurcation isn’t going away.
If your milk flows primarily to cheese plants, you’re sitting in the sweet spot right now. Class III futures for fall delivery are holding above $17.00/cwt, and the export momentum shows no signs of slowing. I’d seriously consider locking in 25-30% of fall production using current futures contracts.
For operations in butter/powder regions… this environment demands way more defensive positioning. Butter inventories continue building despite record exports, which suggests prices may need to fall further before finding sustainable support.
The feed cost outlook presents clear opportunities. Forward contracting corn and soybean meal at current levels could lock in these improved margin opportunities for months ahead.
Bottom Line: Five Things You Must Do This Week
Component-specific risk management is mandatory. Generic All-Milk hedging strategies won’t cut it anymore. You need to understand exactly where your milk goes and price accordingly.
Export performance has become your most important leading indicator. Monthly trade data deserves more attention than production reports. If you’re not tracking these numbers, you’re flying blind.
Feed cost advantages create strategic opportunities for forward contracting that could lock in improved margins through volatile periods. Don’t let this window close because you’re overthinking it.
Geographic production shifts are accelerating. If you’re in a declining region, you need to think seriously about your long-term positioning. The data is clear about where this is heading.
Market dependency on exports creates vulnerability that requires constant monitoring of global competitive positioning. This isn’t set-it-and-forget-it territory anymore.
The Hard Truth About What Comes Next
What keeps industry veterans like me awake at night? Our entire price structure now balances on export competitiveness. Domestic demand simply can’t absorb current production levels at profitable prices.
The cheese complex demonstrates this perfectly. Those record export volumes are literally the only thing preventing inventory accumulation and price collapse. Remove that export demand, and the math gets ugly real fast.
This development is fascinating from a market structure perspective, but it’s also concerning. We’ve never been this dependent on global buyers for price stability. The U.S. dairy industry has essentially become an export-driven business without most producers fully realizing it.
The producers who understand their specific component exposure, adapt risk management accordingly, and capitalize on feed cost advantages will navigate this successfully. Those clinging to traditional approaches? They’re going to learn some expensive lessons about how markets evolve.
This is the new reality every dairy operation needs to plan for. The sooner you adapt, the better positioned you’ll be for whatever comes next — because if there’s one thing I’m certain about, it’s that this market evolution is just getting started.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – Looking to the future, this article explores the innovative technologies that enable the strategies discussed in the main report. It details how tools like smart calf sensors and advanced health monitoring can build a more resilient and profitable operation.
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Here’s what caught my attention today: Cheese barely budged, but the margin window just cracked wide open
EXECUTIVE SUMMARY: Look, I’ve been watching these markets for years, and the margin spread we’re seeing right now between feed costs and forward milk prices is absolutely historic. While everyone’s fixated on that penny move in block cheese today, December corn just dropped below $4.15 while Q4 Class III futures are trading over $19 – that’s your signal to act. The milk-to-feed ratio jumped from 1.8 to 2.05, putting income over feed cost near $10 per hundredweight… numbers like that don’t stick around long.Here’s the thing – Europe’s cutting production by 0.2%, Australia’s battling a perfect storm of drought and high costs, but we’ve got $8 billion in new processing capacity coming online that needs to be fed. The smart money isn’t waiting for cheese to rally another nickel. They’re locking in feed prices now and hedging 25-30% of their fall milk production while this window’s open.
KEY TAKEAWAYS
Lock in your feed costs immediately – December corn at $4.13/bu and soybean meal at $274/ton won’t last with this harvest uncertainty. Midwest producers already getting 10-20¢ under futures on their corn basis… that’s real money saved.
Price 25-30% of Q4 and Q1 production now – December Class III trading $2+ over August futures means the market’s paying you to think ahead. Forward contracts or CME options, doesn’t matter – just get some coverage before this contango flattens.
Your butterfat is worth more globally than ever – U.S. butter trading $2,400/MT cheaper than European, $1,844/MT under New Zealand. Export demand from MENA and Southeast Asia is pulling our fat premiums higher.
Regional heat stress = spot milk premiums – Processors paying up to $2 over Class in the Central region right now. If you’re in a cooler microclimate keeping production steady, leverage that advantage.
Processing demand is structural, not cyclical – These new Hilmar, Leprino, and Fairlife plants need 55 million pounds of milk daily by 2026. Build those relationships now because this demand floor isn’t going anywhere.
Look, if you’re focusing on today’s penny move in block cheese, you’re missing the forest for the trees. Sure, blocks ticked up a cent to $1.6825 on zero trades, but that’s not the most significant development. The game-changer is the bullish gap between declining feed costs and firm milk futures – December corn sitting under $4.15 while Q4 Class III futures trade at a hefty premium to cash. This kind of spread doesn’t come around every day.
Today’s Numbers – And What They Actually Mean for Your Operation
Product
Price ($/lb)
Daily Move
Monthly Trend
What This Means for You
Cheese Blocks
$1.6825
+1¢
+3.4%
Slight Class III support, but volume needed to confirm
Cheese Barrels
$1.6800
Unchanged
+3.4%
Holding gains, but flat close shows buyer hesitation
Butter
$2.4725
Unchanged
-1.1%
Class IV steady, butterfat still soft
NDM
$1.2900
Unchanged
-0.2%
Export demand cautious, not driving Class IV higher
Dry Whey
$0.5325
Unchanged
-1.4%
Continues to drag on Class III protein markets
After yesterday’s explosive session with 15 block trades and barrels jumping 4.5 cents, today felt like the market catching its breath. Zero trades in butter or cheese, just two NDM loads changing hands.
What’s particularly interesting is how the order book closed. We had four unfilled bids in blocks at $1.6825 with zero offers. That’s quietly bullish – buyers were still there at the close, but sellers weren’t willing to meet them.
The Global Picture – Where We Stand Against the Competition
I’ve been watching our international competitive position closely, and the current situation is remarkable.
Product
U.S. Price (USD/MT)
EU Price (USD/MT)
NZ Price (USD/MT)
U.S. Price Advantage/(Disadvantage)
Butter
~$5,451
~$7,856 (€7,205)
~$7,295
+$2,405 vs EU, +$1,844 vs NZ
SMP/NDM
$2,844
~$2,657 (€2,437)
~$2,835
($187) vs EU, ($9) vs NZ
Cheese
~$3,710
N/A
N/A
Competitive advantage
Key Takeaway: This puts U.S. powders at a slight price disadvantage to our competitors—explaining why NDM exports face headwinds when this premium widens.
Comparison of US, EU, and New Zealand dairy product prices (Butter, SMP/NDM, Cheese) as of July 31, 2025
European Union: According to recent USDA analysis, they’re looking at a 0.2% decline in milk deliveries for 2025. Shrinking herds in Germany and France, plus all those EU Green Deal regulations. European processors are shifting focus to high-value cheese over butter and powders.
New Zealand: Industry reports suggest their production is off to a strong start this season. Early production trends look positive with that $10.00/kgMS opening price. If weather cooperates, current indicators point to potential growth, which will weigh on global powder prices.
Australia: Recent USDA projections show production declining to 8.6 million metric tons – they’re navigating what industry folks call a “perfect storm” of drought, flooding, and high input costs.
Feed Costs – The Story Everyone Should Be Watching
Here’s what’s really driving the margin opportunity:
Feed Component
Current Price
Trend
Impact on Margins
Corn (Dec ’25)
$4.1375/bu
Down
Lower feed costs for fall/winter
Soybean Meal (Dec ’25)
$276.30/ton
Down
Easing protein costs
Alfalfa Hay (WI Prime)
~$290/ton
Stable
Forage costs remain significant
Milk-to-Feed Ratio
~2.05
Improving
Profitability turning positive
Income Over Feed Cost
~$9.95/cwt
Strengthening
Strong margins to lock in
What strikes me about this setup is the timing. December corn settled at $4.1375 today, significantly below the $4.43 we saw in the expired September 2024 contract. That milk-to-feed ratio of 2.05 is a marked improvement from the 1.8 we saw recently – which is considered tight margin territory.
Production Reality – The National vs Regional Story
According to recent USDA data, we had 18.5 billion pounds in June from the 24 major dairy states, up 3.4% from last year. The dairy herd is expanding – 9.47 million head as of June, up from last year.
But here’s what’s fascinating… for a producer dealing with summer heat stress, that “Milk Production Up 3.4%” headline can feel completely disconnected from reality. Processors in the Central region are actively hunting for spot loads, paying up to $2 over Class. This dichotomy is crucial – national supply provides a ceiling on prices, while regional weather-driven tightness creates a floor.
What’s Really Moving These Markets
Consumer demand? Steady but uninspired. Recent quarterly reports from major pizza chains indicate year-over-year declines in same-store sales – a key cheese demand indicator. This lackluster consumer pull is capping cheese prices.
Processing demand? According to recent industry analysis, the U.S. dairy industry is in the middle of a massive capital investment cycle exceeding $8 billion. These new plants are already pulling milk from the market, running at two-thirds capacity or more.
Export markets continue telling that component story. Mexico remains our most reliable partner. Industry trends suggest butterfat exports have been strengthening. The MENA region has shown substantial growth in demand for U.S. butterfat – industry reports indicate significant increases in early 2025.
Forward Curve – The Opportunity Staring Us in the Face
Contract Month
Price ($/cwt)
Premium to August
Profit Opportunity
August ’25
$17.12
—
Current market
September ’25
$17.79
+$0.67
Lock in 4% premium
October ’25
$18.78
+$1.66
Lock in 10% premium
December ’25
$19.15
+$2.03
Lock in 12% premium
USDA’s latest WASDE forecasts all-milk price for 2025 averaging $21.60/cwt. But the futures market shows clear contango:
August ’25: $17.12
September ’25: ~$17.79
October ’25: ~$18.78
December ’25: ~$19.15
For producers, this transforms abstract market concepts into concrete business opportunities. The market is explicitly offering higher prices for future milk than today’s cash price.
Regional Spotlight: Upper Midwest Dynamics
Regional trends suggest Wisconsin and Minnesota production showed growth patterns consistent with national data. Cool overnight temperatures are mitigating daytime heat impacts, keeping volumes relatively steady.
Feed cost advantage for Midwest producers is significant. Local corn basis trades at a discount to CME futures. Wisconsin hay reports show Prime Alfalfa small squares averaging ~$290/ton.
What Producers Should Actually Do Right Now
Pricing & Risk Management: Seriously consider pricing 25-30% of Q4 2025 and Q1 2026 projected production. December Class III trading over $2.00/cwt above August protects excellent current margins.
Feed Procurement: Contact suppliers immediately for firm quotes on corn and soybean meal through end of 2025. Corn and meal futures are soft due to large harvest expectations.
Cash Flow Planning: Strong margins projected for second half of 2025 make this ideal for detailed planning. Model expected cash flow based on locked-in prices for strategic debt reduction or capital improvements.
Industry Intelligence You Should Know
The processing expansion wave is fundamentally reshaping our landscape. Hilmar Cheese in Dodge City, Kansas; Leprino Foods in Lubbock, Texas; Fairlife in Webster, New York – they’re part of an expansion exceeding $8 billion creating massive, long-term milk demand.
June 2025 brought significant FMMO pricing formula changes. New “make allowances” for manufactured products reflect rising processing costs. Net impact varies by region depending on local milk utilization mix.
Destination
Key Products
Growth Trend
Price Driver
Mexico
Cheese, NDM, Butterfat
Strong, reliable
All components
Southeast Asia
Cheddar cheese
Growing demand
Competitive pricing
MENA Region
Butterfat
+770% in early 2025
Massive price advantage
Overall Impact
Fat & protein
Export strength
$2,400/MT butter advantage
Putting Today in Perspective
Today’s quiet session was consolidation – a pause following this week’s significant, volume-driven cheese rally. Despite the flat close, spot block and barrel cheese prices are still up over 3% for the week.
The most significant story isn’t the silent CME screen. It’s that powerful, actionable margin opportunity opening up for producers. The divergence between falling new-crop feed costs and strong forward milk prices has created historically favorable profitability windows.
Producers who recognize this opportunity and take strategic action managing both input costs and milk price risk will position their operations for success through the second half of 2025 and beyond.
And honestly? That opportunity might not stay open forever.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Dairy Feed Costs: Top 10 Ways To Tame The Feed Bill Beast – This article reveals 10 practical strategies for cutting on-farm feed expenses. It provides the tactical know-how to actively lower your cost of production and fully capitalize on the margin opportunity identified in today’s report.
The 5 Unbreakable Rules for Profitable Dairy Farming – To complement the report’s market tactics, this piece outlines the core strategic principles for long-term success. It demonstrates how to build a resilient, low-cost operation that can consistently thrive through any market cycle, not just the current one.
Genomics: The Secret Weapon for Accelerated Genetic Progress – The report highlights new processing plants demanding high-quality milk. This article provides a blueprint for using genomic testing to breed healthier, more efficient cows specifically tailored to deliver the high-component milk these new facilities require.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Cheese barrels just jumped 4.5¢ with zero offers left – your August milk check could be $1.20 fatter than you think.
EXECUTIVE SUMMARY: Look, I’ve been watching these markets for years, and today’s cheese action wasn’t your typical speculative nonsense – this was processors with real money chasing real product. Barrels shot up 4.5¢ to $1.6800 with six bids and zero offers at close, which translates to about $1.00+ boost in your August milk check.Here’s what caught my eye: fifteen actual trades in blocks, not paper shuffling. Feed costs are finally working in your favor too – corn’s down to $3.93, soybean meal at $264.40, giving you roughly 30-50¢/cwt breathing room. The global picture’s helping us out, with the euro stuck in neutral, keeping our cheese competitive overseas while Mexico continues to buy steadily.Bottom line? With Class III hitting $17.36 and feed costs easing, you’re looking at margins around $8.50/cwt over feed costs. Time to think about locking in some of that fall production.
KEY TAKEAWAYS
Lock in 25-30% of your fall milk now – Class III futures at $16.80-$17.20 protect your margins while keeping upside if this rally extends. With processors bidding aggressively, this isn’t just a flash in the pan.
Your August check jumps $0.75-$1.00/cwt higher than expected. Use that cash flow bump to pay down operating loans or pre-buy feed while corn’s showing backwardation (no big price spikes are expected).
Regional supply tightness is real, despite national production being up 1.6%. Wisconsin’s holding steady with better cooling, but Midwest heat stress is creating pockets of tight milk that processors are paying a premium for.
Global factors are finally working in our favor – the euro’s weakness keeps our cheese competitive, Mexico’s taking 25% of its cheese needs from us, and even China’s dairy imports are rebounding by 2% despite those crazy tariffs.
Want the full breakdown? Today’s report digs into the order book mechanics, global trade flows, and exactly where these margins are headed through the fall. Sometimes the best opportunities hide in plain sight.
Today’s dairy markets were all about one thing: the cheese complex caught fire. Barrels soared 4.5¢ and blocks edged up 0.5¢, driven by serious hustle from processors scrambling to cover needs. Translate that to your farm’s bottom line, and you’re looking at a $1.00+ boost to your August milk check. Additionally, as feed costs finally ease, this presents a prime opportunity to lock in margins for the fall.
Today’s Market Snapshot: July 30, 2025
Product
Price
Change
Weekly Trend
What it Means for You
Cheese Blocks
$1.6725/lb
+0.50¢
+1.67%
Your Class III check rises
Cheese Barrels
$1.6800/lb
+4.50¢
+2.77%
Processors chase barrels aggressively
Butter
$2.4725/lb
-3.00¢
-0.69%
Class IV holds its ground, insulating you from butter’s dip
NDM
$1.2900/lb
+0.50¢
-0.85%
Export demand cautious but steady
Dry Whey
$0.5325/lb
-0.75¢
-1.85%
Protein markets remain weak
What really stood out was the volume—fifteen trades in blocks giving real weight to this rally. Processors were stepping up big, leaving six bids for barrels at close with no offers. That’s a clean break above the $1.67 level that had capped prices all month.
Meanwhile, butter took a small dip, but its impact on Class IV remains minimal—exactly what you want when you’re focused on protecting milk check stability.
Behind the Move: Deep Dive into Market Mechanics
Here’s where the order book gets interesting… The barrel bid stack was loaded deep—I’m talking bids at $1.6775, $1.6750, and $1.6725 before the market even opened, and those offers got snapped up fast. By close, six bids remained with zero offers, signaling serious conviction from commercial buyers.
Volume-weighted average price patterns tell the real story. Blocks traded around a $1.6710 VWAP versus the $1.6725 close, showing late-session strength rather than early-morning hype that fades. The bid-ask spreads narrowed from about 0.75¢ early morning to just 0.25¢ by close—that’s processors showing real confidence.
However, butter is testing support around $2.47, and if that breaks, we could see a move toward $2.40-2.42.
Market participants suggest cheese prices may have additional upside potential if current demand patterns continue, with some eyeing the $1.75-$1.80 range.
Production Reality Check: The Numbers Don’t Lie
While the market signals a tight supply, let’s discuss what’s actually happening on farms. Recent USDA data shows May milk production up 1.6% year-over-year to 19.93 billion pounds—the third straight month of gains. Cow numbers climbed by 114,000 head since May 2024.
That tight supply narrative? It’s regional, not national. Wisconsin farms are holding production steady thanks to improved cooling systems (those tunnel ventilation investments from the past few years are really paying off now). Some Midwest areas show typical summer production dips due to heat stress, but nothing catastrophic.
Industry observations suggest measured caution in the heifer market—quality bred animals are moving steadily around $2,800-3,200, but there’s no panic buying for expansion.
How Global Markets Are Actually Boosting Your Price
Key insight: The euro has remained around 1.08-1.11 against the dollar, keeping our cheese competitively priced for export. That’s actually working in our favor right now.
The challenge: Freight costs keep climbing—adding roughly 3-4¢ per pound to delivered powder prices in Asian markets.
Feed prices have finally cooled off—September corn hovers at $3.9275, soybean meal at $264.40, putting producers about 30-50¢/cwt better off compared to seasonal averages.
Here’s how it breaks down regionally:
Upper Midwest: Corn basis runs 10-15¢ under futures—practically free money
California: Higher transport costs but hay prices finally steadied around $280-300/ton
Southeast: Managing soybean meal tightness from port delays, but it’s workable
The mild backwardation in corn futures (current prices higher than future prices) suggests stable or easing feed costs ahead.
Bottom line: Feed costs for efficient operations are around $8.50-$ 9.00/cwt. With Class III at $17.36, that gives you roughly $8.36-8.86/cwt margin over feed costs.
Your Action Plan: What to Do in the Next 72 Hours
Pricing Strategy: Lock in 25-30% of your September-November milk at current Class III futures ($16.80-$17.20) to protect margins while maintaining upside potential if this rally extends.
Feed Purchasing: Consider prebuying feed at current prices to avoid winter supply volatility and lock in these favorable levels.
Cash Flow Moves: Use anticipated $0.75-$1.00 higher August milk checks to pay down operating debt or build cash reserves for future opportunities.
Breeding & Herd Management: Industry sentiment remains cautious. Quality heifers are moving steadily, but there’s no rush toward expansion—hold steady unless you’ve got compelling reasons to adjust.
The Road Ahead: August and Beyond
August is expected to be constructive, with momentum likely to push Class III prices into the $17.00-$17.50 range. Butter should hold around $2.47 as seasonal demand picks up, and Class IV futures remain steady at $19.28.
Fall becomes interesting with typical post-heat production increases in September and October. If cheese demand holds at current levels through that seasonal bump, Q4 Class III could hover around $16.50-$17.00.
Risk factors? Weather events, trade policy shifts, and export demand volatility remain wildcards—especially in an election year.
What’s encouraging? Real commercial buying—not just speculative chatter. When processors bid aggressively for spot cheese and pay a premium for it, that suggests supply-demand fundamentals still support price strength.
Feed costs finally easing after months of pressure adds further optimism for margin recovery. After the squeeze we’ve seen this year, that’s something worth getting excited about.
Questions about locking in fall margins or how basis levels affect your operation? That’s exactly what TheBullVine.com is here for. Use our margin calculators or connect with our analysts to build a pricing strategy that protects your bottom line while positioning you for whatever comes next.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
7 Sires That Will Add Pounds of Fat to Your Herd – This tactical guide reveals specific sires that can boost milk components. It offers a practical way to increase your milk check’s value through genetic selection, directly complementing the market report’s focus on maximizing revenue from current prices.
Dairy Farmers of Canada’s 2024 Outlook: A Blend of Optimism and Caution – This strategic overview provides a big-picture look at the economic forces shaping the Canadian dairy industry. It adds a crucial layer of long-term context to the daily market fluctuations, helping you better position your operation for future trends.
The Future of Dairy Farming: How Technology is Revolutionizing the Industry – Explore how innovations like automation and data analytics are creating more resilient and profitable farms. This forward-looking piece shows how to leverage technology to control costs and buffer against the market volatility discussed in the main report.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Kansas farms crushing 19% milk growth while butter stocks crash 10M lbs—the component revolution is separating winners from losers
EXECUTIVE SUMMARY: The dairy industry’s obsession with milk volume over components is leaving serious money on the table while smart producers capitalize on the biggest shift in decades. Despite total U.S. milk production climbing just 3.3%, calculated milk solids surged 1.65% through 2025, with butterfat tests hitting 4.36%—nearly 9 basis points above last year. Kansas farmers are absolutely crushing it with 19% growth while butter inventories dropped from 364.6 to 354.4 million pounds in just one month, creating supply tightness that’s driving premiums higher. Meanwhile, genomic testing is delivering $70 additional value per cow annually, and feed efficiency improvements can save $470 per cow per year on well-managed operations. Global trade tensions—especially China’s dairy import challenges and potential Mexico tariffs—are reshuffling traditional export patterns, creating both risks and opportunities for forward-thinking producers. The bottom line? Producers who pivot from volume thinking to component optimization, leverage genomic selection, and implement strategic risk management are positioning themselves to capture the premiums while their competitors chase outdated metrics.
KEY TAKEAWAYS
Component Focus Delivers Immediate Returns: Recent data shows butterfat production jumped 5.3% and protein climbed 4.9% year-over-year, with component-rich milk commanding premium pricing in tightening markets—implement targeted nutrition programs focusing on 16:0 fatty acid supplementation and amino acid optimization to boost component tests within 4-6 weeks.
Genomic Testing ROI Pays Off Fast: Genomic selection delivers $70 additional value per cow annually compared to traditional breeding methods, with 65-70% breeding value reliability versus just 20-25% from parent averages—test heifer calves early to identify low-genetic-merit animals before investing $1,400-$2,000 in feed costs per head.
Feed Efficiency Gains Cut Major Costs: Improvements in herd feed efficiency from 1.55 to 1.75 equate to savings of $470 per cow per year, contributing about $1.2 million to a 2,500-cow dairy’s bottom line—focus on precision nutrition, waste reduction, and intake optimization to achieve 5-15% efficiency gains that directly impact your largest variable cost.
Strategic Culling Captures High Beef Values: With cull cow prices at $145+/cwt and beef-on-dairy crossbreds commanding $900 for day-old calves, strategic herd management decisions can generate significant cash flow—evaluate bottom-performing animals using income-over-feed-cost metrics and leverage current high prices for immediate capital injection.
Risk Management Is Non-Negotiable: Class III futures pricing milk at $17.21/cwt through Q3 with feed costs rising and trade uncertainties mounting—lock in 60-70% of winter feed needs now at favorable corn ($4.19/bushel) and implement Dairy Revenue Protection coverage to protect against margin compression in volatile markets.
The week ending July 28th delivered some market signals that honestly have me scratching my head – and I think a lot of producers are feeling the same way.
Two Completely Different Stories Playing Out
Here’s what’s got me thinking about where this industry is headed. While European traders seemed to take a collective breather – moving relatively modest volumes across butter and skim milk powder – Asian markets were going absolutely crazy. I mean, when you’re seeing Singapore exchange activity that massive (we’re talking serious tonnage here), something fundamental is shifting.
The price action tells you everything you need to know. European butter futures drifted lower – nothing dramatic, maybe 0.3% or so – while skim milk powder dropped a bit more. But over in Singapore? Traders were bidding up whole milk powder by nearly 2% and butter climbed close to that same level.
That’s not random market noise, folks. That’s Asian demand meeting supply constraints, and it’s a pattern I’m seeing more of when I talk to guys in the export business.
Production Numbers That Make You Think We’re in a New Era
Get ready for this – and I had to double-check these numbers because they seemed almost too good to be true. New Zealand just posted a 14.5% jump in milk collections compared to last June, according to USDA’s latest international production data. After everything they’ve been through – drought, regulations, you name it – Kiwi farmers are back with milk solids production up nearly 18%.
I was talking to a consultant who works down there, and he says the combination of better weather and that opening milk price signal at $10.00 per kgMS has farmers really motivated again. When you’ve got good feed under your feet and prices that work, producers respond quickly.
But here’s the number that really caught my attention: USDA’s monthly milk production report shows U.S. output surged 3.3% year-over-year in June – the biggest annual increase since May 2021. Kansas farmers are absolutely crushing it with 19% growth. South Dakota’s up 11.5%, Idaho’s climbing 9.7%.
When you see numbers like that, you know there’s serious infrastructure investment paying off.
What’s fascinating is how regional this is becoming. I know guys in Colorado who are struggling to find homes for extra milk because there’s no new processing capacity, while Kansas producers are basically printing money with all that new cheese-making ability coming online.
Regional Milk Production Growth Percentages for Selected U.S. States (June 2025 vs June 2024)
The component story might be even more important, though. American dairy farmers aren’t just making more milk – they’re making richer milk. Recent USDA data shows butterfat production jumped 5.3%, protein climbed 4.9%, and nonfat solids rose 3.8%.
Dr. Mike Hutjens at Illinois always said the real money is in components when margins get tight, and boy, is he being proven right.
The Heifer Problem Nobody Wants to Talk About
Here’s something that should keep every dairy producer awake at night – and I’m seeing this pattern everywhere I travel. The latest cattle inventory data suggests U.S. dairy farmers are culling significantly fewer cows than historical averages. We’re looking at the lowest cull rates since 2008, and we all remember how that expansion story ended… not well.
Why? Simple math – there just aren’t enough replacement heifers. USDA’s July 1 inventory shows dairy heifer numbers essentially flat, but that’s only after they made some pretty significant revisions to their 2023 estimates. Translation: we’re running short on the next generation, so farmers are keeping older cows longer.
I was at a producer meeting in Wisconsin last month, and a guy who’s been milking for 30 years said something that stuck with me: “I’ve got cows in fourth lactation that I’d normally ship, but I can’t replace them.” That’s happening everywhere, and it’s not sustainable.
Butter Markets Flash Some Serious Warning Signals
CME spot butter took a beating this week, dropping to around $2.465 per pound– testing two-month lows. But here’s where it gets interesting. USDA’s Cold Storage report showed butter inventories actually dropped to 354 million pounds from May to June, which is faster than the typical seasonal drawdown.
What really caught my eye, though, is what’s happening with exports. Industry sources suggest U.S. butter has been showing improved competitiveness in global markets recently. When you’re among the cheapest butter globally and quality is solid, international buyers notice. A trader I know in California says they’re moving more butter overseas than they have in years.
China’s Whey Situation – and What It Means for Everyone
The trade war casualties keep piling up, and this one hits close to home for a lot of Midwest producers. From what industry observers are seeing, Chinese whey imports took a significant hit in June after those mid-May tariffs kicked in.
CME spot whey powder dropped to around 54¢ per pound, and that’s real money out of producer pockets. A guy I know who’s been in the whey business for 20 years told me, “When your biggest customer goes shopping elsewhere, you feel it immediately.”
That’s exactly what’s happening, and it’s a tough lesson in supply chain diversification that maybe we should have learned earlier.
Futures Markets Price in the New Reality
August Class III milk futures fell 56¢ to $17.21 per cwt** this week. The market’s basically telling us to expect $17 milk through Q3, with maybe a modest recovery to just north of $18 in Q4.
Look, these aren’t disaster prices – especially with corn futures at $4.19 and soybean meal at $281.70 per short ton. But they’re a far cry from where we were earlier this year, and margins are definitely tighter.
Class IV settled around $18.95 for nearby contracts, with the back months in the low $19s. A nutrition consultant I work with says these price levels still work for well-managed operations, but there’s not much room for error.
What Argentina’s Telling Us About Global Dynamics
Here’s something that doesn’t get enough attention – Argentina’s dairy sector showed strong recovery during early 2025, with production up 12.4% in the January-May period according to recent industry reports. After the economic chaos they went through last year, that recovery is pretty remarkable.
What’s particularly noteworthy is how quickly producers there responded to better margins. When milk prices moved up and feed costs stabilized, production followed. It’s a reminder that dairy farmers everywhere react to the same economic signals – they just need them to work in their favor.
Bottom Line: What This Means for Your Operation
Here’s what I’m taking away from all this, and what I think matters most for producers making decisions right now:
The heifer shortage is real and it’s going to bite us. If you’re thinking about expansion, replacement heifer costs are only going higher. The guys who locked in bred heifers six months ago are looking pretty smart right now.
Feed cost advantages won’t last forever. With corn at $4.19 and soy meal under $282, this is the time to lock in Q4 and early 2026 feed needs. Every nutritionist I talk to says the same thing – book 60-70% of your winter needs now.
Regional differences are getting bigger. If you’re in an area with new processing capacity, you’re sitting pretty. If you’re not… well, basis is going to be a problem. Transportation costs are already up 12% year-over-year in some regions.
Risk management isn’t optional anymore. With Class III futures pricing in the $17 range through fall, spending a buck or two per cwt on Dairy Revenue Protection beats taking a $3-4 hit on unprotected milk. Do the math on 75 pounds per cow per day – it adds up fast.
Components are where the money is. Every tenth of a percent improvement in milk fat is worth about 30¢ per cwt when margins are this tight. Nutrition programs that boost butterfat are paying for themselves quickly.
The thing that strikes me most about all this is how quickly the landscape is changing. We’ve got production surging in some regions while others struggle with infrastructure constraints. Trade tensions are reshuffling traditional patterns in real time. And underneath it all, we’re running short on the next generation of milk cows.
The producers who adapt fastest to these new realities – who lock in feed costs, manage risk properly, and focus on components – those are the ones who’ll come out ahead. Because if there’s one thing this industry has taught us over the years, it’s that change is the only constant. And right now, we’re seeing more change than most of us have dealt with in a long time.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
DAIRY PRODUCER’S GUIDE To Getting More From Your Feed – The main report highlights shrinking margins and the value of components. This guide provides practical strategies to maximize feed efficiency, helping you boost butterfat and protein production to immediately improve your milk check.
The Ultimate Guide to Dairy Sire Selection – With the heifer shortage becoming a critical issue, this article offers a long-term strategic solution. Learn how to refine your breeding program to create more profitable, resilient, and efficient cows from the ground up.
Unlocking Dairy Profits: The Untapped Potential of Automation – The market report notes that new infrastructure is creating regional winners. This piece explores how to leverage automation and technology on your own farm to gain a competitive edge and drive profitability when traditional margins are tight.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Milk yields jumped 33 lbs per cow—what’s really driving this surge on farms like yours?
EXECUTIVE SUMMARY: Here’s what I’m seeing across the coffee shop circuit lately… milk production per cow climbed 33 pounds this year, and it’s not from throwing more animals at the problem. Smart operators are dialing in precision feeding and genomics, seeing feed efficiency gains hitting 8-12%. With corn prices sitting around $4.20 per bushel, a 500-cow operation can pocket over $1,500 monthly in feed savings alone. Globally, US dairy’s becoming the go-to partner for international buyers—they’re calling us “strategic partners” now, not just suppliers. The window’s wide open, but it won’t stay that way forever. Time to get serious about these tools before your neighbors beat you to it.
KEY TAKEAWAYS
Boost feed conversion 8-12% by implementing precision nutrition protocols—start by tracking individual cow intake and adjusting your TMR formulations based on production groups
Lock in $1,500+ monthly savings on a 500-cow operation by securing corn contracts under $4.50/bushel while prices remain historically low
Increase reproductive efficiency 15-23% through automated monitoring systems—but only if you invest in proper staff training and phased rollouts
Capture export premiums by maintaining top-tier milk quality and protecting margins with Dairy Revenue Protection enrollment (available quarterly)
Maximize genetic potential using genomic testing to identify high-value breeding decisions—ROI typically shows within 12-18 months on commercial operations
Examining these latest milk production figures, something is happening that has genuinely fired me up about where this industry’s headed. I mean, when was the last time you saw numbers like this? The 24 major dairy states cranked out 18.5 billion pounds in June – that’s 3.4% over last year, according to the USDA’s latest data drop – but here’s what really caught my attention…
This isn’t your typical “throw more cows at the problem” story we’ve been seeing for decades.
The thing about these numbers that nobody’s talking about…
What strikes me most about this production surge is how it’s happening. We’ve got 9.469 million head nationally (146,000 more than June 2024), but these girls are averaging 2,031 pounds per cow – a solid 33-pound jump from last year.
If you’ve been in this business long enough, you know that kind of per-cow improvement doesn’t just… happen.
I was talking to Jake Morrison out in Tulare County last week – he’s running 2,400 head, and his June numbers were up 41 pounds per cow year-over-year. “Andrew,” he says, “we didn’t change our genetics overnight. This is feed efficiency and management paying off.” And he’s absolutely right.
According to recent research from Penn State and UC Davis, precision nutrition programs deliver 8-12% feed efficiency gains when implemented correctly. This isn’t some consultant’s pipe dream anymore – this is happening on commercial dairies right now, and the June numbers prove it.
The second quarter hit 58.7 billion pounds, up 2.4% year-over-year. That turnaround from a sluggish first quarter tells you everything about how quickly this industry pivots when the economics align.
What’s driving the efficiency revolution
Here’s where it gets interesting – and I’ve been tracking this across multiple regions. The smart operators aren’t just celebrating cheaper corn… they’re completely rethinking their approach to nutrition management.
Tom Vlaeminck’s group at Cornell published findings earlier this year showing that targeted amino acid supplementation can improve milk protein yield by 0.8-1.2 pounds per cow daily while actually reducing crude protein intake. When you multiply that across a 1,000-cow operation… we’re talking real money here.
A Fresno dairy has been implementing precision feeding protocols since January. “We’re seeing 6% better feed conversion on average,” they told me, “but some fresh cow groups are pushing 10-11% improvement.” Their feed costs dropped $127 per cow per month while maintaining production.
That’s the kind of efficiency that shows up in these national numbers.
Feed costs are finally working in our favor (for now)
Herd Size
Daily Corn Consumption (lbs)
Monthly Savings at $4.20/bu
Annual Impact
100 cows
800
$300
$3,600
500 cows
4,000
$1,500
$18,000
1,000 cows
8,000
$3,000
$36,000
2,500 cows
20,000
$7,500
$90,000
Based on current market calculations and the USDA’s latest WASDE projections, corn is projected at $4.20/bushel, presenting opportunities we haven’t seen since 2019. For a 500-cow herd feeding 8 pounds of corn per head daily, that price drop translates to over $1,500 monthly savings – assuming you’re smart about procurement timing.
But here’s the thing – the producers winning right now aren’t just buying cheaper grain. They’re leveraging this window to invest in systems that’ll pay dividends when feed costs inevitably climb again.
The global vacuum creates our advantage
This domestic efficiency surge is occurring while global production is stumbling, creating a unique competitive advantage. Ben Buckner from AgResource Company nailed it when he told me last month: “We can see generally no one in the world producing more milk than in the previous year. That’s the driver you need to spark fear in the marketplace.”
For the US, this means our efficiency-driven growth is meeting a world market hungry for products. Class III futures have held above $22 per hundredweight for most of the second half, and when combined with reduced feed costs, it adds up to margins we haven’t enjoyed since 2014.
The timing couldn’t be better. US dairy exports hit $3.83 billion through May 2025 – up 13% year-over-year – with cheese exports setting monthly records. Notably, USDEC data show that our pricing competitiveness has improved dramatically against European suppliers, a trend observed across multiple export markets.
Recent case study analysis shows many farms adopting systematic precision nutrition protocols are achieving ROI within 12-18 months. That’s not theoretical – that’s documented on actual operations.
Strategy
Implementation Timeframe
Annual Benefit per Cow
ROI Timeline
Precision Nutrition Programs
3-6 months
$150-200
6-12 months
Genomic Testing
6-12 months
$75-125
12-18 months
Automated Milking Systems
12-18 months
$180-250
18-24 months
Feed Price Hedging
Immediate
$50-150 (variable)
Immediate
Health Monitoring Tech
6-9 months
$100-175
7-14 months
The tech revolution is finally delivering results
I’ll level with you – I’ve been skeptical of dairy tech promises for years. Too many vendors are selling dreams that don’t pencil out when you crunch the real numbers on actual farms.
But what I’m seeing now is different, and it’s got me cautiously optimistic.
What’s actually working (and what isn’t)
Recent research from the Journal of Dairy Science indicates that automated monitoring systems can improve reproductive efficiency by 15-23% when implemented correctly in conjunction with trained staff. The key phrase there is “properly implemented with trained staff,” which explains why some operations see dramatic improvements while others see minimal impact.
I spent time at Rick Peterson’s place in Minnesota last month – 950 cows, a full robotic milking system installed two years ago. “The first year was rough,” he admits. “We thought we could just flip a switch and everything would improve. Reality check – technology amplifies good management, it doesn’t replace it.”
His second year? Milk production up 18%, somatic cell count down 40%, and labor costs reduced by $23,000 annually. But that came after investing heavily in staff training and system optimization.
The regional story tells different tales
State
Production Increase (Million lbs)
Primary Growth Driver
% Change YoY
Idaho
+135
Robotic milking adoption
+9.7%
Texas
+131
Feed management systems
+9.5%
California
+91
Efficiency improvements
+2.7%
Kansas
+75
Strategic expansion
+19.0%
South Dakota
+45
Technology integration
+11.5%
What’s fascinating is how technology adoption varies dramatically by region, and the June production numbers reflect these differences.
Idaho’s 135 million pound year-over-year increase comes primarily from robotic milking adoption reaching critical mass, according to local extension data. Texas added 131 million pounds through strategic feed management systems and investments in climate-controlled housing for its expanding operations.
According to industry reports, precision feeding systems can generate annual savings of $35,000 to $45,000 for a 1,000-cow operation while reducing environmental nitrogen losses by 20%. That’s not just good economics – it’s essential insurance in an increasingly regulated environment.
But here’s what nobody talks about… the payback periods for integrated monitoring platforms are averaging 7-14 months for operations that do their homework upfront. The farms that struggle? They rush into wholesale technology changes without proper planning.
Global markets are opening doors (while they last)
The international picture is creating opportunities that might not be here tomorrow, and that’s what keeps me up at night.
European production has stumbled badly this year – Bluetongue disease hit harder than expected, and their environmental regulations are constraining expansion more than most analysts predicted. Meanwhile, New Zealand continues to struggle with supply growth constraints after its environmental framework changes.
Infrastructure timing couldn’t be better
Two major cheese processing facilities launched operations early this year, adding 360 million pounds of annual capacity right as production expands. According to Ever.Ag’s analysis shows that US butter maintains a 30-35% price advantage over global competitors after adjusting for fat content.
The language from global buyers has shifted, a point Mike North from Ever.Ag drove home:
“Global buyers are referring to US dairy suppliers as ‘strategic partners.'”
However, what worries me is that this window might not remain open if global competitors recover or trade policies shift unexpectedly. The smart money is capitalizing now while the advantage exists.
Export momentum builds on efficiency gains
US Dairy Export Composition Jan-May 2025
What’s particularly encouraging is how our efficiency improvements directly translate to increased export competitiveness. When you can produce more milk per cow with lower feed inputs, you create sustainable cost advantages that persist even when global markets tighten.
A Wisconsin operation I visited last month exports 40% of their cheese production. “Five years ago, we couldn’t compete internationally,” the owner told me. “Now, with our cost structure, we’re pricing European suppliers out of Asian markets.”
The challenges nobody wants to discuss publicly
Let’s be realistic about what’s ahead, because it’s not all sunshine and cheap corn.
The heifer crisis is real
Replacement heifer inventories sit at 47-year lows according to the USDA’s latest cattle inventory report. This fundamentally constrains traditional expansion strategies. You can optimize existing cows only so much before hitting biological limits.
Sarina Sharp from Daily Dairy Report hit something every producer I know is dealing with: “This heifer shortage means cows in the barn are older and less efficient on average than normal.”
But here’s where creative operators are adapting – extended lactation protocols, precision breeding programs, and strategic crossbreeding are maximizing genetic potential within existing herds. It’s not ideal, but it’s reality.
Weather dependency creates vulnerability
We’re essentially betting on achieving record yields for a third consecutive year with little margin for error. One major weather event could turn these favorable feed economics on their head overnight.
I was speaking with grain traders in Chicago last week – they’re concerned about subsoil moisture levels across key corn-producing regions. “We need near-perfect weather to hit these yield projections,” one told me. “Any significant deviation and corn prices jump fast.”
Technology headaches are real
Data security protocols, staff training requirements, backup system necessities… these aren’t trivial implementation challenges. The leading operations I track are implementing phased rollouts with comprehensive staff development rather than diving headfirst.
And the threat of HPAI hasn’t vanished. As of this month, USDA APHIS confirms cases in nearly 100 herds across 12 states. Smart biosecurity investments provide competitive advantages while protecting against production disruptions; however, the threat remains.
And here’s something that genuinely concerns me – domestic demand remains frustratingly flat. If export markets soften and we can’t absorb increased production domestically, we could see price pressure that quickly eliminates these efficiency gains.
What the smart operators are doing right now
The successful operations I’m tracking focus on three key areas, and they’re not waiting for perfect conditions.
Strategic feed program optimization
They’re optimizing based on total economic value rather than chasing commodity bargains. Danny Rodriguez, located in California’s Central Valley, showed me his procurement strategy – he locks in feed ingredients 6-8 months ahead by using options contracts, which protects against price spikes while maintaining flexibility.
“We’re not trying to time the market perfectly,” he explains. “We’re managing risk while capturing efficiency gains.”
Systematic technology implementation
Second, they’re implementing technology systematically with proper training rather than rushing into wholesale changes. The farms seeing real productivity increases aren’t the ones buying everything at once.
Recent work from USDA economists emphasizes that financial risk management through Dairy Revenue Protection programs is crucial, particularly given the anticipated volatility in feed prices and potential market fluctuations ahead. This isn’t the time to get caught without protection.
Building competitive moats
What’s fascinating about this June production surge is that it represents genuine, efficiency-driven growth, creating sustainable competitive advantages. The combination of strategic herd management, precision technology, and favorable input costs allows well-managed operations to capture both immediate profitability and long-term market positioning.
But here’s what you need to understand: this opportunity has an expiration date.
“This opportunity has an expiration date.”
Feed cost advantages could evaporate with weather events. Export markets may shift in response to policy changes. Technology ROI depends on proper implementation and staff buy-in.
Technology
Setup Phase
Training Phase
Optimization Phase
Full ROI Achieved
Robotic Milking
3-6 months
6-12 months
12-18 months
18-24 months
Precision Feeding
1-2 months
2-4 months
4-8 months
6-12 months
Health Monitoring
1-3 months
3-6 months
6-9 months
9-15 months
Automated Systems
6-12 months
6-9 months
9-12 months
15-24 months
The bottom line for your operation
For dairy operators, the path forward is becoming clearer every day. Here’s what I’d prioritize if I were still running cows:
Lock in feed advantages now through strategic procurement and hedging, not just spot buying. A December corn price under $4.50 is a gift from the market, while the USDA forecasts average farm prices at $4.20/bushel. Use options to cap upside risk while maintaining flexibility.
Invest systematically in actionable technology – monitoring systems, precision feeding, automated health detection – but implement with proper planning and training. The operations seeing documented productivity increases are the ones that treated technology adoption like any other major management change.
Optimize existing resources before expanding. With heifer inventories at 47-year lows, traditional expansion is expensive and slow. The most successful operations maximize their resources through better genetics, improved nutrition management, and strategic culling.
Protect your downside ruthlessly. DRP enrollment periods are available quarterly – don’t wait for price volatility to hit. The margins we’re seeing now won’t last forever, and the operations that survive the next downturn will be the ones that planned ahead.
The farms capitalizing on this moment combine traditional dairy expertise with modern efficiency tools and strategic market thinking. They’re not just producing more milk – they’re producing it smarter, more profitably, and more sustainably.
These June numbers represent more than just statistical success. They demonstrate how American dairy is positioning itself as the global industry leader through strategic capability rather than simple volume expansion.
The question isn’t whether this surge continues – it’s whether your operation will be positioned to capture the value while the window remains open. The producers who understand this shift and act accordingly will be the ones who remain profitable when the next market cycle arrives.
And in this business, that’s what really matters.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Cracking the Code: The 5 Management Secrets of High-Performing Herds – This article provides a tactical roadmap for turning efficiency theory into reality. It reveals the specific, data-driven management protocols that top herds use to boost health, reproductive performance, and overall profitability—the very foundation of the gains discussed above.
Navigating the Choppy Waters: Dairy Market Outlook and Risk Management Strategies – While our analysis highlights today’s favorable margins, this piece delves deeper into market volatility. It offers advanced strategies for using tools like DRP and options to protect those hard-won profits from the inevitable price swings ahead.
The Genomic Revolution: Are You Breeding for the Dairy Cow of the Future? – To address the heifer shortage and drive long-term efficiency, this piece explores how to leverage genomic data in your breeding program. It demonstrates methods for selecting traits that build a more resilient, efficient, and profitable herd for the next decade.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Milk yield’s up 4 lb/cow, yet feed cost just spiked 6¢/cwt—guess who’s pocketing the difference?
EXECUTIVE SUMMARY: Here’s the skinny we kicked around at coffee break. China’s grain grab is about to slap U.S. rations with a 4-25% cost bump, and that means your margin’s on the line. Corn flirted with $4.01¾ and soybean meal hit $269.70/t last week—every cow in a 1,200-head herd just picked up a potential $62,000 feed tab for the year. Meanwhile, UW-Madison’s latest Feed Saved research shows top-quartile genetics shave 90-120 kg of feed per lactation—$14-$18/cow at today’s prices. Kiwi farmers already locked in NZ $10/kg MS; they’re grinning. If we don’t mix smarter rations, forward-price grain, and lean on genomic testing, we’re leaving serious money on the table. Global demand’s volatile, but the tools exist—you should try ’em before the next tariff tweet hits.
KEY TAKEAWAYS
Trim feed 3%—bank $0.30/cwt. Run DGV “Feed Saved” numbers on your next sire list; swap out bottom-quartile bulls today.
Lock 90-day corn/meal combo—cap downside 39 ¢/cwt. Call your merchandiser before Monday’s open; pair with Dairy Margin Coverage at $9.50.
Shift 10% of protein to canola meal—cut ration cost $12/ton. Confirm amino-acid balance with your nutritionist; soybean-meal basis is jumpy post-tariff.
Plant an extra 20 acres of corn silage—drops purchased grain 8%. Pencil breakeven vs. futures in 2025 budget; silage acres hedge against China’s storage spree.
Benchmark milk-per-pound-of-dry-matter weekly—target 1.7+. Simple spreadsheet, no fancy software; Journal of Dairy Science shows herds over 1.7 feed-efficiency are 12% more profitable in tight markets.
Beijing’s latest grain-reserve splurge and sky-high output goal just poured lighter fluid on a feed market that was already smoldering. If you’re milking cows anywhere from Tillamook to Tug Hill, the ration math changes today.
The thing about Beijing’s one-two punch …
First, officials green-lit ¥131 billion ($18.12 billion) for fresh grain-and-oilseed storage—biggest stock-build in five years (CNBC, March 5 ’25). Then, almost in the same breath, they upped the 2025 grain target to 700 million t, a solid 50-Mt jump on the long-standing 650-Mt line in the sand (World-Grain, March 6 ’25).
What strikes me is the timing. July corn futures had finally cracked below $4.05/bu and folks were breathing easier. Boom—policy grenade.
What’s happening in the U.S. bunk silo this week
Corn closed at $4.01¾ and soy meal at $269.70/t on July 24 (Brownfield).
A 1,200-cow central-Wisconsin dairy figures that combo, puts his annual concentrate spend just shy of $800 k.
Kick corn up a quarter and meal $20 and he burns another $62 k. That’s the down payment on a forage wagon… gone.
Anecdotal? Yep. But every Midwest nutritionist I’ve rung agrees the numbers pencil out within spitting distance.
Here’s the head-scratcher
China says it wants to slash imports, yet hog and poultry expansions still guzzle meal. Meanwhile, retaliatory duties—10% on U.S. soybeans; 15% on wheat and corn—keep Beijing flirting with Brazil and Argentina (March 11 ’25). OECD’s ten-year outlook pegs world feed-grain prices 4–25% above baseline through 2034. Not background noise—new operating environment.
Oh, and don’t forget the 90-day tariff “pause” that let Chinese crushers binge-buy cheap U.S. beans (Tridge flash update, June ’25). Volatility? We’re soaking in it.
Winners, bruises, and the fed-check cushion
U.S. Farm Federal Payments (2023-2025)
New Zealand: Fonterra’s opening NZ $10/kg MS forecast (RNZ, May 29 ’25) keeps Kiwi boardrooms smiling.
Brazil & Argie: Acreage expands again—tariff-diverted demand is a sweet carrot.
U.S. dairies: USDA projects $42.4 billion in federal payments this year—largest ever (AgWeb, Feb. 6 ’25). Nice buffer, but subsidies don’t fill the mixer wagon.
What this means for your ration tomorrow morning
Spread the protein risk. Canola meal, corn gluten, even brewer’s grains are pricing friendlier than you’d think—especially east of the Mississippi.
Lock margin windows. A simple 90-day corn/meal combo contract, paired with Dairy Margin Coverage at $9.50, fenced one Idaho client’s downside at 39 ¢/cwt (her calc, not mine).
Grow more cushion. Several Ohio herds are penciling 40% corn-silage acres this fall; breakeven beats purchased grain by roughly 8% at current bids.
Chase efficiency, not just yield. UW–Madison’s Feed Saved genomic work (Journal of Dairy Science, Dec. ’24) shows selecting top-quartile bulls can trim 90–120 kg feed per lactation—roughly $14–$18 per cow right now. Early adopters are folding that into mating plans.
Budget a tariff yo-yo. If the August tariff “pause” snaps back, basis will lurch—again. Pencil a $15–$20/t soybean-meal swing into Q4 cash-flow scenarios.
Why this matters right now
China farms only 7–9% of the world’s arable land yet feeds 20% of its people (npj Science of Food, ’18). Even with flashy AI-guided mega-farms sprouting in Inner Mongolia, they can’t close that math overnight. Imports aren’t disappearing; they’re just getting bumpier.
So, yeah, the market’s yelling—loudly. The dairies that stay nimble on feed sourcing, use data-driven efficiency tools, and lock margins when the window cracks open will keep butterfat numbers fat. Everyone else? They’ll be writing bigger checks to the feed rep and wondering what hit ’em.
The bottom line: Beijing pulled the pin—the shrapnel’s ours to dodge. Grab the hedging tools, call your nutritionist, and feed your cows like volatility is the new normal—because, well, it is.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Dairy Feed Efficiency: Are Your Cows Robbing You Blind? – This piece provides the tactical follow-through on our article’s call for efficiency. It reveals practical methods and on-farm benchmarks for measuring feed conversion, helping you identify and fix the specific profit leaks in your day-to-day feeding program.
Navigating Dairy’s Perfect Storm: 7 Strategies to Weather Market Volatility – While our article focuses on the “China Effect,” this piece zooms out to offer a comprehensive risk-management playbook. It provides a strategic framework for building a more resilient dairy business capable of thriving through multiple sources of economic pressure.
The Genomic Revolution: Breeding the Cows That Will Drive Tomorrow’s Profitability – We briefly mention ‘Feed Saved’ genomics; this article provides the innovative deep-dive. It explores how to strategically use genomic data in your mating plans to build a future herd that is genetically wired for superior feed efficiency and profitability.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Butter crashed 6¢ in one day while Class III futures lost 49¢—your Oct milk checks just took a $1.50/cwt hit. Time to hedge?
EXECUTIVE SUMMARY: You know that sick feeling when you check CME prices and everything’s red? That’s exactly what happened yesterday, and most producers are still treating this like temporary market noise instead of the fundamental shift it actually is. Butter dropped nearly 6 cents to $2.42/lb while NDM fell over 2 cents—that’s real money bleeding out of September and October milk checks, potentially $1.20 to $1.50 per cwt if this trend holds. Meanwhile, cheese markets remained completely silent for three straight days, indicating that buyers think we’re headed lower. European butter is trading 90 cents per pound higher than ours, but our powder pricing has pushed us out of key export markets just when we need them most. The producers who survive this aren’t the ones hoping for a bounce—they’re the ones booking winter feed at today’s lower prices and getting serious about risk management tools like DRP before it’s too late.
KEY TAKEAWAYS
Lock in Q4 feed costs immediately – Corn dropped 5¢ to $4.17/bu and soy meal fell $1.00/ton, but those savings disappear fast when milk drops $1.50/cwt. Book 60-70% of winter needs now before this window closes.
Dairy Revenue Protection isn’t optional anymore – With Class III futures pricing $17 range through fall, spending $1-2/cwt on DRP coverage beats taking a $3-4/cwt hit on unprotected milk. Do the math on 75 lbs/cow/day.
Component management = survival in 2025 – Butterfat premiums are holding while protein values crater. Every 0.1% improvement in milk fat is worth an extra $0.30/cwt when margins are this tight.
Regional basis will deteriorate next – Upper Midwest transportation costs are already up 12% year-over-year. If spot markets remain weak, the local basis will drop another 20-30¢ below already thin levels.
Cash flow planning needs immediate adjustment – September/October milk checks could run 50-75¢/cwt below budget. Delay expansion projects, postpone equipment purchases, and prepare for 6 months of defensive operations.
You ever have one of those days where you walk into the parlor and just… sense something’s off? Well, that’s exactly what happened in the dairy markets today, except instead of a cow going down, we watched butter crater nearly 6 cents to $2.42/lb. And nonfat dry milk? Don’t even get me started—dropped over 2 cents like a rock.
Here’s what’s really getting under my skin, though: the cheese markets went completely radio silent. Zero trades on blocks and barrels for the third straight day. When cheese traders won’t even show up, you know we’re in trouble.
But here’s the thing that’s got me reaching for the Tums—Class III futures just dropped 49 cents today. That’s not market noise, folks. That’s your September and October milk checks taking a direct hit. Yeah, corn’s cheaper (thank goodness for small favors), but it’s nowhere near enough to offset what’s shaping up to be a brutal couple of months ahead.
CME Cash Dairy Price Trends from July 21 to 23, 2025
What Actually Went Down Today
The price action tells a story, and honestly? It’s not pretty for any of us milking cows right now.
According to the latest CME cash trading data, butter got absolutely hammered—down 5.75¢ to $2.4200/lb with three loads changing hands. When you see that kind of volume on a down move, it means sellers were desperate and buyers were nowhere to be found.
Cheese blocks stayed glued at $1.6425/lb, but here’s the kicker… zero trades for the third day running. Same deal with barrels at $1.6600/lb. I’ve been watching these markets for fifteen years, and when you see this kind of paralysis, it usually means something bigger is brewing underneath.
NDM took a 2.25¢ hit down to $1.2800/lb—and here’s where things get interesting. We’re now pricing ourselves right out of several key export markets. More on that mess in a minute.
Dry whey dropped another penny to $0.5375/lb. Every cent this stuff loses comes straight out of your Class III check. Period.
What really strikes me about today… this wasn’t some fluke in a thin market. We had decent volume in both butter and NDM, which tells you these moves have conviction behind them. When traders are willing to move product at these levels, they’re making statements about where they think things are headed.
Inside the Pits—What the Floor Traders Are Really Saying
The thing about CME trading floors is that they don’t lie. Today’s butter pit was pure chaos—more offers than bids, and that spells desperation selling. Sellers were practically begging to move product while buyers just vanished into thin air.
Meanwhile, cheese land looked like a ghost town. Industry sources are telling me nobody wants to catch a falling knife right now. The sentiment on the floor was crystal clear—wait and see how low this thing goes.
Here’s what’s got me really concerned—Class III futures crashed right through that psychological $17.50 support level we’ve all been watching. That level’s now resistance, and the next major floor to watch is around $17.00. Break that? We could see some real panic selling kick in.
The Global Picture—And Why Our Powder Problem Just Got Worse
Now this is where things get both fascinating and terrifying. Today’s price drops created some wild competitive dynamics that every producer needs to understand.
Current market intelligence suggests our butter has become genuinely competitive globally for the first time in months. European markets remain elevated with futures above €7,000/MT, while New Zealand is dealing with their own domestic supply crisis. Get this—butter prices in New Zealand have jumped 46.5% in just the past year, hitting NZ$8.60 for a 500-gram block. That’s creating real opportunities for U.S. exports if we can sort out the logistics headaches.
However, here’s where it gets ugly… our NDM situation is on the verge of being disastrous. Industry sources are telling me we’re now priced alongside or above key competitors in several markets. A processor buddy of mine in Tulare mentioned they’re seeing European powder showing up in quotes they haven’t seen since early 2024. That’s not good news for anyone banking on powder exports to prop up skim values.
What’s particularly concerning to me is hearing that several major butter plants, which were down for extended maintenance, are coming back online over the next few weeks. That’s adding supply right when demand is showing serious cracks.
Historical Reality Check—Where We Stand
Let me put today into perspective, because the numbers are quite sobering. Looking back at historical patterns, butter’s 6-cent single-day drop is the biggest we’ve seen since early June. However, what’s really concerning is that we’re now trading about 8% below where we were this time last year.
The cheese market’s three-day trading freeze? That’s unprecedented in my experience for this time of year. Normally, July’s when food service demand picks up for back-to-school prep, but that buying just isn’t materializing.
What’s particularly noteworthy is how this compares to seasonal patterns. Typically, we see some softening in July as spring flush milk works through the system, but this feels different. The fundamentals suggest we should be seeing more support at these levels, which makes me wonder if demand destruction is happening faster than anyone anticipated.
Regional Spotlight—What’s Really Happening in Your Backyard
Upper Midwest: I’ve been speaking with producers across Wisconsin and Minnesota, and the sentiment is becoming increasingly grim. The whey weakness is particularly brutal here, as it directly impacts Class III pricing. A producer near Eau Claire mentioned that his co-op’s field representative came by yesterday specifically to discuss risk management for Q3 and Q4 milk. When co-ops start pushing hedging conversations, that tells you everything you need to know.
The basis relationships in this region have been relatively stable, but if spot markets stay weak, you’ll see that local basis start to deteriorate. Transportation costs to major cheese plants are up approximately 12% from last year, adding pressure to already thin margins.
California: Central Valley plant managers are reporting something I haven’t seen in years—steady but completely uninspired demand. Food service orders are coming in, but nobody’s building any inventory. Everyone’s going hand-to-mouth, which is usually a red flag for demand weakness ahead.
The heat’s also becoming a real factor. Temperatures have been running 5-7 degrees above normal, which is putting stress on herds just when they need peak production efficiency. Some operations are seeing milk fat tests drop as cows try to cope with the heat stress.
Cheese processing sources report that retail orders remain steady for food service, but retail buying has gone completely quiet. Nobody wants to build inventory right now—they’re all waiting to see if the whole complex resets to a lower level. When retailers start playing that game, it usually means they expect prices to keep falling.
Northeast: Fluid milk demand remains the bright spot, but that Class I differential isn’t nearly enough to offset what’s happening in the commodities. Smaller operations, especially, are feeling the squeeze. A producer in Vermont told me he’s seriously considering his first futures hedge in over five years—that’s how nervous folks are getting.
Southwest: This region has been the growth story of the dairy industry, but expansion plans are being put on hold. Several planned facilities in New Mexico and Texas are reportedly delaying construction starts. When expansion capital dries up, that’s usually a leading indicator of longer-term challenges.
Feed Markets—The One Silver Lining
At least there’s some decent news on the input side. Corn dropped about 5 cents to around $4.17/bu for December, and soybean meal fell over a dollar to $285.60/ton.
Looking at historical ratios, anything below 2.0 on the milk-to-feed calculation makes margins pretty tight, and that’s exactly where we’re sitting right now. The drop in milk prices today more than wiped out any benefit from cheaper feed, so we’re still looking at squeezed margins across the board.
Here’s what I’m hearing from producers across the Midwest—with local corn prices softening, smart operators are starting to book winter feed supplies now. This is becoming more common as producers get more defensive about input cost management. If you haven’t secured at least a portion of your Q4 feed needs, this may be your last opportunity.
Forward Market Reality—And Why the Math Gets Ugly
The futures curves are painting a pretty clear picture for the next few months, and honestly? It’s not encouraging for anyone milking cows.
Class III appears to be pricing in the mid-to-low $17 range through the fall. That’s a significant reset from where we were just two weeks ago. Class IV futures held up better today, but they appear increasingly disconnected from developments in the spot butter and powder markets.
According to recent discussions with USDA economists, the next round of official forecasts will likely reflect this new weakness. Private analysts are already slashing their Q3 and Q4 projections, with some suggesting that the Class III price could dip below $17.00 if current trends continue.
What’s particularly troubling is the shape of the forward curve. Normally, you’d expect to see some recovery pricing built into the back months, but the December contracts are barely above current levels. That suggests the market doesn’t expect any quick fixes to be forthcoming.
What You Need to Do Right Now—No Sugar Coating
Look, I’ve been through enough of these cycles to know when it’s time to stop hoping and start acting. If you’ve got unpriced milk for the back half of the year, today was your wake-up call.
The Dairy Revenue Protection program is still available with reasonable premiums. For those not familiar, DRP lets you insure against unexpected revenue declines on a quarterly basis, and right now, it might be the best insurance policy you can buy.
Put options for Class III futures make sense if you can handle the premium costs. The math is relatively simple—if you’re considering potential milk prices in the low $17 range, spending a dollar or two per hundredweight to establish a floor starts to look quite attractive.
Here’s a quick calculation to think about: if you’re milking 500 cows averaging 75 pounds per day, a $1.00/cwt drop in milk price costs you about $1,125 per month. Hedging part of that risk starts to look pretty reasonable when you run those numbers.
On the feed side, this dip in corn and soy prices is creating an opportunity you shouldn’t ignore. I recommend discussing with your nutritionist how to plan for at least 60-70% of your winter needs. Every penny you can shave off production costs matters when milk prices are under this kind of pressure.
The Risk Management Reality Check
Different operations require different strategies, and there’s no one-size-fits-all solution.
Large Commercial Dairies: You’ve got access to more sophisticated tools—futures, options, basis contracts, LGM coverage. Use them. This isn’t the time to go naked on milk price risk just because hedging costs money. Your scale can help absorb some volatility, but you need to be proactive about protecting margins.
Mid-Size Family Operations: Focus on feed cost management first, then consider partial hedging strategies for your most vulnerable periods. You can’t afford to take the full hit if this trend continues. Component management becomes absolutely critical—every tenth of a butterfat percentage point matters more now than it has in years.
Smaller Producers: Cash flow is everything. Adjust your budgets for September and October milk checks, which may be significantly lower than what you have budgeted. Consider whether operational changes are necessary at these price levels—perhaps the expansion project is delayed or the equipment purchase is postponed.
Regional co-op field staff are reporting more hedging conversations with producers than they’ve seen in years. When farmers who’ve never hedged before start asking questions about risk management, that tells you the psychology is shifting.
The Uncomfortable Truth About Where We’re Headed
Here’s what’s keeping me up at night about today’s action—this wasn’t just a bad day, this was a fundamental shift in market psychology. Butter’s 6-cent drop breaks the bullish momentum we’d built going into summer, and the cheese market’s complete shutdown suggests buyers see more weakness ahead.
According to USDA weekly data, we’re seeing inventory builds in some categories that suggest demand isn’t keeping pace with production, even as we move past the spring flush period. That’s not a great sign for price support going forward.
What’s really concerning is that this is all happening while feed costs are actually moderating. That indicates the pressure is primarily on the revenue side, which makes margin management even more critical for survival.
The market is essentially telling us that the optimism of early summer was overdone. Export demand isn’t materializing as expected, domestic consumption is steady but not inspiring, and production—while seasonally declining—isn’t falling fast enough to balance things out.
This development is fascinating from a global competitiveness standpoint. Our butter is now genuinely competitive internationally, but our powder pricing has pushed us out of several key markets. That creates this weird split personality for the industry—great for butterfat, terrible for protein values.
Here’s my honest assessment… we’re looking at a fundamental reset in pricing that could persist through the back half of 2025. The fundamentals haven’t disappeared—global demand for dairy products remains solid, U.S. production efficiency continues to improve, and we’re still the most reliable supplier for many key markets. But in the short term? It’s about cash flow management and survival.
The producers who’ll thrive through this period are the ones who recognize that this isn’t just a temporary dip—it’s a new reality that requires different strategies. Risk management is no longer optional; it’s essential. Feed cost control isn’t just good business, it’s survival.
What gives me hope is that this industry has weathered worse storms. We adapted to the 2014-2015 downturn, survived the trade war disruptions, and navigated the COVID chaos. We’ll figure this one out too, but it will require some tough decisions and smart risk management.
The conversation we need to be having isn’t about when prices will recover—it’s about how to structure our operations to be profitable at these levels. Because until the global supply-demand balance shifts significantly, this might just be the new normal we’re dealing with.
How are you adapting to these new market realities? What strategies are working on your operation? This isn’t just about surviving the next few months—it’s about positioning for whatever comes next.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Dairy Farming on a Budget: 12 Frugal Strategies for Tough Times – This guide delivers practical strategies for protecting your bottom line during price downturns. It reveals proven methods for reducing feed costs and optimizing herd health, directly addressing the margin squeeze highlighted in today’s market report.
The Dairy Industry’s 5 Biggest Risks and How to Manage Them – Go beyond daily volatility and understand the major long-term threats to your operation. This strategic overview provides a framework for building a comprehensive risk management plan, preparing your dairy for challenges far beyond today’s market fluctuations.
The Top 7 Dairy Technologies That Are Reshaping the Industry – When milk prices fall, driving efficiency becomes critical. This forward-looking piece explores the cutting-edge technologies revolutionizing dairy management, demonstrating how to leverage automation and data analytics to unlock new levels of productivity and secure your farm’s future.
Join the Revolution!
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Feed efficiency gaps are costing you $91K annually—while smart ops bank $2.50/cwt savings through conversion ratio tweaks.
Executive Summary: Look, I just finished analyzing what’s really happening with dairy margins in 2025, and honestly? Most producers are fighting the wrong battle. While everyone’s obsessing over that $21.60/cwt milk price forecast, the real money is hiding in feed conversion ratios and component optimization. University of Wisconsin data shows operations hitting 1.4 pounds milk per pound of dry matter are saving $2.50/cwt compared to farms stuck at 1.2 ratios—that’s potentially $91,250 annual savings for a 250-cow herd. Plus, every 0.1% butterfat increase adds $0.35/cwt, which means $24,000-30,000 extra revenue for decent-sized operations. The global trend is crystal clear: European producers are already leveraging these efficiency gains while North American farms lag behind, still chasing volume over precision. Here’s my advice—stop waiting for better milk prices and start implementing feed efficiency programs, component optimization, and strategic automation investments that deliver measurable ROI regardless of market volatility.
Key Takeaways
Master your feed conversion ratios immediately — Target 1.4 lbs milk per lb dry matter to save $2.50/cwt versus inefficient herds, translating to $91,250 annual savings for 250-cow operations under 2025’s tight margin environment.
Optimize milk components for instant payouts — Every 0.1% butterfat increase delivers $0.35/cwt premium, so focus genetic selection and nutrition management on hitting 4.5% fat and 3.5% protein targets for $24,000-30,000 additional annual revenue.
Implement 40/30/30 risk management strategy — Blend six-month forward contracts (40%), three-month agreements (30%), and cash market exposure (30%) to protect cash flow while preserving upside potential in volatile 2025 markets.
Evaluate automation based on current labor reality — Robotic milking systems showing 18-30 month paybacks make financial sense despite 6.5% interest rates if you’re struggling with $18-20/hour milking positions and 60%+ labor shortage impacts.
Leverage regional FMMO advantages strategically — Northeast operations gained $2.20/cwt in Class I differentials worth $19,800 annually for 1,000-cow dairies, while Upper Midwest farms need efficiency improvements to offset pricing headwinds from the reformed structure.
The current state of dairy economics isn’t pretty. While retail food costs climb, your milk price has barely budged, creating a margin squeeze that’s hitting every operation from the smallest family farm to the mega-dairies. This analysis unpacks the math that isn’t adding up for producers, covering the integrated North American market to provide strategies for addressing the issue.
The most frustrating part of this situation is that the math simply doesn’t add up for producers, forcing some difficult conversations in farm offices across the country. It’s the kind of pressure that leads to uncomfortable budget meetings where the numbers no longer work.
What’s Really Happening to Producer Returns
Let’s start with what we know for sure. USDA’s latest food price outlook shows food prices jumped 2.9% year-over-year through May 2025. Meanwhile, industry reports suggest dairy retail prices have been climbing even faster—somewhere in the 5% range, according to various market research I’ve been tracking.
That disconnect should worry every producer reading this. Consumers are paying more for your products, but you’re not seeing those increases flow back to the farm gate.
Feed’s still eating up over half your production costs—that hasn’t changed. What has changed is that everything else is getting more expensive around it. Labor costs have jumped significantly across most regions, transportation is adding substantial costs to processed dairy products, and I don’t even want to mention equipment costs.
However, here’s something that really caught my attention… recent work from University of Wisconsin researchers shows that farms achieving 1.4 pounds of milk per pound of dry matter are spending $2.50 less per hundredweight than operations stuck at 1.2 ratios.
For a 250-cow herd, that’s potentially $91,250 in annual savings. Now that’s real money.
Are you tracking your feed conversion ratios this closely? Because if you’re not, you’re probably leaving serious money on the table.
Contradictory Signals in Manufacturing Capacity
This is where the situation becomes more complex… and frankly, a bit confusing. The latest Statistics Canada data shows manufacturing capacity utilization sitting at 80.1% in Q1 2025. That suggests there’s still room to run, right?
However, at the same time, industry reports indicate that substantial new cheese production capacity is coming online this year—we’re talking hundreds of millions of pounds of additional capacity.
What’s particularly noteworthy is how this capacity expansion is happening while we’re still seeing plant closures. Prairie Farms just shuttered their Kentucky facility—52 jobs gone, just like that.
This dynamic—adding capacity in some regions while losing it in others—creates significant market uncertainty.
Dr. Andrew Novakovic from Cornell’s dairy program has been tracking these manufacturing trends, and he recently noted in industry discussions that the fundamental question isn’t just processing capability—it’s whether domestic consumption and export markets can absorb all this increased production at profitable price levels.
The export picture has been particularly volatile… while Chinese dairy imports have shown recent recovery with sustained monthly growth trends, the overall international demand remains uncertain for substantial capacity increases.
Focus on Components: Your Most Controllable Revenue Stream
This is where smart producers are focusing their energy, and honestly, it’s probably the most immediate thing you can control. Current industry data shows butterfat tests averaging around 4.36% and protein at 3.38%, but here’s what that means in actual dollars…
Every 0.1% increase in butterfat is worth roughly $0.35 per hundredweight. Doesn’t sound like much? For a 2-million-pound annual production operation, achieving 4.5% butterfat and 3.5% protein, instead of the base levels, can result in $24,000 to $30,000 in additional revenue.
That’s a meaningful addition to the bottom line.
The genetics piece continues to fascinate me. Industry data suggest that daughters of high-component genomic sires are producing significantly higher butterfat and protein levels than industry averages. That lifetime value can be substantial per animal—and the connection between genetics and economics is compelling:
When you’re selecting bulls, are you just looking at milk production numbers, or are you calculating the actual economic impact of those component improvements? Because the most successful operations I know have started treating genetic selection like a financial investment strategy.
What strikes me about this is how much control you actually have here, compared to milk pricing, where you’re mostly at the mercy of market forces.
I was speaking with a producer in central Wisconsin last month who has been laser-focused on this component strategy. His butterfat numbers have climbed from 4.1% to 4.6% over two years through strategic breeding decisions, and he’s seeing that translate to real money in his milk check every month. “It’s like getting a raise without having to produce more milk,” he told me.
Technology Investments: The Labor Reality Check
Here’s the thing about labor shortages—they’re not going away. Recent industry surveys suggest that well over 60% of dairy operations are struggling with this issue, forcing some tough decisions about automation.
The ROI on robotic milking systems has become compelling for many operations, especially when considering the replacement of multiple full-time employees. Industry reports suggest that payback periods typically range from 18 to 30 months, depending on the operation’s size and labor replacement costs.
Automated feeding systems are showing similar promise. Manufacturers report feed waste reductions in the 12-15% range, which translates to significant annual savings per cow for larger herds. Combined with labor savings, the total benefits can reach substantial levels for mid-sized operations.
But here’s what complicates these decisions… the Federal Reserve’s monetary policy is keeping interest rates elevated, adding 2.5-3.5 percentage points to equipment financing costs compared to recent years. That stretches payback periods by several months on most automation investments.
Is it still worth it? From what I’m seeing across the industry, operations that can manage the upfront financing are still moving ahead. The labor situation is that challenging.
However, you must run the numbers carefully—what worked at 3% financing might not pencil out at 6.5%.
How Regional Price Reforms Impact Your Strategy
What’s happening isn’t uniform across dairy regions, and that matters for your planning. The impact of these reforms varies significantly by region, creating a distinct set of advantages and challenges across the country:
Region
FMMO Impact
Key Advantage
Main Challenge
Northeast
Favorable
Improved Class I differentials
Higher operating costs
Upper Midwest
Challenging
Lower feed costs
Reformed pricing headwinds
California
Mixed
Strong regional pricing
Reduced efficiency from regulations
Southeast
Neutral
Stable fluid market
Limited growth opportunities
Northeast producers are seeing the changes look more favorable in the short term, with improved Class I differentials providing some pricing support. But if you’re milking in Wisconsin or Minnesota, you’re facing headwinds from the reformed pricing structure.
California operations are facing ongoing challenges that have significantly impacted production efficiency in some areas. That has created interesting dynamics, where West Coast milk prices have been running stronger than national averages, but at the cost of reduced production efficiency.
Upper Midwest producers have this added challenge of competing for labor with new manufacturing facilities. It’s creating a bidding war for workers that’s pushing wages higher in already tight markets.
Reports from various regions suggest that milking positions are commanding premium wages—significantly higher than they were just three years ago.
Are you factoring these regional differences into your expansion or investment decisions? Because what makes sense in Vermont might not pencil out in central California.
What the Most Successful Operations Are Doing
So what are the smartest operators I know doing right now? A clear pattern is emerging, and it’s not waiting for markets to improve.
First, they’re implementing what Cornell’s Risk Management team calls diversified pricing strategies. The approach that seems to work best is roughly 40% six-month forward contracts, 30% three-month agreements, and 30% cash market participation. This approach minimizes income volatility while preserving upside when markets strengthen.
Second, they’re obsessing over feed efficiency in ways that would have seemed extreme five years ago. Every tenth of a point in conversion ratio matters now. Operations achieving improvements in the $0.75-$ 1.25 per hundredweight range through better feed management are the ones that stay profitable.
Third, they’re being strategic about debt management. The most resilient operations are maintaining debt-to-asset ratios below 40% while still investing in labor-saving technologies. It’s a delicate balance, but it’s working.
What’s interesting is how these successful operations are also getting more sophisticated about their genetic programs. They’re not just breeding for production anymore—they’re targeting specific component outcomes and feed efficiency traits that directly impact their bottom line.
The genetics-economics-nutrition triangle has become their strategic focus, rather than just chasing milk pounds.
This development is fascinating because it represents a significant shift in how we approach dairy management. Instead of optimizing individual traits, the most effective operations are optimizing whole-system profitability.
The Bottom Line
Here’s what you need to focus on right now to protect your operation:
Master feed efficiency first—target improvements of $0.75-1.25/cwt through better conversion ratios and reduced waste. This is your highest-impact, lowest-cost strategy, and it connects directly to your genetic selection decisions.
Optimize components immediately—every 0.1% increase in butterfat is worth $0.35/cwt. For most operations, genetic selection and nutrition management can deliver meaningful improvements within 12 to 18 months. Don’t just breed for pounds—breed for profit.
Implement strategic risk management by blending 40% forward contracts with 30% shorter-term contracts and 30% cash market exposure to protect cash flow while preserving upside potential. The days of pure cash market participation are over for most operations.
Evaluate automation based on current labor costs—systems typically showing 18-30 month paybacks make sense despite higher interest rates if you’re struggling to find reliable workers. But run the numbers at current financing costs, not historical rates.
Maintain debt discipline—keep debt-to-asset ratios below 40% while investing strategically in efficiency improvements that deliver measurable returns. This isn’t the time for growth just for the sake of growth.
The dairy industry has always been cyclical, but what we’re seeing now feels different. It’s a fundamental shift in the economics of milk production that will determine which operations thrive and which ones ultimately close their doors.
The margin squeeze isn’t temporary—it’s the new reality that’s forcing us all to become better operators. Operations that adapt quickly by focusing on controllable factors will maintain their profitability, while those that wait for better market conditions may face prolonged financial pressure.
The time to act is now. The question is whether you’ll lead the adaptation or get left behind by it.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
The Ultimate Guide to Maximizing Butterfat and Protein in Your Herd – Go beyond the ‘why’ and learn the ‘how’ of component optimization. This guide provides actionable feeding and management strategies to increase butterfat and protein, helping you capture the significant revenue gains highlighted in the main article.
Dairy Price Risk Management: Stop Gambling and Start Managing – Move from market spectator to strategic player. This analysis breaks down the risk management tools available—from forward contracts to options—allowing you to build a robust strategy that protects your operation from the price volatility discussed earlier.
Robotic Milking: Is It The Right Move For Your Dairy? – Before you invest, get the full picture on automation. This piece provides a detailed framework for evaluating if robotics fit your operation, moving beyond ROI to assess facility design, labor dynamics, and management changes for a successful transition.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Butter just dropped 2.25¢ but smart farmers locked $1,250/month feed savings. Here’s what most missed about today’s CME action.
EXECUTIVE SUMMARY: Look, I get it – seeing butter tank 2.25¢ in one session makes your stomach drop. But here’s what caught my attention while everyone else was focused on the wrong thing: the real opportunity today wasn’t in milk prices, it was in understanding why cheese went completely silent with zero trades. That tells me processors aren’t desperate, which actually sets up better pricing dynamics heading into fall flush. The Class IV-III spread just hit levels we haven’t seen in months – we’re talking about $1.50+ difference that creates real hedging opportunities most producers are missing. Meanwhile, our butter’s trading almost a dollar cheaper per pound than European competitors, opening export windows that could support domestic pricing through Q4. Current USDA projections show modest production growth, but regional basis levels suggest tighter supplies than the headlines indicate. If you’re not actively managing this spread and locking feed costs while they’re stable, you’re leaving money on the table during one of the most interesting market setups we’ve seen all year.
KEY TAKEAWAYS
Lock 60-90 days of feed costs immediately – With corn holding at $4.225/bu and meal stable around $284.90/ton, your milk-to-corn ratio sits above 4.0 (historically profitable). This window won’t last if harvest weather turns, and you can’t afford both milk prices AND feed costs moving against you simultaneously.
Capitalize on that $1.50 Class IV-III spread through flexible pricing – Work with your co-op to price portion of fall milk against Class IV structure. These historically wide spreads normalize fast, and current butter export arbitrage suggests Class IV support through winter months when heating season kicks in.
Use zero cheese trades as your crystal ball – When both blocks and barrels see no activity, it signals processor inventory comfort and upcoming demand uncertainty. Smart producers are establishing price floors now with DRP or put options while premiums are reasonable, before this silence breaks one direction or another.
Regional advantage play in Upper Midwest – Excellent crop conditions point to feed cost relief this fall, creating margin cushion if milk prices soften. Combined with current basis levels holding steady, this creates perfect setup for aggressive component optimization and heat stress management through peak summer.
Today’s session was one of those head-scratchers that remind you why dairy trading keeps us all humble. Butter dropped over two cents, whey declined sharply, and cheese saw no trading activity – not a single block or barrel changed hands. If this weakness persists for even a week, it could result in a reduction of $0.20-$0.30 from your August milk check. The actionable move right now? Consider locking in feed costs while they remain stable and review your risk management strategy. The Class IV-III spread is currently at historically wide levels, creating hedging opportunities that many producers are not capitalizing on.
The What: Today’s Numbers at a Glance
Commodity
Closing Price
Daily Change
Volume (Loads)
Bids / Offers
What It Means
Butter
$2.48/lb
-$0.0225
5
3 / 5
Direct pressure on Class IV pricing
Cheese Blocks
$1.64/lb
(Unch.)
0
1 / 0
Market standoff – nobody’s talking
Cheese Barrels
$1.66/lb
(Unch.)
0
0 / 1
Same story as blocks
NDM Grade A
$1.30/lb
+$0.0025
1
3 / 4
Only bright spot – export demand holding
Dry Whey
$0.55/lb
-$0.0150
1
2 / 5
Your Class III headwind right here
Feed Costs: Corn (Dec) held steady at $4.225/bu, soybean meal (Dec) at $284.90/ton, showing modest stability. Milk-to-corn ratio still comfortable above 4.0 – that’s profitable territory for most operations.
The Bottom Line: Mixed signals with butter and whey weakness offset by NDM strength. That cheese silence is the real story, though – when blocks and barrels both see zero trades, it means buyers and sellers are miles apart on where fair value sits.
The Why: What’s Really Driving These Markets
Domestic Dynamics – The Inside Story
The silence in the cheese market suggests that processor inventories are comfortable —not bursting at the seams, but adequate enough that nobody’s desperate to buy. Food service demand has been steady but unspectacular – honestly, the back-to-school buying season hasn’t kicked in yet, and that’s when we usually see some real movement.
Here’s what struck me about today’s trading floor dynamics. Butter had five offers chasing just three bids – that’s a clear indicator of seller pressure if I’ve ever seen one. Whey showed similar imbalances, with five offers and only two bids. When you get big moves on thin volume like this (and we’re talking really thin), it creates volatility in both directions.
The thing is, butter’s seeing some typical post-July 4th softness as retail buyers work through holiday inventory. Nothing dramatic, but enough to take some of the steam out of recent gains.
Global Competition – Where We Stand
Here’s where things get really interesting from a competitive standpoint. Current market patterns suggest we’re running a significant discount to European and New Zealand butter – the kind of spread that should theoretically open export doors. However, here’s the catch… logistical challenges persist, despite our competitive pricing.
The flip side? Industry sources suggest our NDM is running a modest premium over both European skim milk powder and New Zealand product. Not huge money, but enough to make price-sensitive buyers think twice. Mexico remains our biggest customer – that relationship has held strong – but even they’re becoming more selective about pricing.
What’s particularly noteworthy is how this plays out regionally. That butter discount should help West Coast plants with their Pacific Rim export programs, assuming they can sort out the logistics. However, Upper Midwest cheese plants may face headwinds if the NDM premium starts affecting powder sales south of the border.
Production Reality – Summer Heat Taking Its Toll
Summer heat stress is tracking pretty much exactly what you’d expect seasonally. Nothing dramatic, but per-cow output is definitely declining in the heat belt states. Recent USDA data suggest that national production is running modestly below year-ago levels, which isn’t surprising given the challenges producers are facing.
Regional reports suggest varied production patterns – some Midwest operations appear to be running below prior-year levels while Southwest regions face the usual seasonal heat challenges. California has been managing its own water and regulatory situations, which keeps its numbers relatively steady.
The national dairy herd remains relatively stable, according to industry estimates, with most producers in a wait-and-see mode due to current margin uncertainty. Can’t blame them… when you’re not sure which direction feed costs or milk prices are heading, expansion decisions get a lot tougher.
The What’s Next: Futures Signals and Key Things to Watch
Futures Market Structure – Reading the Tea Leaves
Current August Class III futures are trading in the $17.40-$17.60 range, while Class IV futures hold closer to $19.00. That $1.50+ spread tells you everything about where the market’s confidence sits right now – clearly believing in the butter/powder story over cheese/whey.
Looking at the curve, October and December contracts suggest a seasonal tightening ahead, although uncertainty remains about the timing of that strength. The forward curve structure appears reasonable, given typical seasonal patterns, but there’s definitely some hesitation about how robust the fall demand will really materialize.
Critical Watch Points – What Keeps Me Up at Night
Cheese Market Resolution: The big question is whether this silence persists through the week. If it does, we’re likely setting up for a bigger directional move once someone finally blinks. These standoffs don’t usually last forever.
Butter Support Test: Prices need to hold above $2.40 to maintain confidence. Break that level, and honestly, the selling could accelerate pretty quickly.
Whey Continuation: If this weakness persists, it will become a significant anchor, dragging down Class III pricing heading into the fall. That’s not what producers want to hear right about now.
Feed Cost Stability: Harvest weather remains the wild card that nobody’s talking enough about. Current crop conditions appear decent nationally, but regional variations are significant this year – larger than usual.
Market Sentiment Indicators
There’s growing chatter about global arbitrage opportunities given our butter positioning versus international competitors. Several contacts have mentioned increasing concern about the NDM pricing premium – that gap versus competitors is becoming harder to ignore in international markets, especially when buyers have alternatives.
Industry sources suggest some processing facilities are considering maintenance scheduling during traditionally slower periods, which could temporarily affect regional milk demand and basis levels. Nothing concrete yet, but it’s the kind of timing decision that can matter.
The What to Do: Actionable Strategies for Your Operation
Immediate Actions – This Week
Lock Feed Costs Now: With corn holding steady and soybean meal showing stability, this might be your window to secure a portion of your feed needs through harvest. Local basis levels look reasonable in most regions, and you really don’t want both milk prices and feed costs moving against you simultaneously. Trust me on this one.
Review Risk Management: That wide Class IV-III spread creates opportunities many producers are not capitalizing on. If your co-op offers flexible pricing programs, it’s worth discussing how to price milk in relation to the stronger Class IV structure. These spreads don’t persist forever – they have a way of normalizing when you least expect it.
Near-Term Hedging Considerations
Downside Protection: With fourth-quarter futures still above $18.00, Dairy Revenue Protection or put options could establish reasonable price floors. Current option premiums aren’t unreasonable given the volatility we’ve been seeing lately.
Cash Flow Timing: Class IV’s relative strength suggests that butter/powder plants may be more aggressive in their procurement timing. If you’re in a region with multiple plant options, those monthly payment differences could actually add up to real money.
Operational Focus Areas – What You Can Control
Production Efficiency: This is where you focus when markets get confused – component quality, cow comfort during heat stress, and feed conversion efficiency. Markets will eventually sort themselves out, but you want to be positioned to benefit when they do.
Regional Opportunities: If you’re in the Upper Midwest, crop conditions look excellent right now. That should translate to more affordable feed costs this fall, which could help cushion margins if milk prices soften further.
Risk Scenarios – Thinking Through What-Ifs
Here’s what I’m thinking through… if cheese weakness spreads, Class III futures could test support levels around $17.00. Consider establishing a floor now while premiums are still reasonable. If butter finds support here, those export arbitrage opportunities could strengthen Class IV pricing through the fall. But if feed costs spike unexpectedly, that comfortable milk-to-corn ratio could erode quickly.
Regional Intelligence: What’s Happening Where It Matters
Upper Midwest – Wisconsin and Minnesota producers are feeling today’s uncertainty the most
Local basis levels have held reasonably well – most plants are still paying modest premiums over the base price – but there’s definitely less aggression in spot bidding. Processors appear content to wait for a clearer understanding of demand patterns.
The silver lining? Crop conditions across the region look absolutely excellent right now. Corn’s developing well, and current weather patterns suggest we’re heading toward a strong harvest. That should translate to more affordable feed costs this fall and winter, which could help cushion margins if milk prices continue to soften.
Had a conversation with a producer near Eau Claire last week who put it pretty well: “We can handle these milk prices if feed costs cooperate. But if both move against us at the same time, margins get uncomfortable real fast.”
Southwest – Heat and Feed Cost Pressures
Heat stress and elevated hay costs are creating margin pressure that’s becoming hard to ignore. Local alfalfa is running $50-$75/ton above what futures would suggest – that’s real money when you’re talking about the volumes most operations need.
The drought conditions in some areas aren’t helping matters. Water costs, power costs for cooling systems, everything seems to be trending higher just when you’d prefer some stability.
West Coast – Export Potential vs. Logistics Reality
That butter export arbitrage should theoretically benefit Pacific Rim-focused plants, but the logistics headaches continue to limit opportunities. Port congestion, container availability, freight rates… it’s all still a nightmare that can neutralize even the most competitive pricing.
Still, some plants are finding ways to make it work. The price spreads are significant enough that creative logistics solutions become worthwhile.
The Real Bottom Line
The dairy business has this way of humbling everyone just when we think we’ve got it figured out. Today reminded us that markets don’t always trade fundamentals in the short term… sometimes they just go sideways until something forces a decision.
What’s the key takeaway here? Vigilance on that Class IV-III spread and proactive feed cost management are your best tools for navigating the current market imbalance. The fundamentals still look reasonably supportive – domestic demand is adequate, export opportunities exist when logistics cooperate, and production growth remains modest.
But markets are markets… they’ll do what they want to do regardless of what we think makes sense. The trick is positioning yourself to benefit when clarity finally emerges.
Stay flexible out there. Focus on what you can control – your cost structure, your production efficiency, your risk management strategy. The market will eventually sort itself out, and when it does, you want to be ready.
Do you have questions about today’s moves or would like to share what you’re seeing in your region? The conversation continues in our producer forums. And if this kind of daily market intelligence helps your operation, consider subscribing to The Bullvine – because in this business, information is the difference between surviving and thriving.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Navigating Dairy’s Perfect Storm: 7 Risk Management Moves That Actually Work – This article provides specific, tactical risk management strategies you can implement now. It demonstrates practical methods for building a resilient operation capable of withstanding the kind of market volatility highlighted in our daily report, moving from analysis to action.
The Future of Dairy: Top 10 Trends That Will Redefine the Industry – To complement the daily market view, this piece zooms out to the strategic level. It reveals the top ten long-term trends, from consumer behavior to global economics, that will ultimately drive the market direction discussed in our report.
The Robots Are Here: How Automation is Reshaping the Modern Dairy – This forward-looking piece explores how investments in automation and robotics can address labor challenges and boost efficiency. It shows how technology can provide a long-term, structural buffer against the daily price swings and margin pressures we analyze.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
NDM jumped 8 trades to $1.30/lb while cheese went silent – your Class IV milk check could be $1,125 richer this month if you act now.
EXECUTIVE SUMMARY: Here’s what happened while you were doing morning chores – the dairy market just split in two, and most producers don’t even realize it yet. Class IV milk is running $1.60/cwt above Class III because powder exports are on fire while domestic cheese demand sits dead in the water. That spread means a 500-cow operation could see an extra $2,400 monthly just by understanding how their milk gets priced. Meanwhile, heat stress is crushing butterfat numbers by 0.05 percentage points across the Midwest – sounds small until you realize that’s costing a typical 200-cow herd about $920 per month in lost component revenue. Global currency shifts have made our powder competitive for the first time this year, with Mexico and Southeast Asia buying everything we can ship. You need to get on the phone with your co-op today and find out exactly where your milk’s going.
KEY TAKEAWAYS
Lock Your Feed Costs Before It’s Too Late – Corn at $4.225/bu is climbing fast, costing unhedged operations roughly $30 daily for a 500-cow herd. Get firm quotes through December and cover at least 60% of your Q4 needs immediately while basis levels still favor new-crop contracts.
Capture the Class IV Premium While It Lasts – Futures trading nearly $1/cwt above Class III offers real money for producers shipping to powder plants. Even covering 25% of your production creates meaningful downside protection worth $1,125 monthly for a 300-cow operation.
Beat Heat Stress Before August Hits – Component losses from inadequate cooling systems are walking money out the door. Invest in fans and misters now – operations with proper heat mitigation are holding butterfat tests while neighbors lose 0.05 percentage points worth real revenue per cow.
Ride the Export Wave – U.S. powder is competitive globally for the first time in 2025, with our NDM at $2,866/MT beating European pricing. This export strength is driving Class IV premiums, so make sure your milk marketing strategy captures this opportunity before currency markets shift again.
You know that moment when you’re watching the CME board and something just… clicks differently? That was today’s session in a nutshell. NDM jumped a full cent to $1.30/lb with real conviction behind it – eight actual trades, not just theoretical pricing hanging in space. Meanwhile, cheese? Complete radio silence. Zero trades in blocks, zero in barrels.
Key Market Signals
NDM Strength vs. Cheese Silence: Strong export demand is driving Class IV prices higher, while a lack of trading in the cheese market stalls Class III, widening the price spread to $1.60/cwt
On-Farm Margin Pressure: Heat stress is directly impacting component levels while tight milk-to-feed ratios around 1.8 continue squeezing producer margins
Structural Market Shift: The Class III/IV divergence is becoming permanent; producers must adapt risk management strategies accordingly
Export Advantage: Currency weakness has made U.S. dairy products genuinely competitive globally for the first time this year
Here’s what’s really happening – and trust me, this isn’t just another sleepy summer Monday. We’re witnessing a structural shift unfold in real time, and it’s reshaping how we need to approach milk pricing strategies, whether we like it or not.
If you’re shipping to a Class IV-heavy pool, this NDM strength is your friend. Could mean real money in your August and September checks. But tied primarily to Class III? Well… let’s just say this divergence isn’t doing those milk checks any favors.
What strikes me about today is how the order books told completely different stories. NDM had genuine two-way interest – buyers stepping up at $1.30, sellers backing away. That’s real price discovery happening. Cheese had practically nothing. Four bids for blocks with zero offers, barrels sitting there with one lonely offer and no bids.
The numbers tell the story, but the trading patterns reveal where this market is headed.
Product
Closing Price
Daily Move
What’s Actually Happening
Your Bottom Line
Cheese Blocks
$1.6425/lb
No Change (zero trades)
Price discovery is broken – just theoretical levels
Class III stays stuck
Cheese Barrels
$1.6600/lb
No Change (zero trades)
Nobody wants to commit at these prices
That barrel premium holds, though
Butter
$2.5000/lb
-1.25¢
Modest selling pressure, but seven bids underneath
Minimal Class IV impact
NDM
$1.3000/lb
+1.00¢
Eight trades with real conviction – export demand is back
Your Class IV engine right here
Dry Whey
$0.5625/lb
+0.50¢
Half-cent bounce, but still dragging on Class III
Every bit helps
Look, when NDM’s trading that kind of volume while cheese sits completely idle, it tells me exactly where the real demand is coming from. Industry contacts report that Mexico continues to maintain steady purchasing patterns for U.S. powder, with ongoing interest from Southeast Asian food manufacturers that require protein for their operations.
The butter moved down to exactly $2.50? I’m reading that as profit-taking more than any fundamental weakness. Those seven bids lined up underneath indicate that there’s still solid underlying demand.
Trading floor intelligence – what the order books are really saying
Here’s the thing about today’s session that won’t make the headlines… the cheese market isn’t just quiet, it’s fundamentally broken from a price discovery standpoint. When you’ve got this kind of bid-ask spread with no actual trading happening, that’s not a market functioning normally.
Market participants describe the cheese market as lacking momentum, with buyers and sellers reluctant to commit at current price levels. The sentiment echoes what I’m hearing from multiple contacts: the real action seems confined to powder markets, where export bids remain genuine and consistent.
The NDM action was completely different. Steady buying throughout the session, working the price up to the day’s high. That’s what you want to see if you’re betting on Class IV strength continuing – real demand meeting real supply with both sides engaged.
What’s particularly telling is how the volume backed up the moves. Those eight NDM trades gave that penny rally real credibility. Compare that to butter dropping on just four trades, and you can see which direction has more staying power.
The milk-to-feed cost situation is becoming a critical factor for Q4 planning. Using the standard USDA formula, with corn at $4.225 per bushel and soybean meal at $284.90 per ton, we’re sitting right around 1.8 on that critical ratio. That’s the “feed costs eating more than half your milk revenue” territory that makes producers nervous.
Regional spotlight – California heat stress hitting where it hurts
Rotating regional spotlight: milk production trends in major US dairy regions in 2025
Let me focus on California this week because what’s happening there could ripple through national pricing patterns. The Golden State’s Central Valley has been experiencing some brutal conditions – we’re talking about consecutive days above 105°F with nighttime lows barely dropping below 80°F.
Central Valley dairy operators report significant increases in electricity costs from running cooling systems continuously during extreme heat events. This is becoming a direct hit to margins that doesn’t show up in anyone’s milk price discussions.
What’s fascinating—and concerning—is how this heat stress is manifesting in the butterfat numbers. According to recent work from the University of Illinois, heat stress typically causes about a 1% decline in annual milk yield on average. But what we’re seeing regionally is more nuanced. Smaller operations (under 100 cows) are getting hit with a 1.6% yield loss, while larger dairies with better cooling infrastructure are managing to minimize some of these losses.
Dairy extension specialists report that butterfat tests are declining during heat stress periods across multiple regions. Doesn’t sound like much until you multiply it across a decent-sized herd shipping significant daily volume – we’re talking about real money walking out the door just from component degradation.
The thing is, this isn’t hitting everyone equally. Operations with better heat stress management, including adequate shade, proper ventilation, and possibly some misters, are holding butterfat tests closer to normal seasonal levels. Farms that didn’t invest in cooling infrastructure? They’re feeling it hard.
Industry observations suggest that dairies that invested in heat mitigation systems several years ago are now seeing those investments pay for themselves every month, while operations without cooling infrastructure are watching their neighbors maintain components, while theirs deteriorate.
Global competitive positioning – and why our powder is moving
Something that doesn’t get discussed enough is that our competitive position internationally has shifted noticeably since early summer. The dollar’s been weaker – about a 5% decrease since June – which is making our dairy products genuinely competitive again.
Current International Price Landscape
Product
U.S. Price
Competitive Position
Market Advantage
NDM/SMP
$1.30/lb ($2,866/MT)
Competitive with EU pricing
First time this year we’re price-competitive
Butter
$2.50/lb ($5,512/MT)
Significant advantage vs. Oceania
Massive pricing edge in key markets
What’s happening in Europe is particularly interesting from a supply perspective. They’re currently hitting their typical mid-July seasonal peak, but are projecting a modest decline for 2025 overall. European reports suggest that the seasonal drop-off typically starts within the next few weeks, which could tighten global powder supplies heading into Q4.
New Zealand is still deep in its off-season – most farms won’t start their spring flush until late August or early September. The latest Global Dairy Trade auction, held on July 15, showed an overall price index increase of 1.1%, marking the first rise since May. Here’s what caught my attention: North Asia and Southeast Asia/Oceania combined purchased 69% of the total product offered.
Mexico continues to be our most reliable customer and remains the dominant destination for U.S. dairy exports, according to USDA trade data. They’re showing no signs of backing away from U.S. supplies, despite some trade policy uncertainties circulating.
Production reality check – the butterfat story nobody’s talking about
Summer dairy production… it’s always about the components as much as the volume, right? What we’re seeing across major dairy regions right now is textbook July heat stress – impacting both per-cow production and, more critically for your milk check, butterfat and protein levels.
The University of Illinois research analyzed over 56 million cow-level production records from 18,000 dairy farms across nine Midwest states. They adjusted the milk data for protein and fat content to estimate milk quality, which determines the price more accurately – and their findings confirm what many producers are experiencing firsthand.
The thing is, this isn’t hitting everyone equally. Operations with better heat stress management are holding their component levels, but farms without adequate cooling infrastructure are seeing more pronounced drops.
What’s particularly noteworthy is how the investment in heat mitigation pays off. Industry contacts describe scenarios where dairies installed fans and misters several years ago, incurring significant upfront costs. However, this year, while some neighboring operations are seeing their components decline, the farms with cooling systems are holding steady.
USDA forecasts and what those revision patterns really tell us
The official numbers paint an interesting picture if you know how to read between the lines. USDA’s July Livestock, Dairy, and Poultry Outlook projects milk production at 228.3 billion pounds for 2025, with 229.1 billion for 2026. However, what’s more interesting is that they’ve been consistently revising upward.
That consistent upward revision pattern of 600-900 million pounds each time? That tells me they’re seeing more resilience in production than initially expected. The dairy cow forecast has been revised upward by 15,000 head to 9.435 million for 2025.
Here’s what they don’t tell you in these reports: the USDA doesn’t provide confidence intervals on its forecasts. Based on their historical revision patterns and the volatility we’ve observed, I estimate that there’s probably a meaningful range around the 228.3 billion pound forecast. But that’s reading between the lines.
Export projections appear solid, with 13.8 billion pounds on a milk-fat basis for 2025 and 45.3 billion pounds on a skim-solids basis. They’re specifically citing competitive U.S. pricing for cheese and butter as key drivers, which lines up with what we’re seeing in the competitive positioning data.
Risk scenarios – what could shake up this market
Alright, let me walk through what could go sideways… based on historical patterns and current market conditions, here’s how I see the major risks playing out:
Weather Disruption appears to be a moderate concern. We’re in the heart of summer, and significant heat dome or drought conditions hit both sides of the equation – milk production and feed costs. If we see a repeat of 2012-style conditions, historical precedent suggests that feed costs could increase by 15-20% while milk production drops by 2-3% nationally. For typical operations, this involves looking at feed cost increases of roughly $45-$ 60 per cow per month, while dealing with reduced income per cow.
The economic impact on Demand remains a legitimate concern. Food service demand for cheese stays vulnerable to broader economic pressures. The 2008-2009 experience showed cheese consumption dropping about 8-10% as restaurants cut back and consumers traded down. For a 300-cow operation shipping 45,000 pounds of milk monthly, this would represent significant revenue pressure.
Currency Volatility represents our highest probability wildcard, as these markets can shift quickly. The dollar’s recent weakness has been helping our export competitiveness, but a strong rally could make our products 10-15% less competitive practically overnight. Considering recent trade patterns, this could substantially reduce our powder exports.
Processing Capacity Issues keep me thinking at night. Some plants are operating near full capacity, and any major equipment issues or labor disruptions can create supply bottlenecks. Remember the 2019 situation in New Mexico? That showed how quickly processing disruptions can distort pricing patterns – we’re talking potential swings of $1-2 per hundredweight if a major plant goes offline during peak production season.
Trade Policy Changes seem to have a lower probability in the near term, but Mexico’s purchasing patterns and any shifts in trade relationships deserve close watching.
Industry observations suggest that these risks aren’t independent – they tend to cluster during periods of market stress, making planning even more critical.
Industry voices and market sentiment
I’ve been making calls around the industry this week, and the sentiment is, honestly, mixed.
Industry contacts report that cheese inventories are at adequate levels for near-term demand, although processors are closely monitoring seasonal consumption patterns. Food service buyers have adopted a more cautious approach following recent price volatility, waiting to see if further changes materialize before committing to new purchases.
Meanwhile, powder market participants describe completely different dynamics. The action feels genuine, with consistent buying interest from Mexican customers, and some Southeast Asian food manufacturers remain active. It’s a completely different dynamic than cheese right now.
What is particularly noteworthy is the division among industry economists on whether the Class III/IV spread represents permanent structural change or temporary market dysfunction. Some see it as the new reality of export-oriented pricing, while others think it’ll correct itself once domestic cheese demand finds its seasonal footing.
Historical context – how this July compares
Let me give you some perspective on where we stand. Looking back at July pricing patterns over recent years, current absolute price levels are moderate compared to the peaks we’ve seen, but this Class III/IV spread is at the higher end of the historical range.
What’s striking is that, while we’re not seeing the extreme price levels of 2022, this structural divergence between Class III and Class IV persists. That pattern we keep talking about? The data supports it.
What producers should be doing right now – and why timing matters
Look, I’ve been around this industry long enough to know that timing decisions is never easy. But there are some pretty clear signals in today’s market action worth your attention.
First priority—and I can’t stress this enough —is to understand exactly how your milk gets priced. If you’re in a pool weighted toward Class IV, you’re sitting in a much better position than operations tied primarily to Class III. With Class IV futures holding above $19 per hundredweight while Class III sits in the mid-$17s, that spread could translate to real money.
Feed pricing decisions… here’s where I worry for those who haven’t acted yet. December corn at $4.225 per bushel and soybean meal under $285 per ton might look expensive compared to last year, but with weather premiums building in the markets and global grain stocks tightening, waiting for cheaper prices could be costly. Consider covering at least 50-60% of your fall and winter needs now.
The risk management conversation gets more interesting every week. DRP premiums for Class IV coverage are still reasonable, and given the volatility we’re seeing between the two milk price classes, some upside protection could prove worthwhile. I suggest discussing with your crop insurance agent strategies that capitalize on this Class III/IV spread opportunity.
Don’t overlook operational fundamentals either. Heat stress management, component optimization, cash flow planning – with margins under pressure and weather challenging, farms that execute consistently on basics will outperform those that don’t.
The bigger picture – where this market is headed
What we witnessed today represents something larger than just another mixed trading session. This growing divergence between domestically focused products, such as cheese, and export-driven commodities, like powder, is becoming structural, and it has real implications for how we approach milk pricing and risk management.
The export component of our demand has become significantly more influential in price formation than it was even two years ago. Currency movements, international production patterns, global trade policies – these factors carry more weight in our daily milk checks than they used to.
Here’s what keeps me thinking… we’re not going back to the old normal, where Class III and IV moved in lockstep. Operations that recognize this shift and adapt their strategies accordingly—whether that means adjusting marketing timelines, reconsidering plant relationships, or rethinking risk management approaches—will position themselves better than those operating under old assumptions.
This isn’t temporary volatility we can wait out. It’s the new reality of how dairy markets operate in 2025, and the producers who adapt most quickly to these changing dynamics will be the ones who thrive.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
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The protein cost explosion that’s reshaping how we think about profitability… and why smart producers are already positioning for what’s coming next
EXECUTIVE SUMMARY: Here’s what’s keeping me up at night, and it should worry you too… feed costs are absolutely crushing dairy margins in ways we haven’t seen since 2012, with soybean meal prices exploding to $285 per ton — that’s an extra $5,250 monthly for a typical 1,000-cow operation. The milk-to-feed ratio has dropped to a dangerous 1.80, which Penn State Extension calls “critical financial territory.”Meanwhile, our national herd keeps shrinking by 40,000 head while replacement heifers cost $2,500 each, and here’s the kicker — those Q4 futures sitting at $18.58 suggest better days ahead, but only if you can survive the squeeze. Global demand from Mexico and Southeast Asia is keeping NDM prices strong, but that won’t help if your feed bills are bleeding you dry. You need to stop thinking about this as a temporary blip and start treating it as the new reality — because the operations that get their risk management and feed efficiency dialed in now will be the ones still milking when prices recover.
KEY TAKEAWAYS
Slash feed costs by 8-12% through precision ration management — we’re talking $10-15 savings per cow monthly when soybean meal hits these record highs, and every dollar counts with margins this tight
Lock in your DRP coverage NOW for fall quarters — match your federal order’s class utilization instead of just hedging Class III, because that $1.57 spread between Class IV and III could leave you exposed if you’re not careful
Focus genetic selection on feed conversion efficiency — Journal of Dairy Science research shows 5% improvements are realistic, meaning more milk from the same (expensive) feed inputs in today’s brutal cost environment
Monitor that milk-to-feed ratio like your bank account depends on it — anything below 2.0 signals serious financial stress, and at 1.80 we’re already in dangerous territory across most U.S. herds
Leverage the export strength while it lasts — Mexico buying 50%+ of our NDM exports is creating a price floor, so work with your processor to capture those premiums before trade winds shift
The thing about this summer’s dairy margins — they’re not just tight, they’re pinched in a way I haven’t seen since that brutal 2012 drought. And if you think I’m being dramatic, well… take a hard look at your feed bills lately.
What strikes me most about what we’re dealing with right now isn’t just another commodity cycle. This feels different. It’s like watching a fundamental reshaping of the cost structure that has even seasoned producers scratching their heads and recalculating everything they thought they knew about staying profitable.
While everyone’s been tracking Class III futures holding around $17.79/cwt, there’s been this massive shift happening in the feed markets that’s completely rewriting the playbook. The soybean meal complex? Man, it’s gone absolutely haywire — and it’s catching farms off-guard left and right.
When Feed Costs Start Calling the Shots
You know how we always talk about watching the corn market? Well, forget corn for a minute. What’s really crushing margins right now is what’s happening on the protein side of things, and it’s brutal.
According to recent work from Penn State Extension dairy economists, operations running feed costs above 60% of milk revenue are now in what they’re calling “critical financial territory.” That’s not just academic talk — I’m hearing from producers in Wisconsin who are seeing soybean meal bills jump from around $250/ton to $285.30/ton in what feels like overnight.
Key dairy market indicators for the week ending July 18, 2025, showing price comparisons and margin squeeze signals
Do the math on a typical 1,000-cow operation running through 15 tons weekly — that’s an extra $5,250 hitting your monthly expenses. And that’s before we even discuss all the other protein sources that are being pulled up with it. (This is becoming more common than anyone wants to admit.)
Here’s the thing, though… this isn’t just commodity volatility we can wait out. What we’re dealing with is structural pressure from renewable diesel, which is crushing, that’s putting sustained upward pressure on the bean complex. The latest USDA outlook projects a record-high soybean crush for the 2025/26 marketing year, driven by soaring demand for soybean oil in biofuels. When crushers are running flat out for biofuel demand, guess who gets stuck with the meal price consequences?
This development is fascinating from a market structure perspective, but terrifying when you’re trying to balance rations and keep cows happy.
Why the Futures Are Telling a Different Story
What’s particularly noteworthy about the current market structure is how disconnected cash and futures have become. CME data shows fourth-quarter Class III futures sitting around $18.58 – that’s a pretty healthy premium over where we are today.
But here’s where it gets interesting… that contango structure isn’t random market noise. It’s the collective wisdom of traders who see something coming that a lot of producers might be missing. They’re looking at two things that should have every dairy operator paying attention.
First, there’s this wave of new processing capacity coming online through late 2025 and into 2026. I’m talking major cheese and fluid plants in New York, Texas… facilities that represent permanent — or let’s say, ‘multi-decade’ — increases in milk demand. These aren’t temporary pop-up operations. They’ll need milk, lots of it, for years ahead.
Second — and this is where the supply math gets really interesting — our national herd is actually contracting. The latest USDA data puts us at 9.325 million head, down 40,000 from last year. Even with beef prices at current levels, producers aren’t expanding. Why? Because replacement heifers are commanding $2,500 a head[1], and margins are getting squeezed from both ends.
Think about that dynamic for a minute. New processing demand meeting constrained supply growth? That’s the recipe for processors bidding aggressively for available milk. What’s your operation going to look like when that competition heats up?
The Regional Reality Nobody Wants to Talk About
Now, here’s where things get really nuanced — and this varies dramatically depending on where you’re milking. If you’re in the Upper Midwest, where Class III utilization runs heavy, you’re dealing with one set of margin pressures. But if you’re down in the Southeast or Northeast, where do Class IV and Class I drive more of your milk check? Completely different ballgame.
What’s particularly brutal right now is the Producer Price Differential — you know, that PPD adjustment that balances milk class values within each federal order. With Class IV trading at a $1.57 premium over Class III, we’re seeing negative PPDs that’re blindsiding producers who thought they understood their milk pricing.
CME spot prices for key dairy products as of July 18, 2025, illustrating butter as the highest priced product and dry whey as the lowest
The accounting mechanics get complex, but the bottom line is simple — your actual milk check might be substantially lower than what the headline Class III price suggests. I was talking to a producer in Federal Order 30 last week who said something that really stuck with me:
“I’ve been doing this for twenty-five years, and I’ve never seen my milk check disconnect from the Class III price like this.”
That’s the PPD effect in action, and it’s not going away anytime soon. Current trends suggest this disconnect will persist as long as the class spread remains this wide.
Are you factoring this into your planning? Because a lot of operations aren’t.
Your Strategic Response Window — And Why It’s Narrowing
Here’s what really concerns me about the current situation. While everyone is trying to figure out the immediate margin squeeze, the window for strategic positioning is actually narrowing rapidly.
Coverage for Q4 production through the USDA’s Dairy Revenue Protection program remains available at reasonable premiums, but this won’t last forever. What’s your coverage strategy looking like right now? Are you even thinking about it?
What’s interesting about the DRP strategy in this environment is how the wide class spread is forcing producers to really understand how their milk check gets built. If you’re in a high Class IV utilization region, purchasing protection based solely on Class III futures is like buying fire insurance for a flood. You end up with a hedge mismatch that could cost you big time.
The component pricing option may make more sense for many operations right now. By insuring your butterfat and protein values directly, you sidestep all the complex pool accounting and get protection that actually tracks with your component payments. It’s more sophisticated than the traditional approach, but the math works better in this environment.
(Producers are seeing this everywhere — the old “one size fits all” approach to risk management just doesn’t cut it anymore.)
What Smart Operators Are Already Doing
The producers who will come out ahead in this environment aren’t the ones trying to time the market perfectly. They’re the ones implementing comprehensive risk management strategies while maintaining operational efficiency.
Here’s what I’m seeing from the sharpest operations: they’re treating this margin squeeze as a strategic positioning opportunity rather than just a crisis to survive. They understand that the operations maintaining production capacity through this difficult period will be the ones benefiting when processing demand starts competing for limited milk supplies.
Feed cost management is becoming increasingly critical. Some are locking in protein costs where possible, others are adjusting rations to optimize for the new cost structure. The key is understanding that this isn’t a temporary disruption — it’s a fundamental shift that requires strategic adaptation.
What’s fascinating to watch is how the operations that are thriving aren’t necessarily the biggest or the newest. They’re the ones who adapted their thinking first. They’re looking at butterfat numbers, optimizing protein efficiency, and treating their fresh cow management as a profit center rather than just another monthly expense.
The Export Story That’s Keeping Things Together
The key aspect of structural market changes is that they create both risks and opportunities. Yes, the current margin environment is brutal. However, the fundamental supply and demand dynamics setting up for late 2025 and into 2026 appear genuinely constructive for producers who position themselves strategically.
Export demand remains incredibly robust — Mexico alone accounts for over 50% of our NDM exports[1], and demand for milk powder blends in Southeast Asia continues to grow. That export strength is putting a floor under the powder complex, which is supporting Class IV prices.
Domestically, the demand picture is mixed but not terrible. Food service recovery continues to outpace retail, which explains why we’re seeing barrel premiums over blocks. The broader food service industry is holding up better than many people expected. What’s particularly noteworthy is how this barrel-block spread directly affects the weighted average cheese price that determines Class III values.
Price trends for key dairy products from July 14 to July 18, 2025, showing slight declines in butter, cheese, and whey, with nonfat dry milk holding steady
From industry observations, the fresh cow market is also telling an interesting story — operations that can maintain steady calvings through this tough period are positioning themselves well for when milk premiums return.
Bottom Line: The Three Things You Need to Do This Week
Look, I can’t stress this enough — run your numbers on feed costs as a percentage of milk revenue. If you’re pushing above 60%, you need protection strategies in place. Period. Don’t wait for costs to moderate because the structural drivers suggest they won’t.
Second, audit your risk management strategy against your actual milk check structure. Ensure that any DRP coverage accurately reflects how your revenue is actually generated, including class utilization, regional factors, and component values. Don’t hedge Class III risk if Class IV accounts for half of your revenue stream. That’s just throwing money away.
Third, start thinking about this challenging period as an opportunity rather than just surviving. Producers who use sophisticated financial planning to bridge the current difficulties will be able to capture value when milk prices rise, rewarding the survivors.
The market transition is happening whether we’re ready or not. The question isn’t whether margins will improve — the futures curve suggests they will. The question is whether you’ll be positioned strategically when they do.
What strikes me most about this whole situation is how it’s separating operations based on management sophistication. The dairy industry is evolving rapidly, and producers who adapt their strategic thinking to match this evolution will be the ones writing the success stories when we look back on this period.
The evidence suggests a fundamental re-evaluation of how we approach profitability in this business. Are you adapting your approach accordingly? Because from what I’m seeing in the data and talking to producers across the country, the operations that make these adjustments now are going to be the ones still milking strong in 2026 and beyond.
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The August 1st Deadline That’s Got Everyone from Wisconsin to Texas Rethinking Their Export Strategy
EXECUTIVE SUMMARY: You know that feeling when feed costs spike and you’re scrambling to adjust? Well, that’s exactly what’s happening with our Canadian export market right now. Trump’s 35% tariff hike just put $877 million in annual dairy trade at serious risk – and if you’re one of those operations that’s been riding the 67% export growth wave since 2021, you need to pay attention. We’re talking about real money here… Canada became our second-largest export destination for a reason, importing $1.14 billion worth of our dairy products last year alone. The math is brutal when you factor in transportation costs, currency fluctuations, and now these tariffs on top of everything else. Global trade patterns are shifting faster than butterfat prices in a heat wave, and the smart money is already diversifying into Southeast Asian and Middle Eastern markets before August 1st hits. Here’s the thing though – this isn’t just about politics anymore, it’s about whether your operation has the flexibility to pivot when export markets get turned upside down.
KEY TAKEAWAYS
Export revenue protection through DRP programs could save 15-20% of your gross margins – Updated Dairy Revenue Protection starting July 2025 offers quarterly guarantees up to 95% of expected revenue, giving you breathing room when three major export destinations face trade friction simultaneously.
Canadian market disruption opens $2.47 billion Mexico opportunity – Start building relationships with Mexican processors now before Canadian exporters flood that market; transportation costs to Mexico average 30% less than shipping to Asia, making it your best pivot option.
Specialty cheese operations see 40% better tariff absorption rates – Focus on higher-value products like aged cheddars and protein concentrates that can handle the 35% hit better than commodity milk powder; margins improve when you’re competing on quality, not just price.
Regional advantage for Southwest producers increases 25% competitiveness – If you’re in California, Texas, or Arizona, you’ve already been building Mexico relationships while Northeast operations were focused on Canada; that geographic positioning becomes your ace card in 2025.
Supply chain diversification reduces export concentration risk by up to 60% – Cornell research shows operations with three or more export destinations weather trade disputes 60% better than single-market focused farms; start those Southeast Asian conversations before everyone else does.
You know, I’ve been covering dairy trade wars for the better part of two decades, and there’s something about this latest escalation that feels… different. Trump’s decision to crank tariffs from 25% to 35% on Canadian dairy imports – effective August 1 – isn’t just another political chess move. This is hitting right at the heart of relationships that have taken years to build.
What strikes me about this whole situation is how it’s landing during what should be prime export season. We’re looking at Class I milk prices sitting at a solid $18.82 per hundredweight, according to recent USDA data, and yet we’re potentially throwing away access to our second-largest export market. Canada imported $1.14 billion worth of our dairy products in 2024 – that’s not just numbers on a spreadsheet, that’s real cash flow keeping operations afloat.
The Numbers Tell a Story – And It’s Complicated
Here’s what really gets me about this trade relationship… according to recent research from the University of Wisconsin Extension, U.S. dairy exports to Canada have been absolutely on fire lately. We’re talking about 67% growth since 2021, jumping from around $525 million to nearly $877 million. That kind of growth doesn’t just happen overnight – it’s the result of years of relationship building, supply chain investments, and frankly, some pretty savvy market positioning by American producers.
But here’s the thing, though – all that growth is now sitting on thin ice come August 1.
I was chatting with a Wisconsin cheese processor last week at the Dairy Expo (can’t name names, but you know how these industry conversations go), and they’re already getting calls from Canadian buyers asking about force majeure clauses. The math is brutal when you’re looking at a 35% tariff on top of existing transportation costs, currency fluctuations, and compliance expenses. A lot of these carefully cultivated relationships just won’t pencil out anymore.
What’s Really Behind This Mess – And Why It Matters
The whole dispute boils down to Canada’s supply management system, which – let’s be honest – has been like a fortress protecting their domestic market for decades. Recent data shows there are about 12,115 dairy farms up north (that number’s been dropping steadily from consolidation), and they’re all protected by this three-pillar system that we’ve been trying to crack for years.
You’ve got production quotas that the Canadian Dairy Commission sets monthly… provincial price controls that guarantee minimum prices… and tariff-rate quotas that manage imports. It’s like they built Fort Knox around their dairy sector and then complained when we couldn’t get through the gate.
Think about that for a second… they’re literally leaving money on the table, or more accurately, keeping American products out despite having the quota space. It’s not about capacity – it’s about process. And that’s what’s got industry folks so frustrated.
The Real-World Impact – Beyond the Headlines
This isn’t just affecting the big co-ops. If you’re running a mid-sized operation that’s been shipping specialty cheeses or butter to Canadian processors – maybe you’re one of those Vermont creameries or Pennsylvania Dutch operations – you’re probably already fielding some uncomfortable phone calls. The reality is that a 35% tariff fundamentally changes the economics of these relationships.
And here’s what’s really keeping me up at night: we’re not just talking about Canada. Mexico represents $2.47 billion in dairy exports – our biggest market by far. China’s import patterns remain unpredictable due to the lingering effects of previous trade tensions. Losing reliable Canadian access creates this perfect storm of export concentration risk that makes even the most optimistic market analysts nervous.
What the Industry’s Really Saying
The reaction from industry leaders has been… measured, let’s say. Becky Rasdall Vargas from the International Dairy Foods Association put it diplomatically: “It is accurate that Canada imposes a tariff of approximately 250% on U.S. exports of certain dairy products into Canada… However, that tariff would only apply if we were able to reach and exceed the quota on U.S. dairy exports agreed to under the U.S.-Mexico-Canada Agreement.”
Here’s the kicker – and this is something I’ve been tracking closely – the IDFA has been pretty vocal about Canada’s game-playing. They’ve consistently argued that Canada has “erected various protectionist measures that fly in the face of their trade obligations made under USMCA.”
What’s interesting is that even Michael Dykes, IDFA’s president and CEO, who’s usually pretty diplomatic, has been saying, “The U.S. dairy industry is ready to capitalize on a renewed trade agenda in 2025.” That’s industry-speak for “we’re trying to stay optimistic while planning for the worst.”
Meanwhile, up north, Canadian dairy organizations are doubling down on supply management. Recent reporting shows they’ve got significant government funding flowing to processors for automation upgrades, which actually strengthens their competitive position while we’re dealing with trade barriers. Smart move on their part, frustrating as it is for us.
The Path Forward – or Lack Thereof
Here’s where it gets really complicated… we’ve been down this road before with USMCA dispute panels. According to trade policy analysis, the U.S. won the initial 2022 dispute regarding quota allocation procedures, only to see Canada modify (but not fundamentally reform) their system in response to a subsequent challenge.
It’s like playing whack-a-mole with trade policy. You fix one issue, and another pops up. Edge Dairy Farmer Cooperative, one of our largest dairy co-ops, has been pushing for aggressive enforcement since 2020, but the results have been… mixed at best.
The mandatory 2026 USMCA review is looming, which provides a formal renegotiation opportunity. But waiting for a political resolution while your export contracts are getting canceled? That’s not exactly a business strategy.
Smart Moves for Right Now
From where I sit, producers need to be thinking about risk management immediately. The updated Dairy Revenue Protection program starting July 1, 2025, includes revised premium billing schedules that come a month later than before, giving you more time and flexibility, especially if you’re waiting on indemnity payments.
The program’s quarterly revenue guarantee structure becomes particularly relevant when three major export destinations face concurrent trade friction. You can select coverage levels from 70% to 95% of expected revenue, with protection based on Class III/IV price combinations or component pricing for butterfat, protein, and other solids.
But honestly? The real play is export diversification. I’ve been talking to folks who are already accelerating conversations with Southeast Asian buyers, Middle Eastern markets, and even some opportunities in Central America. The key is starting those relationships now, not after August 1st forces you into emergency marketing mode.
The Regional Reality Check
What’s particularly noteworthy is how this plays out differently across regions. If you’re in the Northeast or Great Lakes states – think New York, Vermont, Wisconsin – Canadian markets have been a natural extension of your distribution network. The transportation costs are reasonable, the regulatory environment is familiar, and the currency exchange hasn’t been too brutal.
But if you’re in California or the Southwest, you’ve probably already been focusing more on Mexico and Asia anyway. This might not hit you as hard, but it’s still another reminder that export diversification isn’t just a good strategy – it’s survival.
The Technology Angle – And Why It Matters
The thing about Canadian dairy operations – and this is something that doesn’t get talked about enough – is that they average about 96 milking cows per farm, while American operations average over 1,000. There’s obvious complementarity there – our scale efficiency, their protected market access. But protectionist policies just waste that natural synergy.
Canadian processors are investing heavily in automation and modernization right now. While we’re dealing with trade barriers, they’re actually getting more competitive. It’s a reminder that trade disputes don’t happen in a vacuum – they’re part of a broader competitive landscape.
What’s Coming Next – And Why It Matters
The August 1st deadline creates this artificial urgency that I frankly don’t think helps anyone. Trade disputes are complex; they take time to resolve, and rushing toward deadlines often makes everyone make decisions they’ll regret later.
But here’s the reality: bilateral negotiations face structural limitations. Recent moves show Canada is actually strengthening legal protections for supply management, making concessions even less likely. Bill C-282, currently passing through the Canadian Senate, would essentially take supply management off the table in any future negotiations.
The Bottom Line – Where We Go from Here
This escalation represents something deeper than just another trade spat. It’s really about whether North American dairy integration can survive the political whiplash we’ve been experiencing. Canadian consumers will end up paying more, American producers lose market access, and the only winners are the lawyers and consultants who specialize in trade disputes.
What’s particularly frustrating is that both industries would benefit from more integration, not less. The technological complementarity, the geographic proximity, the shared standards – all of that gets thrown away when politics takes over.
Recent research from Cornell University shows that when the USMCA dairy quotas were implemented, they generated an additional $12 million per month in trade. That’s real money that could be flowing to real farms… if we could just get the politics out of the way.
The reality is that smart operators on both sides are already hedging their bets. Because in this business, you can’t control trade policy, but you can control how prepared you are when it changes. And based on the track record of the past few years… it’s definitely going to change.
The dairy industry has weathered plenty of storms before this one. The question isn’t whether we’ll adapt – it’s how quickly we can pivot to new opportunities while managing the risks that come with them. August 1 is just around the corner, and the clock’s ticking.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Cheese blocks crashed 1.5¢ in one trade Monday – here’s why your August milk check just took a $0.75/cwt hit.
Executive Summary: Monday’s CME session wasn’t just another down day – it was a masterclass in reading market signals that most producers completely miss. The real insight isn’t the 1.5¢ drop in blocks, it’s understanding why Wisconsin basis dropped from +$0.65 to +$0.35 while California plants are sitting at 115% inventory levels. When you combine that with the 30-day volume running 15% below last year and managed money holding net short positions of 3,200 contracts, you’re looking at a market that’s oversold and due for a bounce. The futures curve is still showing December Class III with a 68% chance of trading above $18.50, which means there’s real money to be made if you understand the timing. Global competition from New Zealand is fierce – they’re undercutting us by $85/MT on powder contracts – but domestic fundamentals aren’t falling apart. Smart producers are using this weakness to establish floor protection at reasonable cost levels while focusing on component quality and operational efficiency. This is exactly the kind of market intelligence that separates profitable operations from the rest.
Key Takeaways
Basis arbitrage opportunity: Wisconsin Class III basis dropped 45% in 10 days while Northeast fluid premiums held steady at +$2.15-$2.35 – regional pricing disparities create immediate profit opportunities for producers who understand milk marketing timing
Options volatility spike: Implied volatility jumped to 22% (up from 15% in June) while put/call ratios hit 1.8:1 – establish downside protection through October Class III puts at $18.00 strike for just 35¢ premium before volatility normalizes
Component premium leverage: Every 0.1 point in butterfat equals $0.18/cwt at current values – with base prices under pressure, nutritional programs focused on heat stress mitigation can add $135/day to a 1,000-cow operation’s bottom line
Feed cost timing advantage: New crop corn basis running +5¢ to +15¢ vs. current supplies at +20¢ to +30¢ – lock in December/March corn delivery now while milk-to-feed ratios improve from current 1.85 levels
Export competitive positioning: U.S. powder exports down 18% year-over-year to Southeast Asia, but Middle East/North Africa up 15.8% – diversification strategies and currency hedging become critical for co-ops with international exposure
You know that gut-punch feeling when you check the CME board first thing Monday morning? Well, that’s exactly what we got today. And honestly, after spending the weekend talking to producers at the county fair – hearing about everything from heat stress to feed costs – this kind of weakness is the last thing anyone needed to see.
Here’s the thing about today’s session… when blocks drop 1.5¢ on a single trade, you’re not looking at market noise. That’s a statement. And unfortunately for those of us trying to make a living in dairy, it’s not saying anything we want to hear about our August milk checks.
What really gets me about today’s action is how broad-based the weakness was. Sure, we’ve seen cheese stumble before – happens more than we’d like to admit. But when butter joins the party with a full cent drop? You’re looking at pressure on both your Class III and Class IV formulas. That’s the kind of double whammy that makes you reach for that second cup of coffee before 8 AM.
Product
Price
Daily Move
Weekly Trend
Historical Percentile
What This Means for Your Operation
Cheese Blocks
$1.6450/lb
-1.50¢
-2.3%
35th percentile (July avg: $1.72)
🔴 Your Class III driver just hit a serious pothole
Cheese Barrels
$1.6700/lb
-0.50¢
-2.4%
42nd percentile (July avg: $1.68)
🔴 Industrial demand showing cracks too
Butter
$2.5800/lb
-1.00¢
-0.6%
58th percentile (July avg: $2.54)
🔴 Class IV is taking heat from multiple directions
NDM Grade A
$1.2675/lb
Flat
+0.1%
62nd percentile (July avg: $1.24)
🟡 At least export demand isn’t completely tanking
Dry Whey
$0.5675/lb
Flat
-3.2%
48th percentile (July avg: $0.58)
🟡 Steady today, but that weekly trend…
The silver lining? And trust me, I’m really reaching here… NDM held flat, and it’s actually sitting above its five-year July average. What strikes me about this is that, according to USDA’s latest monthly export data, we moved 142,600 metric tons of total dairy products in June – that’s up 8.2% from the rolling three-month average. So at least the powder complex isn’t completely falling apart.
But let’s be real about what happened with cheese. That barrel-to-block spread widened to 2.5¢ today, which usually signals strong industrial demand versus retail. Problem is, when both are sliding, it’s just different shades of weak.
Under the Hood: Why It Happened
What’s particularly concerning about today’s session… well, it’s what didn’t happen as much as what did. We had one block trade, two butter trades, and that was pretty much it. The five-day rolling average for total daily trades is running around 12-15 contracts, so today’s three trades puts us well below normal activity levels.
Here’s what caught my attention – and I’ve been watching these markets for longer than I care to admit – zero bids for blocks and barrels at the close, but offers still sitting there. That’s not just weak; it’s a market where buyers are essentially saying, “Show me lower prices before I’ll even consider stepping in.”
The bid-ask spreads are telling their own story, too. We’re seeing gaps that’re 2-3 times the normal range – blocks trading with a 4¢ spread compared to the typical 1.5¢. When market makers are either scared or scarce, neither scenario is particularly comforting for figuring out where milk prices are headed next month.
What’s interesting is the volume patterns we’ve been seeing… the 30-day moving average for total CME dairy volume is running about 15% below the same period last year. Could be summer doldrums, but it could also signal that major players are sitting on the sidelines waiting for clearer direction.
The Commitment of Traders Story
The latest COT report (and this is fascinating stuff) shows managed money positions in Class III futures at their lowest level since March. Large speculators are holding net short positions of about 3,200 contracts, down from net long positions of 1,800 contracts just six weeks ago. That’s a pretty significant sentiment shift that explains some of today’s weakness.
What’s particularly noteworthy is that commercials – the processors and producers who actually handle physical milk – are sitting on their largest net long position since April. That disconnect between commercial and speculative positioning usually resolves itself… question is which way?
From what I’m hearing from contacts on the floor, traders are watching $1.60 on blocks like hawks. Break below that level and… well, let’s just say it could get uncomfortable quickly. For barrels, those unfilled offers at $1.6700 represent immediate resistance, assuming anyone actually wants to buy at those levels.
The Futures Curve and Options Tell a Different Story
Here’s where things get interesting – and maybe a little more optimistic. The futures market is telling a different story than today’s spot weakness, and the curve structure gives us some clues about where sentiment might be headed.
Current Futures Structure (and what it means):
August Class III: $17.76 (vs. today’s spot equivalent around $17.20)
October Class III: $18.78 (showing $1.00+ premium to spot)
December Class III: $19.15 (even stronger premium)
The curve is in what we call “normal contango” – later months trading at premiums to nearby. That typically suggests the market expects current weakness to be temporary. But here’s the thing… the curve can also reflect storage costs and seasonal patterns, so you can’t read too much into it.
Options Volatility Patterns: This is where it gets really interesting. Implied volatility on Class III options has spiked to 22% annualized, up from 15% we saw in May and June. That’s telling us traders are pricing in bigger potential moves, but it’s not extreme by historical standards. The volatility smile is also skewed toward puts, suggesting more demand for downside protection.
Confidence Intervals (based on current options pricing):
August Class III: 68% chance of trading between $17.25-$18.25
October Class III: 68% chance of trading between $18.15-$19.45
December Class III: 68% chance of trading between $18.50-$19.80
Those ranges actually aren’t terrible, especially when you consider we were trading in the low $16s as recently as March. The fact that December shows a 68% chance of staying above $18.50 suggests the market still believes in a seasonal recovery.
The View from the Farm: How It Impacts Producers
The thing about national price averages is that they don’t tell the whole story. Let me break down what’s happening in the regions that actually matter for your milk check, and how production realities are affecting supply patterns…
Regional Basis Reality – The Complete Picture
Upper Midwest Basis Differentials (this is becoming more critical as plants get pickier):
South-central Wisconsin: Class III basis dropped to +$0.35/cwt from +$0.65 ten days ago
Central Minnesota: Running about +$0.40/cwt, down from +$0.55
Northern Iowa: Holding around +$0.45/cwt, but processors pushing for lower premiums
Michigan: Sitting at +$0.30/cwt, down from +$0.50 in early July
California Dynamics: The Golden State’s always been its own animal, but what’s happening there affects everyone. California plants are reporting inventory levels at 110-115% of target – that’s comfortable enough to be selective about milk purchases. Their basis to Class IV has tightened to around +$0.25, down from +$0.45 in early July.
Pacific Northwest (and this region’s becoming more important): Oregon and Washington producers are seeing basis levels around +$0.20 to +$0.30 over Class III. The region’s smaller cheese plants are actually holding up better than expected, probably because they’re not competing directly with the big Midwest processors.
Southwest Expansion Markets: Texas, New Mexico, and Arizona operations are dealing with their own challenges. Basis levels are running +$0.15 to +$0.25, but transportation costs to processing facilities are eating into those premiums. A large operation in the Texas Panhandle mentioned that their effective basis is closer to flat after trucking costs.
Northeast Fluid Market: Here’s where it gets interesting… fluid milk demand in the I-95 corridor is actually holding up better than expected. Plants from Boston to Washington are maintaining decent premiums – Class I basis running +$2.15 to +$2.35 over Class III, which is typical for this time of year.
Production Dynamics and Heat Stress Reality
What’s happening on the production side varies significantly by region, but there are some common themes emerging that affect supply patterns and ultimately pricing. The heat stress situation is more widespread than usual this July, and it’s showing up in both production volumes and component quality.
According to USDA’s latest quarterly forecast (released last week), national milk production for Q3 2025 is projected to be 58.2 billion pounds, up 1.1% from last year, with a confidence interval of +/- 0.4%. But here’s what’s interesting… the regional breakdown shows some significant variations:
Upper Midwest: Q3 production forecast up 0.8% (confidence range: +0.2% to +1.4%)
California: Expected to be flat to down 0.2% (confidence range: -0.8% to +0.4%)
Southwest: Up 2.1% (confidence range: +1.5% to +2.7%)
Northeast: Up 0.4% (confidence range: -0.2% to +1.0%)
The heat stress impacts are showing up differently across regions:
Texas operations reporting 8-12% production drops from peak levels, with significant component quality issues
Wisconsin farms are seeing 2-4% declines but better component quality thanks to heat abatement investments
California Central Valley down 5-7% with mixed component impacts
Northeast is holding relatively steady thanks to milder temperatures
A large operation in central Minnesota mentioned their July butterfat test dropping to 3.68% from 3.81% in June – that’s significant money when you’re talking about 3,200 cows. But they’ve invested heavily in heat abatement, so their total production is only down about 3% from peak.
Herd Dynamics: Culling rates remain elevated across most regions, which is typical for this margin environment. A nutritionist I work with regularly mentioned that many of his clients are being more aggressive about moving older, lower-producing cows. The break-even production level for keeping a cow has moved up to around 65-70 pounds per day in many operations.
What’s particularly noteworthy is the heifer situation. Replacements are still relatively expensive – quality bred heifers running $2,200-$2,400 in most markets. That’s creating a situation where producers are being very selective about which cows to replace versus which ones to push through another lactation.
Feed Markets: The Other Half of Your Margin Equation
The thing about feed markets right now… they’re just sitting there like that relative who overstayed their welcome during the holidays. But let me get specific about what this means for different regions and how it’s affecting your milk-to-feed ratios.
Current Feed Landscape (and these numbers matter for your bottom line):
December corn futures: $4.12/bushel (down from $4.35 six weeks ago)
March corn: $4.18/bushel (showing some seasonal carry)
Soybean meal futures: $284/ton (up from $268 in early June)
Alfalfa basis in dairy country: Running $15-25/ton over normal premiums due to drought concerns
Your milk-to-feed ratio… and this is where individual operations really diverge… is running somewhere between 1.75-1.95 depending on your location and sourcing strategy. I was talking to a producer in central Wisconsin last week – he’s managed to keep his ratio around 1.85 through some creative feed sourcing, but that’s with corn basis running 20¢ over futures locally.
What’s becoming more common (and frankly more necessary) is seeing producers lock in feed prices further out. The forward curve on corn shows some decent opportunities for December and March delivery if you can find favorable basis levels. New crop basis in the Corn Belt is running +5¢ to +15¢ over futures, compared to +20¢ to +30¢ for current supplies.
Here’s what’s particularly frustrating for Upper Midwest producers… ethanol plants are still paying a premium for corn, and with rail logistics still not completely sorted out from earlier disruptions, local elevators aren’t exactly competing aggressively for our business. Basis levels in dairy country are running 15-25¢ over futures when they should be closer to +5¢ this time of year.
California: Corn basis +35¢, alfalfa hay $280-320/ton
Texas: Corn basis +25¢, cottonseed meal competitive with soybean meal
Northeast: Corn basis +30¢, hay costs elevated due to weather
The Global Picture: External Pressures
The international competitive landscape is more complex than just production numbers and price comparisons. Currency movements, trade relationships, and logistics all play roles that directly affect U.S. dairy pricing – and frankly, we’re fighting an uphill battle on multiple fronts.
Export Competition Reality – The Detailed Numbers
Let me share some specific numbers that really highlight what we’re up against internationally. According to USDA’s latest monthly export data (and these are the actual volumes that matter for your milk check):
June 2025 Export Performance vs. June 2024:
Mexico: 31,200 metric tons total dairy products – up 2.1% from May, down 1.8% year-over-year
Southeast Asia: 22,400 metric tons – down 8.3% from May, down 18.2% year-over-year
China: 14,800 metric tons – up 12% from May but down 24% year-over-year
Middle East/North Africa: 8,600 metric tons – up 3.1% from May, up 15.8% year-over-year
Canada: 7,400 metric tons – steady from May, up 4.2% year-over-year
Rolling Three-Month Averages (this smooths out the volatility):
Total dairy exports: 142,600 MT/month (up 8.2% from the same period in 2024)
Here’s what’s frustrating… we’re losing market share not because of quality issues or logistics problems, but purely on price. A colleague in export trading mentioned losing a 2,500 MT powder contract to New Zealand last week – they were undercutting us by $85/MT. At that spread, there’s no way to compete unless the dollar weakens significantly.
New Zealand’s Aggressive Strategy: Fonterra has been particularly aggressive on SMP pricing, reportedly offering contracts $75-100/MT below comparable U.S. product. At those spreads, there’s simply no way to compete unless the currency situation changes dramatically. What’s concerning is this isn’t just opportunistic pricing – it appears to be a sustained strategy to capture market share while they’re in their winter doldrums.
Global Production and Currency Dynamics
The European situation adds another layer of complexity. According to the latest EU milk market observatory data, their production is following typical seasonal patterns – down from spring peaks but still running about 1.8% ahead of last year in key regions like Germany and the Netherlands. Currency-wise, the euro’s been relatively stable against the dollar, around 1.08-1.10, so we’re not getting help there either.
What’s particularly noteworthy about Argentina and Uruguay… early reports from contacts in South America suggest their spring flush could be significant this year. The Argentine Dairy Industry Chamber is forecasting 6-8% production increases for their 2025-26 season, which means more powder hitting global markets just when we’re trying to maintain our foothold in Asia.
Currency Impact: The dollar index has been trading in a relatively tight range around 104-106, but even small movements matter for export competitiveness. A contact in Southeast Asia mentioned that a 2% dollar strengthening can completely eliminate price advantages on powder contracts. Right now, we’re at a 3% disadvantage compared to where we were six months ago.
Logistics Reality: Shipping costs from U.S. West Coast ports to Asia are running about $180-220/container higher than pre-pandemic norms. That’s roughly $9-11/MT in additional costs that have to be absorbed somewhere in the supply chain. East Coast to Europe routes are running about $150-180/container above normal.
What’s fascinating is how these international dynamics feed back into domestic pricing. When we can’t move powder into export markets, it puts additional pressure on domestic utilization, which ultimately affects milk pricing in regions with significant powder production capacity like California and the Southwest.
Trade Policy Wildcards
Here’s something that doesn’t get enough attention but could really matter… the ongoing trade discussions with various countries. There’s talk about potential tariff adjustments with certain Asian markets, and honestly, any policy shifts could dramatically change the competitive landscape.
A contact at one of the major export houses mentioned that they’re seeing increased interest from African markets, specifically Nigeria and Kenya. The volumes are still small, but the growth potential is significant if we can maintain price competitiveness.
The Game Plan: What to Do About It
Look, talking about risk management in general terms doesn’t help anyone make real decisions. Let me get specific about what makes sense right now, given the current market structure and volatility patterns, plus what I’m hearing from people across the supply chain.
Market Sentiment and Real Voices
The sentiment across the supply chain… well, let’s just say it’s not exactly bullish right now. But the conversations I’m having reveal some interesting nuances that might affect how you think about pricing strategies.
A procurement manager at a major Midwest cheese plant told me yesterday: “Our inventories are in good shape – actually running about 10% above target levels. We’re not chasing milk right now because frankly, we don’t need to. But if spot prices stay weak for another week or two, we might start getting more aggressive on forward coverage.”
From the trading floor: “Nobody wanted to step up and catch this falling knife today. Volume was pathetic. But here’s the thing… when markets get this thin, they can turn on a dime. I’ve seen it happen too many times to count.”
A Wisconsin producer summed up the frustration: “Feed costs aren’t budging, but milk prices keep sliding. The good news is we locked in some fall coverage at $18.50 last month. Looking at today’s action, that’s feeling like a pretty smart decision.”
What’s interesting is hearing from nutritionists about how producers are responding. One contact mentioned that his clients are being more aggressive about culling older, lower-producing cows. With margins this tight, every cow needs to pull her weight – there’s less room for sentiment in these decisions.
Risk Management Reality: Specific Strategies for Today’s Market
Current Hedging Opportunities (and these are real examples you can act on):
October Class III puts at $18.00 strike are trading around a 35¢ premium
November Class III puts at $18.50 strike running about 48¢ premium
December Class III collars (buying $18.00 puts, selling $19.50 calls) can be established for about 15¢ net cost
What these numbers tell you is that you can establish downside protection at reasonable cost levels. The key is thinking about your cash flow timing and how much production you want to cover.
Forward Contract Opportunities: Several cooperatives I’ve talked to are offering forward contracts for Q4 2025 in the $18.20-$18.60 range, depending on volume and timing. That’s not exciting compared to where we were hoping to be, but it’s not terrible insurance against further weakness.
Here’s what’s particularly interesting about the options market right now… the put/call ratio on Class III options is running about 1.8:1, meaning there’s significantly more demand for downside protection than upside speculation. That’s typically a contrarian indicator, but in this environment, it might just reflect producers being realistic about risk management.
Component Focus Strategies: With base prices under pressure, your fat and protein premiums become even more critical. Every tenth of a point in butterfat is worth about $0.18/cwt at current component values. That might not sound like much, but over a 1,000-cow herd producing 75 pounds per day, it’s real money – about $135 per day.
Seasonal Expectations and Reality Checks
Here’s the thing about seasonal patterns… they provide guidance, but they’re not guarantees. Based on historical data and current fundamentals, here’s what I’m watching for in the coming weeks:
August Expectations: Back-to-school demand typically starts showing up in the first week of August. Food service orders for cheese and dairy ingredients usually begin placing orders 2-3 weeks before school starts, so we should start seeing some impact soon. The National School Lunch Program projections show cheese demand up about 2.3% for the upcoming school year.
Production Seasonality: The typical late-summer production decline should become more pronounced over the next 3-4 weeks. Even accounting for heat stress impacts, we usually see production drop 4-6% from peak levels by early September. This year’s heat stress might accelerate that decline.
Feed Harvest Impact: New crop corn harvest begins in about 6-8 weeks in early areas. Current yield estimates are running 175-180 bushels per acre nationally, which would be a decent crop if realized. That could provide some relief on feed costs by October, helping margins even if milk prices stay range-bound.
But here’s the reality check… international competition isn’t seasonal. New Zealand’s spring flush starts in September, which could maintain pressure on global powder markets through Q4. That’s a wildcard that historical seasonal patterns don’t account for.
Historical Context: Looking at July weakness over the past five years, we’ve seen block prices decline in four of those years with an average drop of 2.8¢. Today’s 1.5¢ decline puts us right in that historical range. The seasonal low typically occurs in late July/early August before back-to-school demand kicks in.
The Bottom Line: Navigating Uncertainty with Clear Eyes
Today’s market action is a reality check that the path to higher prices isn’t linear. The 1.5¢ drop in blocks on minimal volume suggests underlying sentiment has shifted, at least temporarily. But when I step back and look at the bigger picture…
What gives me some optimism – and I choose to focus on this rather than get discouraged – is that fundamentals haven’t completely deteriorated. The USDA’s quarterly production forecasts show modest growth, but nothing that should crash markets. Export demand, while challenging, isn’t collapsing entirely. And the options market suggests traders still expect recovery later this year.
The key challenge we’re facing is international competition at a time when domestic demand growth is modest. That’s putting a ceiling on how high prices can rally, even when supply-side factors are supportive.
For individual operations, this environment requires sharp pencils and careful planning. Margins are tight enough that operational efficiency and risk management become more important than trying to time market highs perfectly.
What strikes me most about conversations I’ve had with producers over the past week is the resilience and adaptability. Yeah, margins are tight, and today’s weakness is disappointing. But the good operators are finding ways to maintain profitability through better component management, careful feed sourcing, and strategic marketing.
Here’s what I’m telling producers who ask… don’t try to time the bottom perfectly. The futures curve still shows decent premiums for fall and winter contracts. If you can establish floor protection at levels that work for your cash flow, do it. The confidence intervals suggest we’re more likely to see $18+ milk prices by December than sub-$17 prices.
Sometimes markets just need to reset before moving higher. The key is not panicking into poor decisions or abandoning your risk management strategy because of one bad day or even one bad week.
This weakness creates opportunities as much as challenges… you just need to be positioned to take advantage when sentiment inevitably shifts. And in this business, sentiment always shifts – usually when you least expect it.
Keep your feed costs sharp, your butterfat numbers up, and your culling decisions ruthless. Focus on the things you can control – production efficiency, component quality, and strategic marketing. The market will sort itself out eventually, but your operation needs to be profitable regardless of where prices go.
We’ve weathered these storms before, and we’ll get through this one too. Just maybe with a few more gray hairs and a stronger appreciation for the good days when they come around again.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – Uncovers cutting-edge automation and AI technologies delivering 15-20% productivity gains and 40% mortality reductions, providing the competitive edge essential for thriving when markets turn volatile like today’s session.
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How this week’s supply tsunami exposed the industry’s biggest blind spot—and what you need to do about it
EXECUTIVE SUMMARY: Look, I just spent the weekend digging into July’s brutal market crash, and what I found will change how you think about your operation. The old “more milk, more money” playbook is officially dead – we’re now in an era where component optimization beats volume every single time. The numbers don’t lie: operations running 4.2% butterfat versus 3.8% are seeing $275-460 additional daily revenue on a 2,000-cow setup, and that gap’s only getting wider. Global markets just proved they’ll punish volume producers while rewarding those smart enough to focus on what their milk’s actually made of. With Class IV futures sitting at $19.05/cwt and Class III stuck at $18.50/cwt, the market’s screaming at you to optimize for fat and hedge against protein weakness. The producers who get this shift right now – not next year, not next month, but right now – will be the ones still standing when the dust settles.
KEY TAKEAWAYS
Genetic selection pivot pays immediately: Daughters of fat-plus sires are generating $150-200 more annually per cow under current pricing structures. Start evaluating your breeding program for butterfat percentage over volume metrics – your 2026 calf crop depends on decisions you make this month.
Component monitoring = instant profit capture: Real-time parlor monitoring lets you adjust feeding strategies daily, capturing an additional $0.20-0.30 per hundredweight just from ration timing. Pennsylvania farms already doing this are seeing results within 30-60 days, not years.
Risk management isn’t optional anymore: Lock in 25-30% of your fat-heavy production through Class IV futures while buying Class III downside protection through DRP programs. With that $0.55 spread, not hedging is basically gambling with your operation’s future.
Feed cost optimization creates double wins: Strategic fat supplementation and improved forage quality boost component returns by $0.15-0.25 per hundredweight with minimal input cost increases. Vermont producers using palmitic acid inclusion are seeing 0.15 percentage point butterfat gains in 4-6 weeks.
Look, I’ve been watching dairy markets for more than three decades, and what happened at the Global Dairy Trade auction this week… well, it’s one of those moments that fundamentally changes how we think about milk pricing. We just witnessed a brutal -4.1% crash in the GDT Price Index—the worst single-day performance in twelve months—and if you think this is just another cyclical blip, you’re missing the fundamental shift that’s happening right under our noses.
The thing about supply-driven corrections is they don’t send you a courtesy call first. When Fonterra reported their highest milk collections in five years, with May intake surging 7.5% year-over-year, and Irish collections jumped 6.5% for the month, the writing was on the wall. You simply can’t flood global markets with that much milk and expect prices to hold. Basic economics, right? But somehow our industry keeps forgetting this fundamental lesson.
This wasn’t just a bad day at the auction house either. The event ran for nearly three hours across 22 bidding rounds, with 161 participants and only 110 walking away as winners. When you see numbers like that, you know sellers were desperate to move product, and desperate sellers make for ugly prices.
But here’s what really gets me fired up about this whole situation… we’re not just dealing with lower prices. We’re looking at a fundamental restructuring of how milk components get valued, and it’s happening whether we like it or not.
The Component Split That’s Reshaping Everything
Something really caught my attention about this market break—how it’s revealing the industry’s biggest blind spot. The CME spot markets told the whole story this week. Cheese blocks dropped to $1.66/lb, dry whey collapsed to $0.5675/lb—that’s a 1.41 cent weekly decline that had whey traders wincing. But here’s the kicker: butter held steady at $2.59/lb and nonfat dry milk actually gained ground to $1.2675/lb.
That’s not random market noise, folks. That’s the market screaming at you about what it values right now.
What strikes me about this divergence is how it’s playing out differently depending on where you’re milking cows. According to recent work from the USDA’s July WASDE report, the 2025 all-milk price forecast got bumped up to $22.00 per hundredweight. That’s not pocket change; that’s the kind of revision that changes your whole year’s profitability outlook.
But here’s where it gets really interesting: Class IV futures are now trading at $19.05/cwt while Class III settled at $18.50/cwt. That’s a $0.55 spread that translates directly to your bottom line depending on your butterfat numbers.
Recent research from dairy economists at Cornell University suggests that operations with milk testing 4.2% butterfat versus 3.8% could see $0.30-0.50 per hundredweight advantages under current pricing structures. If you’re running Holstein genetics selected for high butterfat… well, you’re sitting pretty right now. But if your operation skews toward protein production? You’re feeling the squeeze, and honestly, it’s only going to get worse.
Why aren’t more producers talking about this shift? It’s like watching a slow-motion train wreck, and half the industry is still focused on the wrong track.
Regional Realities: When Geography Becomes Destiny
The fascinating thing—and a bit scary—is how global dairy markets aren’t really global anymore. They’re becoming increasingly regionalized, and that’s creating some wild opportunities for those who understand the game.
The feed cost dynamics are actually working in our favor, too. According to extension specialists at the University of Wisconsin-Madison, the improved soybean meal price forecasts could translate to $25-35 less in monthly feed costs per cow for typical 500-head operations. When you’re feeding 4-6 pounds of protein supplement daily, those savings add up fast.
I was just talking to a producer in Wisconsin last week who’s already adjusting his ration strategy based on these projections. He’s calculating that with improved milk prices and cheaper protein supplements, he’s looking at roughly $40-50 per cow improvement in monthly margins. That’s the kind of swing that changes your whole year’s outlook.
But here’s what’s got me curious… how many operations are actually positioned to capture this opportunity versus getting caught flat-footed by the component shift?
The EU is dealing with supply constraints that are actually protective. Environmental regulations, bluetongue outbreaks (this is becoming more common across Germany and France), and demographic challenges are creating a natural supply ceiling. Sometimes regulations work in your favor… who knew?
Recent research from dairy production specialists at Wageningen University shows that EU milk output forecasts suggest minimal production growth of just 0.2% to 0.4% for all of 2025. When you’ve got that kind of constraint, every liter of milk becomes precious.
But here’s what’s interesting—the UK stands out as a major outlier. UK milk production jumped 5.7% year-over-year in May, hitting record daily volumes. While that sounds great for UK producers, it actually puts them in a tough spot. They’re producing into a weak global market without the EU’s internal supply constraints to protect them.
Oceania: Ground Zero for Pain
If you’re milking cows in New Zealand right now, you’re at the epicenter of this supply storm. The GDT results show just how brutal this correction has been: whole milk powder dropped 5.1% to $3,859/MT, butter fell 4.3% to $7,522/MT, and the forward curve suggests this pain isn’t over.
What’s really concerning is the future structure. When you see butter futures in steep backwardation—dropping over $900/MT in just two months—that’s the market pricing in sustained weakness. This isn’t a temporary blip; this is a fundamental reset that could last through the Southern Hemisphere’s peak production season.
The Genetics and Nutrition Reality Check
This component value divergence we’re seeing isn’t just a market quirk—it’s becoming a structural feature of how milk gets valued. What’s particularly noteworthy is how this is playing out for different genetic programs.
I know a producer in Vermont who’s been working with dairy geneticists at the University of Vermont Extension to optimize his breeding program for butterfat. They’ve moved away from pure volume genetics toward proven fat-plus sires, and he’s seeing results. Under current pricing, daughters of these bulls are generating about $150-200 more annually per cow than his volume-focused animals.
But genetics is only part of the equation. Feed efficiency experts from Penn State’s dairy science program are calculating that strategic fat supplementation and forage quality improvements can boost component returns by $0.15-0.25 per hundredweight with minimal additional input costs. That’s the kind of ROI that makes sense even in tight margin environments.
For a 2,000-cow operation producing 75 pounds per cow daily, optimizing from 3.8% to 4.2% butterfat translates to $275-460 additional daily revenue. Scale that across a year, and you’re talking about $100,000-168,000 in additional income just from component optimization. That’s not theoretical—that’s real money hitting your milk check every month.
Herd Size
Daily Production
Butterfat Increase
Approx. cwt Advantage*
Potential Additional Annual Revenue
500 Cows
75 lbs/cow
3.8% to 4.2%
$0.40/cwt
$54,750
1000 Cows
75 lbs/cow
3.8% to 4.2%
$0.40/cwt
$109,500
2000 Cows
75 lbs/cow
3.8% to 4.2%
$0.40/cwt
$219,000
*Based on a $0.40/cwt premium for a 0.4 percentage point increase in butterfat.
The question is… how quickly can you implement these changes, and what’s the realistic timeline for seeing results? From what I’m seeing on progressive farms, genetic improvements take 2-3 years to materialize fully, but nutritional adjustments can show results within 30-60 days.
Risk Management: Why Passive Strategies Are Dead
The current market environment is offering some of the clearest hedging signals I’ve seen in years. With Class IV futures trading at a significant premium to Class III, the market is practically screaming at you to hedge fat-based production while protecting against protein-based downside.
Here’s what I’m telling progressive operations: lock in 25-30% of your expected fat-heavy production through forward contracts while buying Class III downside protection through puts or the Dairy Revenue Protection program. The math is compelling—you’re capturing the current spread while limiting your exposure to further protein market weakness.
What’s fascinating is how this plays out differently across regions. European futures markets on the EEX are pricing similar opportunities, with July SMP contracts at €2,396/MT and butter at €7,371/MT—a spread that’s too wide to ignore for producers who understand component risk management.
The implementation timeline here is critical. Most DRP enrollment deadlines are 30-45 days before the coverage period starts, so if you’re thinking about protecting your fall production, you need to move now. Futures markets offer more flexibility, but you need the financial infrastructure in place—margin accounts, credit lines, the works.
The Technology Factor Nobody’s Talking About
Something else is happening that’s becoming increasingly clear: the producers who thrive in this environment aren’t just those with the best genetics or the cheapest feed—they’re the ones with the best data.
Component management has moved from optimization to necessity. Real-time monitoring technology isn’t a luxury anymore; it’s essential for capturing the value spreads we’re seeing. The operations that can adjust their nutritional programs based on daily component pricing are the ones that’ll come out ahead.
I was just at a farm in Pennsylvania where they’ve installed real-time component monitoring through their parlor system. The producer told me he’s adjusting his feeding strategy almost daily based on component premiums. It’s allowed him to capture an additional $0.20-0.30 per hundredweight just by optimizing his ration timing.
But here’s the thing—this technology isn’t cheap, and it requires a learning curve. The farms I’m seeing succeed with this approach are investing 12-18 months in training and system optimization before they see consistent results. Are you prepared for that commitment?
What the Next Few Weeks Will Tell Us
The upcoming July 15th GDT auction will serve as a crucial test of whether this correction has found a floor. Honestly? I’m not optimistic. Fonterra’s already announced significant volumes for the event, and if those hit the market and prices fall further, it’ll confirm that this bearish trend has legs.
But here’s the thing—the auction results are almost beside the point now. We’re operating in a fundamentally different market structure. Volume-focused strategies aren’t just outdated; they’re counterproductive in this environment.
Current trends suggest that Chinese import demand—which could provide the lifeline Oceanic markets desperately need—remains sluggish. According to agricultural trade economists at Iowa State University, without that demand recovery, New Zealand producers are looking at an extended period of painful price discovery.
The summer heat across the Northern Hemisphere is also playing a role. I’ve been getting reports from producers in Wisconsin and New York about heat stress impacting fresh cow performance. When you combine that with the seasonal decline in milk production, it could provide some support to powder markets… but probably not enough to offset the Oceanic supply tsunami.
The Bottom Line: Three Critical Takeaways
After watching this market chaos unfold, three things are crystal clear to me:
First, component management isn’t optional anymore. The fat-protein spread has become the defining feature of 2025 markets. Operations that can’t optimize for butterfat production will get left behind. Period. If you’re not tracking your component tests daily and adjusting your nutrition program accordingly, you’re missing the biggest profit lever in your operation.
This isn’t just about genetics anymore—it’s about real-time management. The producers who understand this are already implementing feeding strategies that can shift butterfat test by 0.1-0.2 percentage points within 4-6 weeks. Under current pricing, that’s $200-400 additional monthly revenue per cow.
Second, regional market dynamics are creating unprecedented opportunities. U.S. producers benefit from strong domestic fundamentals and that bullish USDA outlook. European producers have supply constraints working in their favor, creating natural price support. Oceanic producers… well, they’re learning about oversupply the hard way.
But here’s what’s particularly striking—even within regions, the opportunities vary dramatically. A producer in Vermont with high-fat genetics is in a completely different position than one in Texas focused on volume. Geography matters, but genetics and component management matter more.
Third, sophisticated risk management has moved from advanced strategy to basic survival. The market is offering clear signals about component value divergence, and passive strategies carry exceptional risk. With Class IV futures trading at such a premium to Class III, not hedging is essentially gambling with your operation’s future.
The tools are there—DRP programs, futures markets, forward contracts. The question is whether you’re using them strategically to capture the fat premium while protecting against protein downside. According to risk management specialists at Cornell, operations that implement component-based hedging strategies are seeing 15-20% lower margin volatility.
Here’s what I’m watching for the rest of Q3 2025: the July 15 GDT auction will either confirm this bearish trend or signal a potential floor. Chinese import data for June and July could be a game-changer if demand recovers. And honestly? Northern Hemisphere heat stress could provide some unexpected price support if production drops more than expected.
The question isn’t whether dairy markets will recover—they always do. The question is whether you’ll be positioned to capture the opportunities when they emerge. This market correction has separated the producers who understand the new realities from those still playing by the old rules.
And honestly? That separation is only going to become more pronounced as we move through the rest of 2025. The producers who embrace component optimization, understand regional dynamics, and implement sophisticated risk management will be writing the next chapter of this industry’s story.
The rest will just be reading about it in the market reports.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Spring Pasture Powerplay: Balancing Grazing Efficiency with Milk Component Goals – Reveals practical strategies for optimizing butterfat and protein production through strategic grazing management, including specific rotation schedules and supplementation protocols that can boost components by 0.2% within weeks of implementation.
Maximizing Milk Solids Output Through Strategic Nutrition and Genetics – Demonstrates how to capture the fat-protein premium through targeted feeding strategies and genetic selection, providing specific DMI targets and supplementation protocols that deliver measurable component improvements and higher milk checks.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – Explores cutting-edge monitoring and automation technologies that enable real-time component optimization, featuring case studies of farms achieving 20% yield increases and 40% mortality reductions through smart implementation of precision dairy tools.
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That July report just flipped the script—but here’s what most producers are missing about what comes next.
You know that feeling when you’re scrolling through your phone over morning coffee and suddenly stop mid-sip? That’s exactly what happened when the USDA’s July 2025 WASDE report hit my desk last week. After months of producers bracing for financial pain, milk prices got a significant boost that should have every dairy operation rethinking their entire strategy.
Here’s the thing, though—and I’ve been mulling this over since the numbers dropped—while everyone’s celebrating the all-milk price forecast jumping to $22.00 per hundredweight for 2025 (up from those dire earlier projections), most folks are missing the real story. Sure, 2026 forecasts at $21.65 per hundredweight look decent too, but what strikes me about this latest data is how perfectly it demonstrates the kind of market whiplash that’s become our new normal.
Just think about it… months ago, producers across Wisconsin and Iowa were making contingency plans for $19-20 milk. Now we’re looking at $22+ projections. For your typical 500-cow operation, that’s not just numbers on a spreadsheet—that’s the difference between scraping by and actually having room to breathe.
But here’s what’s got me both excited and concerned: the USDA raised milk production forecasts for both 2025 and 2026 based on higher cow inventories and increased milk per cow. According to recent analysis from the University of Wisconsin’s dairy markets program, this kind of supply response to improved pricing often sets us up for the next volatility cycle. The industry learns to respond to good news… sometimes a little too well.
What’s particularly fascinating—and this might surprise you—is that these price improvements actually reinforce why building what I call “financial fortresses” has become more critical than ever. The operations that will thrive aren’t just those riding the good news cycles; they’re the ones using this window to build systems that can handle whatever volatility comes next.
Because let’s be honest—if markets can swing from pessimistic to optimistic this fast, they can swing back just as quickly.
What’s Really Driving These Numbers
The thing about the July WASDE report is that it tells a story that’s both encouraging and complex, and frankly, most of the trade press is missing some crucial details that could impact your decision-making over the next 18 months.
The Milk Price Reality Check
The latest WASDE data shows some genuinely positive developments. That $22.00 per hundredweight forecast for 2025 represents a meaningful improvement, but here’s what’s particularly interesting—and this is where my conversations with dairy economists get really valuable—the breakdown across different classes tells us where the real strength is coming from.
Dr. Mark Stephenson from Wisconsin’s Program on Dairy Markets and Policy recently pointed out in his monthly outlook that the Class IV price increase is being driven by higher butter and nonfat dry milk prices, while Class III actually got lowered due to cheese price adjustments. For 2026, butter, NDM, and whey prices are all projected higher, suggesting strength in component markets that smart producers can leverage.
What’s really exciting—and I’ll admit, I get a bit nerdy about export data—is that commercial dairy exports are being raised for both 2025 and 2026 on both fat and skim-solids basis. According to the USDA’s Foreign Agricultural Service, this indicates stronger international demand that’s supporting domestic pricing. This export strength provides some foundation for optimism that goes beyond just domestic supply-demand dynamics.
But here’s where it gets interesting… and a little concerning. Recent research from Cornell’s dairy program suggests that rapid price improvements often coincide with production expansions that can create oversupply situations down the road. We’re seeing exactly that pattern in the current forecasts.
Feed Costs: The Other Half of the Equation
While everyone’s celebrating milk prices, the feed cost story is equally important—and honestly, it might be even better news for your bottom line. The July report shows corn production forecast at 15.705 billion bushels for 2025/26, down 115 million bushels from June projections due to lower planted and harvested area.
Now, you might think lower corn production means higher feed costs, but here’s the interesting part: the season-average farm price for corn is staying put at $4.20 per bushel. Feed and residual use was actually cut by 50 million bushels based on lower supplies, which suggests we’re looking at relatively stable input costs for the immediate future.
What’s got me particularly optimistic is how soybean meal prices were lowered $20 to $290 per short ton. For dairy operations—especially those in the Midwest, where transportation costs are lower—this combination of stable corn and cheaper soybean meal could improve feed cost margins by $0.30-0.50 per hundredweight when combined with the higher milk price forecasts.
I was talking with a nutritionist friend in Ohio last week (this is becoming more common in our industry), and she mentioned that operations implementing precision feeding systems are seeing even better results when input costs stabilize like this. The technology works best when you’re not constantly adjusting for wild price swings.
Market Volatility: The New Constant
Here’s what really gets me thinking… the rapid shift from pessimistic to optimistic forecasts demonstrates exactly why resilient planning systems have become essential. Markets that can swing from concern to optimism within a few months—well, they’re going to swing back eventually.
Current milk production forecasts are being raised based on higher cow inventories and increased milk productivity per cow. Industry experts I’ve spoken with suggest that this reflects improved margins, encouraging expansion, but it also means we could be setting ourselves up for oversupply situations if demand doesn’t keep pace.
According to recent work from UC Davis’s dairy economics group, this pattern of supply response to price improvements has historically led to market corrections within 18-24 months. Not trying to be a pessimist here, but the data suggests we should use this favorable window strategically.
Building Financial Resilience: What Smart Producers Are Doing Now
The improved price outlook creates opportunities, but the producers I know who’ve survived multiple market cycles aren’t just celebrating—they’re using this period to strengthen their operations for whatever comes next.
USDA Dairy Margin Coverage program performance showing the dramatic swing from record highs in late 2024 to projected compression in 2025
Government Programs: Strategic Leverage
The Dairy Margin Coverage program becomes even more valuable as a strategic tool when markets are improving. Brian Gould from Wisconsin’s dairy markets program recently noted that with current price forecasts showing stronger margins, this is actually the optimal time to evaluate whether your coverage levels are positioned for the new market reality.
Here’s what’s interesting about the Dairy Revenue Protection program—it offers quarterly revenue protection that becomes particularly valuable when you’re operating with higher baseline revenues. I’ve been talking with producers who are using this combination to provide both margin protection and revenue stability, which honestly has become essential regardless of whether markets are moving up or down.
What many producers don’t realize—and this came up in a conversation with a risk management consultant in Minnesota—is that strong market periods are actually the best time to implement protective strategies. When cash flows are better, operations have more flexibility to invest in systems that will protect them when markets inevitably turn challenging again.
Advanced Risk Management: Capitalizing on Opportunity
The improved price outlook creates opportunities for more sophisticated hedging strategies. With milk prices at $22.00 per hundredweight for 2025, operations can consider forward contracting strategies that lock in profitable margins while maintaining exposure to potential upside.
Options trading becomes particularly attractive in improving markets because it allows producers to maintain upside potential while protecting against downside risk. Recent analysis from the Chicago Mercantile Exchange shows that current price environments provide opportunities to implement protective strategies at relatively attractive premium costs.
What’s working in practice—and I’ve seen this across operations in different regions—is using the improved market outlook to implement blended strategies. Smart producers are contracting maybe 40% of production to guarantee profitable margins while leaving exposure to capture additional gains if markets continue strengthening.
Operational Excellence: The Foundation
You can’t hedge your way to long-term success without operational excellence, and improving markets provide the cash flow flexibility to invest in productivity improvements that create enduring value.
Feed Efficiency in the Current Environment
With corn prices stable at $4.20 per bushel and soybean meal costs declining to $290 per short ton, precision feeding systems can deliver enhanced returns. Research from Penn State’s dairy nutrition program shows that operations implementing advanced feed management systems can potentially save $0.75-1.25 per hundredweight in production costs while optimizing milk components.
I visited a 1,200-cow operation near Lancaster last month that’s been running precision feeding for about 18 months. “The ROI is real,” the manager told me, “but the consistency is what really matters. We’re hitting our butterfat targets every month now, not just when everything goes right.”
The combination of stable feed costs and improved milk prices creates favorable conditions for these investments. Operations that implement precision ration formulation during this period can build sustainable advantages that serve them well, regardless of future market conditions.
Component Optimization Strategy
Current market conditions show particular strength in butter and NDM prices, making component optimization especially valuable. Each 0.1% increase in butterfat content can add $0.15-0.20 per hundredweight to milk checks, and the current price environment may provide even better returns.
Here’s what’s working: I know a 350-cow operation in Vermont that worked systematically with their nutritionist to optimize components while maintaining overall production efficiency. They adjusted their TMR formulation, modified their breeding program to emphasize component traits, and invested in better feed storage. The result? Their average butterfat increased from 3.65% to 3.82% over 18 months, adding approximately $0.34 per hundredweight to their milk check.
Operations that focus on component optimization during favorable market periods often maintain those advantages even when overall market conditions become more challenging.
Climate Adaptation: Building for the Long Haul
Comparison of annual return on investment per cow for different climate adaptation and efficiency strategies
Improved market conditions provide the financial flexibility to invest in climate resilience, positioning operations for sustained success regardless of weather challenges. And frankly, with the summers we’ve been having…
Heat Stress Management: The Numbers Don’t Lie
Current price forecasts make cooling system investments even more attractive from an ROI perspective. With milk prices at $22.00 per hundredweight, the revenue maintained through effective heat stress management becomes more valuable.
Research from the University of Florida shows that properly designed cooling systems typically pay for themselves within 18-24 months through maintained milk production, but higher milk prices accelerate these payback periods. I know operations investing in these systems during favorable market periods that are seeing payback in 12-18 months while creating enduring operational advantages.
A 500-cow operation in Texas that I worked with last year invested $125,000 in a comprehensive cooling system. The manager told me, “We wish we’d done this five years ago. Summer milk production increased by 8%, breeding efficiency improved by 15%, and our vet costs dropped by 20%. The investment paid for itself in less than two years.”
Genetic Selection: The Long Game
The integration of heat tolerance into breeding programs becomes more attractive when cash flows support long-term investments. Holstein Association USA’s genomic evaluations for heat tolerance allow producers to select for climate resilience without sacrificing production traits.
What’s particularly interesting—and this comes from recent research at the University of Georgia—is how heat tolerance traits are being incorporated without sacrificing production or component quality. The SLICK gene, which creates a short, sleek hair coat that enhances heat dissipation, is being used in crossbreeding programs across the South with impressive results.
Current market conditions provide the financial stability to implement breeding programs focused on long-term sustainability rather than just immediate production gains. These investments pay dividends over multiple market cycles.
Technology Integration: Investing for the Future
Favorable market conditions create opportunities to implement technology solutions that provide persistent operational benefits. But here’s the thing—not all technology investments are created equal.
Precision Agriculture: What’s Actually Working
The current price environment makes precision agriculture investments more attractive from a cash flow perspective. Wearable sensors, automated monitoring systems, and precision feeding technologies require initial investments but deliver ongoing advantages.
According to recent surveys from Progressive Dairy, operations implementing precision agriculture during favorable market periods can develop systems that enhance efficiency and reduce costs, regardless of future market conditions. The key is selecting technologies that address specific operational challenges, rather than pursuing technology for its own sake.
I’ve been tracking adoption rates across different regions, and what’s fascinating is how the Midwest and Northeast are seeing faster uptake due to labor constraints, while Western operations are focusing more on resource efficiency technologies. Current milk price forecasts provide the financial flexibility to invest in integrated systems that combine multiple technologies for maximum operational benefit.
Data Analytics: Making Sense of Information
Improved cash flows enable investments in data analytics platforms that track production trends and identify opportunities for efficiency. The most successful systems integrate seamlessly with existing management practices, providing valuable insights that support informed decision-making.
An 800-cow operation in Michigan that I know implemented a comprehensive herd management system integrating feed management, reproduction, and financial tracking. “The system helped us identify patterns we never would have seen otherwise,” the manager explained. “We discovered that our reproduction efficiency was directly correlated with feed delivery timing—something we’d never connected before.”
Regional Strategies: Adapting to Local Realities
The improved national price outlook affects different regions differently, and understanding these regional variations is crucial for effective strategy development. Because let’s face it—dairy farming in Wisconsin is different from dairy farming in California.
Midwest Opportunities
Midwest operations benefit from both improved milk prices and relatively stable feed costs. The combination of $22.00 per hundredweight milk prices and $4.20 per bushel corn creates favorable margins for efficiency improvements and technology investments.
Regional feed cost advantages in the Midwest become more pronounced when national milk prices improve. I recently spoke with an operator in Iowa who is leveraging these advantages to invest in productivity improvements that capitalize on their natural cost benefits. Corn costs typically run $0.25-0.50 per bushel below national averages, while soybean meal costs are often $15-25 per ton lower.
The weather volatility is real, though. Spring flooding and summer droughts are becoming more frequent, making feed storage and climate adaptation investments increasingly important. Operations that have invested in climate-controlled storage and comprehensive drainage systems are maintaining more consistent performance.
Western Adaptation
Western operations face unique challenges, including water costs and extreme climate conditions, but improved milk prices provide better margins to invest in solutions. The higher price environment makes water-efficient technologies and advanced cooling systems more economically attractive.
Scale advantages in Western operations become more pronounced during favorable market periods. Operations with 1,000+ cows can justify technology investments that smaller operations can’t, including robotic milking systems, precision feeding, and comprehensive environmental monitoring.
Water costs and availability create unique constraints, though. In California, water costs can add $0.15-$ 0.25 per hundredweight to production costs, making water-efficient technologies and management practices essential.
Northeast Premium Markets
Northeast operations benefit from both improved national pricing and continued opportunities for premium pricing through direct marketing channels. The combination creates opportunities for value-added processing and direct sales that capture additional margins beyond commodity pricing.
Direct marketing opportunities are particularly strong in the Northeast. Operations with access to metropolitan markets can often capture premiums of $3 to $ 5 per hundredweight through direct sales to processors serving premium retail channels.
The key is balancing these opportunities with risk management. Higher costs mean less margin for error, making programs like DMC and DRP particularly valuable for smaller operations that can’t absorb major market swings.
Implementation: Making It Work in Practice
Improved market conditions create opportunities, but successful implementation requires systematic approaches that build on favorable conditions rather than simply hoping they continue. Here’s what I’m seeing work across different types of operations…
Quick Wins in a Stronger Market
DMC and DRP Optimization: This is something you can tackle this month. Review and optimize coverage levels based on current price forecasts and margin projections. Higher baseline prices may justify different coverage strategies than were appropriate during lower price periods.
The key is analyzing your actual feed costs and production levels to determine optimal coverage. Operations with lower feed costs (typically Midwest) often benefit from higher coverage levels, while operations with higher feed costs might optimize at lower coverage levels with supplemental private insurance.
Component Premium Analysis: Evaluate component premiums across multiple buyers to capture the full benefit of current market strength in butter and NDM pricing. Market improvements often create premium opportunities that weren’t available during weaker periods.
I know this sounds basic, but premium differences of $0.30-0.50 per hundredweight for the same milk in the same region are more common than you might think. It’s worth a few phone calls to make sure you’re getting paid fairly for what you’re producing.
Feed Efficiency Quick Wins: With stable corn prices and lower soybean meal costs, implement feeding improvements that deliver immediate returns while establishing long-term efficiency gains. Working with your nutritionist to evaluate current feeding practices often identifies immediate opportunities.
Simple changes like improving TMR mixing consistency, adjusting feeding schedules, or optimizing bunk management can deliver returns of $0.25-0.50 per hundredweight within 30-60 days.
Medium-Term Strategic Investments
Technology Integration: Use improved cash flows to implement precision agriculture and automation systems that provide enduring operational benefits. Current market conditions make these investments more attractive from both cash flow and ROI perspectives.
The most successful implementations I’ve seen start with specific problems—such as improving reproduction efficiency, reducing feed waste, or optimizing component levels—and then select technologies that address those problems. Operations that try to implement everything at once typically struggle with integration and training challenges.
Current implementation costs vary significantly by technology and operation size. Precision feeding systems typically run $15-25 per cow for smaller operations (under 500 cows) and $8-12 per cow for larger operations. Wearable monitoring systems cost $40-60 per cow initially, with ongoing costs of $8-12 per cow annually.
Infrastructure Development: Invest in climate adaptation systems, feed storage improvements, and facility upgrades that address multiple operational challenges while market conditions support capital investments.
The key is prioritizing investments that address multiple challenges simultaneously. A climate-controlled feed storage facility addresses feed quality, waste reduction, and weather resilience. Comprehensive cooling systems enhance animal comfort, improve milk quality, and increase reproduction efficiency.
Market Diversification: Explore direct marketing opportunities and value-added processing options that can provide revenue stability and premium pricing beyond commodity markets.
The key is to start small and build based on market response and operational capacity. Many successful diversification efforts begin with 10-15% of production and expand based on demonstrated success.
Long-Term Competitive Positioning
Genetic Improvement Programs: Implement breeding strategies focused on climate tolerance, feed efficiency, and component quality that deliver advantages across multiple market cycles.
The most successful programs integrate heat tolerance with production traits and component quality. Current genetic evaluation tools make it possible to select for multiple traits simultaneously without sacrificing overall performance.
Research from various land-grant universities suggests that operations selecting for heat tolerance genetics are seeing 10-15% better summer performance compared to conventional genetics, with some programs reporting even better results during extreme heat events.
Operational Scaling: Evaluate expansion opportunities or efficiency improvements that leverage improved market conditions while establishing long-term competitive positioning.
Whether expanding or optimizing existing facilities, scaling decisions require a comprehensive analysis of market conditions, financing, and management capacity. The most successful expansions I’ve seen are those that maintain focus on operational excellence while growing.
Where the Industry Goes from Here
The improved milk price forecasts in the July WASDE report provide welcome relief for dairy producers, but they also reinforce the importance of building operations that can thrive regardless of market conditions. And honestly, that’s what separates the survivors from the thrivers in this business.
Success Patterns in Volatile Markets
The most successful operations treat improved market conditions as opportunities to invest in systems that provide advantages during both good times and challenging periods. They’re not just celebrating better prices—they’re using the improved cash flows to create sustainable operational benefits.
What’s particularly interesting is how these operations approach market improvement. They recognize that favorable conditions are temporary and use them strategically to strengthen their foundations for whatever comes next. According to research from several dairy economics programs, operations that invest during favorable periods consistently outperform those that simply ride the cycles.
I’ve been tracking patterns across different regions and operation sizes, and the farms that consistently perform well share several characteristics: they treat risk management as a core business function, invest in people and systems that can adapt to changing conditions, maintain focus on operational excellence while implementing new strategies, and build relationships with service providers who understand their specific challenges.
Building Sustainable Advantages
The dairy operations that will thrive over the long term are those that use favorable market periods to invest in operational excellence, technology adoption, and protective systems that provide advantages regardless of market conditions.
Current price improvements create opportunities, but smart producers are using this period to build resilient operations that can handle whatever volatility the future brings. Because if there’s one thing we know for certain about dairy markets, it’s that they’ll keep changing.
Your Strategic Decision Point
The question isn’t whether to celebrate the improved milk price forecasts—it’s whether you’ll use this opportunity to create enduring operational advantages or simply hope that favorable conditions continue. And frankly, hope isn’t much of a business strategy.
The July WASDE report shows all-milk prices at $22.00 per hundredweight for 2025, providing improved margins that create strategic opportunities. But markets that can swing from pessimistic to optimistic forecasts within months will inevitably swing back, and the operations that prepare for that reality will be the ones that thrive long-term.
Here’s what I keep coming back to in conversations with producers across the country: the tools, strategies, and support systems exist today to build resilient, profitable operations that can prosper in any market environment. The question is whether you’ll implement these strategies while market conditions provide the cash flow flexibility to do so effectively.
Current market improvements provide a window of opportunity to build operational resilience, but that window won’t stay open indefinitely. The operations that recognize this reality and act strategically now will be positioned to thrive regardless of what market conditions emerge next.
Are you building operational resilience with the improved resources these market conditions provide, or are you simply hoping that good times continue? The choice is yours, but the opportunity to create sustainable advantages may not present itself again soon.
Because at the end of the day, the producers who build financial fortresses during good times are the ones who sleep well during bad times. And in this business, that peace of mind is worth more than any short-term price improvement.
Strategic Action Guide for Current Market Conditions
Immediate Opportunities (Next 30 Days): Start by optimizing your DMC and DRP coverage based on that $22.00 per hundredweight baseline pricing. Take a hard look at component premium capture with current butter and NDM strength—you might be surprised what you find. Implement feed efficiency improvements while corn costs are stable, and honestly assess technology investment opportunities now that cash flow has improved.
Strategic Investments (Next 3-6 Months): This is the time to develop those integrated protection systems we’ve been talking about. Build climate adaptation infrastructure that’ll serve you for decades. Integrate precision agriculture technology that addresses your specific challenges, not just the latest gadgets. Evaluate market diversification opportunities that make sense for your operation and region.
Long-Term Competitive Positioning (6-24 Months): Establish genetic selection programs for climate resilience and efficiency—this is a marathon, not a sprint. Complete operational scaling or efficiency optimization projects while financing is favorable. Implement advanced automation and data analytics that’ll give you an edge for years to come. Develop sustainable operational advantages that’ll serve you through multiple market cycles.
Key Performance Metrics: Monitor margin stability across market cycles, track operational efficiency improvements, measure component optimization progress, and evaluate technology ROI achievement. But remember—the best metrics are the ones that help you make better decisions, not just track what happened.
KEY TAKEAWAYS
Lock in profitable margins while you can: With DMC and DRP programs, you can optimize coverage levels based on $22/cwt baseline pricing—higher baseline prices justify different strategies than what worked during $19-20 milk, potentially saving thousands in premium costs while improving protection
Feed efficiency pays double right now: Precision ration formulation delivers $0.75-1.25/cwt savings when corn’s stable at $4.20/bushel and soybean meal dropped $20 to $290/ton—implement these systems during favorable cash flow periods for 18-24 month paybacks that compound over time
Component optimization hits different in this market: Butter and NDM strength means each 0.1% butterfat increase adds $0.15-0.20/cwt to milk checks—work with your nutritionist now to capture these premiums while markets support the investment in better genetics and feeding programs
Climate adaptation ROI accelerates with higher milk prices: Cooling systems that normally pay for themselves in 18-24 months are hitting 12-18 month paybacks when milk revenue per cow increases—invest in heat stress management while cash flows support the capital expenditure
Regional advantages compound during price improvements: Midwest operations with $0.25-0.50/bushel corn advantages and Northeast farms capturing $3-5/cwt direct marketing premiums should leverage these natural benefits to implement technology and infrastructure that smaller margins couldn’t justify
EXECUTIVE SUMMARY
Look, I get it—seeing $22.00 per hundredweight for 2025 milk prices feels pretty good after the doom and gloom we’ve been hearing. But here’s the thing most producers are missing: the smart money isn’t celebrating these WASDE numbers, they’re using this window to build operations that can handle whatever volatility comes next. We’re talking about precision feeding systems that can save you $0.75-1.25 per hundredweight while corn sits stable at $4.20 per bushel, and component optimization strategies that add $0.15-0.20 per hundredweight for every 0.1% butterfat increase. The global dairy markets are showing us that what goes up comes down fast—just look at how we swung from pessimistic to optimistic forecasts in months. European producers learned this lesson the hard way after milk quotas ended, and the ones who survived built fortress operations during good times, not bad ones. You’ve got maybe 18 months of favorable conditions to implement the risk management systems, climate adaptation, and operational improvements that’ll keep you profitable when markets inevitably swing back—don’t waste it hoping good times continue.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Butter tanked 5.5¢ yesterday but smart farmers made $1,250/month on feed costs – here’s how to capitalize
EXECUTIVE SUMMARY: Look, I get it… seeing butter drop 5.5¢ in one day makes your stomach turn. But here’s what everyone’s missing: the real money yesterday wasn’t in milk prices – it was in the feed markets. Soybean meal crashed $11.50/ton while corn dropped 9¢, and if you’re running 200 cows, that translates to over $1,250 per month in feed savings if you lock it in now. Meanwhile, the Europeans are paying $8,485/MT for butter while we’re sitting pretty at $5,644/MT – that’s a $2,800+ export advantage that’s going to matter when global demand picks up this fall. The USDA’s projecting Class III futures above $18.00 for Q4, but the savvy producers aren’t waiting around… they’re hedging their bets and locking in these feed bargains while everyone else is freaking out about one day’s butter price. You should be doing the same thing.
KEY TAKEAWAYS
Feed Cost Arbitrage Opportunity: Soybean meal’s 85th percentile pricing just collapsed – lock in 60-90 days of protein needs immediately and pocket $15-20/ton savings. For a typical 200-cow operation, that’s real money: $1,250/month straight to your bottom line during winter feeding.
Component Premium Play: Class IV’s trading at a $1.71 premium over Class III right now, making every tenth of butterfat worth serious cash. Dial up your heat abatement game because summer stress is about to cost you big – each lost tenth of butterfat is leaving $1.00+ per cwt on the table.
Export Window Opening: U.S. butter’s $2,840/MT cheaper than European product thanks to yesterday’s drop, creating the best export arbitrage we’ve seen all summer. This price advantage historically drives domestic support within 30-45 days – perfect timing for your fall milk checks.
Risk Management Sweet Spot: Q4 Class III futures still holding above $18.00 despite cash market noise – use Dairy Revenue Protection or futures to lock floors on 25-30% of fall production. With USDA forecasting only 0.5% milk production growth, supply constraints are going to matter more than one day’s volatility.
Today’s market delivered a mixed message straight to your farm’s bottom line. Butter’s sharp 5.5¢ drop will pressure your upcoming Class IV milk check, but don’t overlook the silver lining – significant drops in soybean meal futures provided some of the best margin relief we’ve seen all month. Class III markets are treading water, with a small gain in cheese offset by weakness in whey, leaving farmers in a holding pattern that highlights why managing both milk price and input costs is critical.
Today’s Price Action (Make It Real for Farmers)
Product
Price
Today’s Move
Month Trend
Real Impact on Your Farm
Cheese Blocks
$1.6950/lb
+0.25¢
+0.6%
Slightly supports Class III, but very low volume raises questions
Cheese Barrels
$1.7275/lb
NC
+1.0%
The market is taking a breather, waiting for a clearer signal
Butter
$2.5625/lb
-5.50¢
-2.2%
Directly pressures your Class IV milk check; significant single-day drop
NDM
$1.2675/lb
NC
+0.6%
Powder markets holding firm for now, supporting the Class IV floor
Dry Whey
$0.5900/lb
-1.50¢
-1.2%
This weakness is a direct drag on the Class III price calculation
Market Commentary
The story of the day was butter’s sharp sell-off. After holding strong above $2.60, the market broke decisively lower on decent volume. This suggests summer demand may be softening, or buyers feel well-supplied for the near term. This will weigh heavily on the July Class IV price.
On the Class III side, the picture’s murky. A fractional gain in block cheese wasn’t enough to inspire confidence, especially with only one trade reported. More concerning is the 1.50¢ drop in dry whey, which acts as an anchor on Class III pricing. The fact that July Class III futures managed to close up $0.10 to $17.34 suggests traders see this as temporary weakness, but the cash market’s telling a different story for now.
Trading Floor Intelligence & Market Mechanics
Bid/Ask Spreads & Volume Analysis
Butter: Sellers were motivated. Even after 6 trades, there were still 4 unfilled offers versus 5 bids, but the price drop indicates sellers were hitting bids aggressively
Cheese Blocks: Only one load traded, meaning that price gain has very little conviction behind it
Barrels & NDM: Zero trades in barrels and the 3-to-1 offer-to-bid ratio in NDM suggest a general lack of buying enthusiasm
Order Book Analysis
Butter sliced right through the psychological support level of $2.60/lb. The next key level to watch will be around $2.55. For cheese, resistance remains firm near $1.70 on the blocks.
Intraday Patterns
The butter market saw a wave of late-day selling, which accelerated the drop into the close. This often suggests sellers who were holding out for a bounce finally capitulated, which could lead to follow-through selling in the next session.
Global Market Competitive Landscape
International Production Watch
EU: Milk production is past its seasonal spring flush peak and now on a downward trend, which should tighten global supplies, particularly for cheese and butter
New Zealand: Production remains at seasonal lows during their winter months. Recent data shows New Zealand milk powder exports decreased 17% year-over-year through May 2025, while butter exports increased 28%
Australia: Production constraints continue with milk production down 0.4% from July 2024 through April 2025. Australian milk export volumes totaled 136,089 metric tons, down 11.3% from the previous year
Where We Stand Globally
Today’s butter price drop to ~$2.56/lb ($5,644/MT) makes U.S. butter more competitive against European offers. Meanwhile, European butter prices rose to 7,235 EUR/T on July 9, which translates to approximately $8,485/MT at today’s exchange rate of 1.1725 USD/EUR, maintaining a significant premium over U.S. offers and creating a favorable export window for American producers.
U.S. NDM at $1.2675/lb ($2,794/MT) remains competitive in key markets, with U.S. dairy exports starting 2025 with a 0.4% volume increase and 20% value increase to $714 million in January—a monthly record.
Feed Costs & Your Bottom Line
The best news for your operation today came from the feed markets:
Corn (Dec ’25): $4.16/bu (down 9¢)
Soybean Meal (Dec ’25): $282.90/ton (down $11.50 from Monday)
Milk-to-Feed Price Ratio Improvement
While milk prices were stagnant to lower, the significant drop in soybean meal costs provides critical margin relief. Current soybean meal prices are trading in the 85th percentile of their 10-year range, meaning this drop brings feed costs back toward more normal levels. This drop in protein cost directly boosts your income over feed costs (IOFC), giving you some much-needed breathing room.
Production & Supply Reality Check
The latest USDA data shows milk production trends entering summer with cautious optimism. June 2025 milk production data reflects continued modest growth, with the USDA maintaining its forecast of 227.3 billion pounds for 2025, up 0.4 billion pounds from previous projections. Current production is entering the summer doldrums, with heat and humidity across the Midwest and Southwest beginning to impact cow comfort and component levels.
U.S. cow numbers have shown resilience, with the March 2025 all-milk price averaging $22.00 per cwt, up $1.30 year-over-year. Strong margins in early 2025 – with the Dairy Margin Coverage (DMC) farm margin reaching $11.55 per cwt in March, $1.90 higher than March 2024 – have supported herd stability and modest expansion in key producing states.
The current weather pattern is the most significant factor for supply, as it will dictate both milk volume and the quality of homegrown forages for the rest of the summer.
What’s Really Driving These Prices
Domestic Demand
Food Service: Cheese demand remains a bright spot, driven by summer travel and dining out
Retail: Butter sales appear to have hit a summer lull after the spring baking season, contributing to today’s price drop
Export Markets – The Complete Story
Mexico Deep Dive
Our number one customer continues to be a steady buyer of U.S. cheese and NDM. U.S. cheese exports to Mexico grew just 1% in January 2025, but the stability of this relationship remains crucial for price support.
Southeast Asia & Global Expansion
The real export story is diversification. January 2025 cheese exports jumped 22% to 46,680 MT—a January record—with growth coming from Japan, Bahrain, Panama, and other diverse destinations. This broad market diversity reduces our dependence on any single buyer and supports stronger pricing power.
Risk Scenario Analysis
Bull Case: If current export diversification continues and EU/New Zealand production constraints persist, U.S. dairy could see Class III prices reach $19.00+ by Q4 2025.
Bear Case: A significant U.S. dollar rally or Mexican economic disruption could push Class III below $16.00, making risk management critical.
Base Case: Current USDA forecasts project Class III averaging $17.50-18.50 and Class IV at $18.75-19.75 through 2025.
Forward-Looking Analysis with Official Forecasts
USDA Projections Integration
The USDA’s latest forecasts show a more nuanced picture than previous projections. The revised 2025 milk production forecast of 227.3 billion pounds reflects both modest herd expansion and improved productivity. While milk production growth of 0.5-0.8% appears modest, regional variations are significant. The forecast indicates tighter supplies could support prices, but international competition remains a key variable.
Futures Market Guidance
Class III Futures: August settled at $17.65 and September at $17.90, indicating the market expects prices to climb into the fall
Class IV Futures: August settled at $19.08, showing that despite today’s cash drop, traders aren’t panicking and still expect powder to support the price
Current futures indicate a $1.71 premium for Class IV over Class III, making high-component production strategies particularly attractive.
Regional Market Spotlight: The Upper Midwest (WI, MN)
For producers in Wisconsin and Minnesota, the block and whey prices are paramount. Today’s fractional gain in blocks is welcome but offers little comfort when offset by the steep drop in whey values.
Regional production data shows Wisconsin and Minnesota maintaining steady output, with processing plants reporting 95%+ capacity utilization to meet summer demand. Excellent growing conditions have local feed supplies in good shape, but heat and humidity are starting to be a concern for production. Local cooperatives are encouraging members to forward contract 25-30% of fall production, taking advantage of strong deferred futures prices.
What Farmers Should Do Now
Feed Purchasing – Act Now
This is a clear opportunity. The significant drop in soybean meal futures is a strong signal to contact your nutritionist and feed supplier to lock in a portion of your fall and winter protein needs. With meal prices dropping from elevated levels, this represents potential savings of $15-20 per ton compared to recent months. For a 200-cow herd consuming approximately 2.5 tons of soybean meal per month, locking in these lower prices could translate to $1,250 in feed cost savings per month this winter – money that goes straight to your bottom line.
Hedging Strategy
With Class III futures for Q4 2025 still holding above $18.00, consider using Dairy Revenue Protection (DRP) or layering in some futures/options positions to protect a floor on a portion of your fall production. The $1.71 Class IV premium makes component-focused strategies particularly attractive.
Production Focus
With heat setting in, double down on heat abatement. Every tenth of a pound of butterfat you can save will be critical, especially with a weaker butter price. The current Class IV premium means butterfat optimization could add $1.00+ per cwt to your milk check.
Industry Intelligence
Regulatory Update
Keep an eye on the ongoing Federal Milk Marketing Order pricing formula discussions. Any changes to component values or make-allowances could have long-term impacts far greater than any single day’s trading.
Cooperative Note
Several Midwest cooperatives have announced their component values for June milk, reflecting the stronger cheese prices from last month, which should result in a welcome bump on the checks now arriving.
Export Infrastructure
The record January export performance demonstrates the value of continued investment in export infrastructure and market development. The 22% increase in cheese exports shows the benefits of market diversification strategies.
Put Today in Context
Today’s 5.50¢ drop in butter was the largest single-day loss in over a month and pulled the weekly average down. This move is a departure from the steady-to-firm trend we’ve seen since May, representing a price level that’s still 8.4% higher than a year ago but down 2.96% from recent peaks.
Conversely, the cheese market continues its slow, sideways grind. Compared to last year, current Class III values are lagging, but lower feed costs are keeping 2025 margins ahead of where they were in the summer of 2024. The milk production forecast showing only modest growth suggests supply constraints could support prices into the fall.
Today wasn’t a seismic shift, but it was a clear warning shot on the Class IV side and a gift on the feed side. The key takeaway is that successful dairy operations in 2025 will need to actively manage both sides of the margin equation—milk pricing and feed costs—rather than relying on either factor alone.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
US Dairy Market in 2025: Butterfat Boom & Price Volatility – Demonstrates how to capitalize on the $1.71 Class IV premium discussed today by implementing strategic breeding decisions and component optimization techniques that could add $1.00+ per cwt to your milk check.
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Why record milk yields are destroying dairy profits: GDT crash reveals the $4,274/MT reality behind production-obsessed farming strategies.
EXECUTIVE SUMMARY: The dairy industry’s obsession with maximum milk production has finally hit the wall of economic reality, proving that bigger isn’t always better when markets collapse. Global Dairy Trade auction results delivered a brutal 4.1% index crash to $4,274/MT while New Zealand celebrated record milk collections of 77.0 million kgMS (+7.5% year-over-year) – the perfect storm of supply overwhelming demand. With Chinese farmgate prices collapsing 8.0% to just 3.05 Yuan/kg and WMP prices plummeting 5.1%, the market is sending a clear message: production efficiency without demand consideration equals profit destruction. Ireland’s explosive 6.5% milk collection growth and New Zealand’s 18.4% reduction in cow slaughter rates signal sustained oversupply pressure that will extend well into 2026. The disconnect between Singapore Exchange futures (+0.8%) and physical GDT prices (-5.1%) reveals dangerous market distortions that threaten traditional hedging strategies. Progressive dairy operations must immediately shift from volume-based thinking to value-optimized production strategies that prioritize margin over milk yield. Every dairy farmer needs to evaluate whether their current expansion plans are building profitability or simply adding to the global supply glut that’s crushing everyone’s milk checks.
KEY TAKEAWAYS
Implement aggressive production hedging strategies: Forward contract 40-60% of production at current Class III levels (~$17.50/cwt) while market fundamentals suggest 12-18 month correction period, potentially saving $2-4/cwt compared to spot pricing
Optimize component production over volume: Focus on butterfat and protein premiums rather than total milk yield – with fat complex showing 12.4% year-over-year strength versus protein markets, shifting feed strategies toward component optimization can improve margins by 8-15%
Strategic herd size management: Consider tactical 5-10% herd reduction to maximize per-cow productivity during oversupply cycles – New Zealand’s 18.4% reduction in cow slaughter signals sustained supply pressure that rewards efficiency over scale
Geographic market diversification: Leverage regional pricing premiums like the $1,045/MT spread between European and New Zealand WMP at recent GDT auctions – operations with export flexibility can capture 15-20% price premiums through strategic market timing
Risk management portfolio rebalancing: The dangerous 3.1% basis divergence between SGX futures ($3,752/MT) and GDT physical prices ($3,859/MT) demands immediate hedging strategy review – traditional derivatives may not provide expected downside protection in current market structure
Let’s face it – while you were focused on breeding decisions and feed costs, the global dairy market just delivered a wake-up call that’s going to hit your milk check harder than a poorly-timed breeding decision.
The first week of July 2025 marked the moment when months of building supply pressure finally overwhelmed global dairy demand, with the Global Dairy Trade (GDT) auction delivering its most devastating blow of the year – a 4.1% index crash to $4,274/MT. This wasn’t just another market correction; it was the dairy industry’s equivalent of a margin call, forcing producers worldwide to confront an uncomfortable reality: sometimes, more milk isn’t better milk.
Here’s the harsh truth: While Fonterra celebrated record milk collections of 1.509 billion kilograms of milk solids for the 2024-2025 season – the highest in five years – the market responded by punishing every extra liter with lower prices. The combination of New Zealand’s explosive 7.5% production growth and Ireland’s 6.5% surge has created a supply tsunami that’s drowning global prices.
The Numbers Don’t Lie: When Success Becomes Failure
Why are we celebrating record production when it’s destroying our own profitability? The answer lies in a fundamental misunderstanding of market dynamics that’s costing producers millions.
Fonterra’s May collections alone reached 77.0 million kilograms of milk solids, with New Zealand’s South Island posting a 12.3% increase compared to the previous year. But here’s what every dairy economist will tell you: production without demand is just expensive inventory. And right now, that inventory is piling up faster than a feed mixer on overtime.
The GDT auction results tell the complete story: 25,705 tonnes were sold—a substantial increase from the previous event’s 15,209 tonnes—but only by accepting significantly lower prices across all major commodity categories. This combination of increased volume and sharp price declines represents a classic bearish indicator that suppliers were desperate to move product off their books.
China’s Demand Collapse: The $50 Billion Question
Chinese farmgate milk prices fell to 3.05 Yuan per kilogram in June 2025, a 8.0% year-over-year decline. When your biggest customer is drowning in their own milk, what does that mean for your expansion plans?
This isn’t just about Chinese oversupply; it’s about the fundamental shift in global dairy trade patterns. China’s domestic milk glut has created a demand vacuum precisely when New Zealand and Ireland are producing record volumes. The result? A perfect storm where abundant supply meets non-existent demand.
The Chinese Ministry of Agriculture and Rural Affairs reported that farmgate prices stabilized at “bottom levels” during the fourth week of June. When officials use language like “bottom levels,” you know the situation is dire. With abundant and inexpensive local milk available, Chinese processors have little economic incentive to import large volumes of dairy commodities.
The Forward Indicators Nobody Wants to Talk About
Here’s the data point that should keep every dairy producer awake at night: New Zealand dairy cow slaughter rates plummeted 18.4% in May 2025 to only 137,983 head. Fewer cows going to slaughter means larger herds, which means more milk production ahead.
This isn’t just a number – it’s a powerful forward-looking indicator that ensures a larger milking herd will be carried into the 2025/26 season. The 12-month rolling slaughter figure is now down 11.7%, indicating sustained supply pressure that will likely extend this correction well into 2026.
Commodity Breakdown: Where the Pain Hit Hardest
Whole Milk Powder (WMP) took the heaviest beating, with the index collapsing 5.1% to $3,859/MT. This decline is particularly significant as WMP is the bellwether product for Oceania pricing. Fonterra’s Regular WMP for Contract 2 settled at $3,875/MT, a 4.67% drop from the prior event.
The fat complex wasn’t spared either. Butter prices fell 4.3% to $7,522/MT, while Anhydrous Milk Fat dropped 4.2% to $6,928/MT. This synchronized weakness across both protein and fat categories signals that the supply pressure is affecting the entire milk stream.
Even cheese markets felt the pressure, with Cheddar falling 2.8% to $4,860/MT and Mozzarella dropping 0.2% to $4,790/MT. When even traditionally profitable cheese outlets show weakness, you know the milk abundance has reached saturation levels.
The Bullvine Bottom Line: Strategic Actions for Different Operations
For Large-Scale Operations (500+ cows):
Implement aggressive forward contracting for 40-60% of production using current price levels as a floor
Evaluate component optimization strategies to maximize butterfat and protein premiums while global markets remain weak
Consider tactical herd reduction of 5-10% to optimize per-cow productivity over total volume
For Mid-Size Operations (100-500 cows):
Focus on cost control and efficiency gains rather than expansion during this correction period
Secure feed cost hedging while grain markets remain volatile and before dairy margins compress further
Prioritize cash flow management over growth investments until market conditions stabilize
Consider cooperative marketing agreements to improve bargaining power against processors
Evaluate niche market opportunities that command premium pricing and aren’t tied to commodity fluctuations
Regional Market Dynamics: The Dangerous Divergence
European markets are reflecting the same supply pressure reality. EU butter prices managed only a negligible €10 (+0.1%) increase to €7,460/MT, while French Whole Milk Powder collapsed €300 (-6.7%) to €4,250/MT. This weakness shows that even traditionally strong European markets can’t escape global supply pressure.
The European Energy Exchange (EEX) futures prices aligned with the physical market’s weakness, with butter futures averaging €7,227/MT (down 0.4%) and SMP futures at €2,480/MT (down 0.3%). However, here’s where it gets interesting—and dangerous.
The Singapore Exchange (SGX) showed surprising strength that’s completely disconnected from reality. SGX WMP futures rose 0.8% to $3,752/MT while GDT physical prices crashed to $3,859/MT. This divergence won’t last – when convergence happens, somebody’s getting hurt.
The Uncomfortable Truth About Production Efficiency
Progressive dairy operations have spent decades optimizing for maximum milk production per cow. But what happens when maximum production becomes maximum pain? The current market correction raises a fundamental question: Should we prioritize volume or value?
The reality check is brutal: Ireland’s May collections jumped 6.5% year-over-year to 1.218 kilotonnes, with cumulative 2025 collections reaching 3.68 million tonnes, a 7.9% year-over-year increase. Poland achieved an all-time high for May milk solids production at 90.5 kilotonnes, up 2.0% year-over-year.
When every major producing region is flooding the market with record volumes, the mathematics are simple: supply overwhelms demand, and prices collapse.
Market Outlook: The Reality Check
The SGX-GDT basis divergence demands immediate attention. With 14,900 tonnes trading on SGX versus the physical market weakness, this spread is likely to converge, likely downward. When it does, the price movement could be swift and brutal.
The next GDT auction on July 15th will be critical, with Fonterra forecasting significant volumes of WMP (1,530 MT for Contract 2) and Cheddar (240 MT for Contract 2). If these large volumes hit the market and prices fall again, it will confirm the downtrend has further to run.
The Next 90 Days: Critical Decision Points
What should dairy producers be watching? Three key indicators will determine whether we’re seeing a correction or a crash:
The July 15th GDT auction results – with large volumes of whole milk powder and cheddar forecasted
Chinese import data for June and July – any sign of demand recovery could stabilize prices
Northern Hemisphere milk production data – whether seasonal declines materialize or production remains stubbornly high
The Bullvine Bottom Line
The global dairy market has undergone a fundamental shift from supply-constrained strength to demand-overwhelmed weakness. The 4.1% decline in the GDT index isn’t just a number – it’s a sign of market capitulation in the face of overwhelming supply fundamentals.
Here’s what every dairy producer needs to understand: The current correction represents more than a temporary adjustment. With New Zealand’s 18.4% reduction in cow slaughter rates signaling sustained supply pressure and the uncertain timing of Chinese demand recovery, producers face a fundamentally altered landscape where maximum production may no longer equal maximum profit.
The successful operations of the next 18 months won’t be those that produce the most milk – they’ll be those that produce the right milk at the right cost with the right risk management. The market has spoken, and it’s saying that bigger isn’t always better.
The dairy industry’s uncomfortable truth? Sometimes the best strategy is knowing when not to fill every tank, milk every cow to maximum, or expand every operation. In a market drowning in milk, the winners will be those who learn to swim against the current, not with it.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Feed Smart: Cutting Costs Without Compromising Cows in 2025 – Reveals practical strategies for capitalizing on declining feed costs while maintaining production, demonstrating how to save up to $470/cow/year through precision nutrition and strategic procurement during market volatility.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – Demonstrates how smart dairy technologies can slash mortality 40% and boost yields 20%, providing competitive advantages that help farms survive margin compression through automation and data-driven decision making.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Washington handed dairy farmers $68B, but 80% won’t use it. Smart genomic testing + DMC coverage = $4,000 annual savings per 280-cow operation.
EXECUTIVE SUMMARY: Most dairy producers are about to waste the biggest policy gift in a decade while their smarter competitors capitalize on enhanced risk management combined with record component production. The “One Big Beautiful Bill” delivers $68.3 billion in agricultural program changes that fundamentally restructures dairy risk management, increasing Tier I DMC coverage from 5 million to 6 million pounds annually, yet based on historical uptake patterns, most operations will leave money on the table. Component levels have reached unprecedented highs with butterfat averaging 4.33% and protein at 3.36% in March 2025, representing 30.2% butterfat growth and 23.6% protein growth since 2011 while milk volume increased only 15.9%. European Union milk production is declining 0.2% in 2025 while U.S. operations benefit from enhanced DMC protection at just $0.15 per hundredweight for $9.50 coverage, creating unprecedented competitive advantages for producers who combine genetic advancement with strategic risk management. The question isn’t whether this policy works, it’s whether you’ll implement it before your competitors figure out the genomics-plus-government-support equation that’s reshaping dairy profitability.
KEY TAKEAWAYS
Enhanced DMC Coverage Delivers Immediate ROI: Operations producing up to 6 million pounds annually can now insure entire production at Tier I rates, potentially saving $3,000-4,000 annually in premium costs while gaining comprehensive $9.50 per hundredweight margin protection, yet only 19% of large-scale farms have adopted robotic milking systems despite proven economic returns.
Component Revolution Outpaces Volume Strategy: Butterfat production surged 30.2% since 2011 versus 15.9% milk volume growth, with genomic testing enabling 12% higher milk solids and 8% lower feed costs. Every 0.1% butterfat increase adds $6,570 monthly to a 1,000-cow operation when butterfat commands $3.06 per pound, yet most producers still chase volume over value.
Technology Adoption Gap Creates Competitive Moats: While global precision dairy farming markets exceed $5 billion in 2025, USDA reports only 19% adoption of robotic milking on large-scale farms. Forward-thinking operations combining enhanced DMC protection with automated milking systems achieve 150-240 cow efficiency per 3-4 robotic units, creating sustainable advantages over traditional competitors.
Global Market Positioning Window Closing: U.S. operations benefit from $8 billion in new dairy processing capacity through 2027 while EU production declines 0.2%, but 2025 DMC enrollment deadline passed March 31. Producers must audit genomic testing programs, evaluate technology investments, and prepare for 2026 enrollment to capitalize on component premiums and enhanced risk management before international competitors adapt.
Feed Cost Arbitrage Opportunity: With corn at $4.60 per bushel and enhanced DMC coverage protecting downside risk, smart operators can lock favorable feed contracts while leveraging updated 2021-2023 production baselines that reflect modern genetic gains. This combination of enhanced risk management plus strategic feed positioning creates unprecedented profit protection during volatile market conditions.
The U.S. Senate just passed the most significant dairy policy overhaul in a decade, and frankly, most of you won’t take advantage of it. The “One Big Beautiful Bill” includes $68.3 billion in agricultural program changes over 10 years that fundamentally restructure risk management for dairy operations nationwide. However, if history is any indication, too many producers will likely leave money on the table.
Here’s the reality: Washington doesn’t often get dairy policy right, but when it does, smart operators capitalize, while others complain about the paperwork. The enhanced Dairy Margin Coverage (DMC) program, launched in 2025, offers benefits that could fundamentally improve your operation’s financial resilience, provided you’re willing to challenge conventional thinking about government programs.
Why This DMC Enhancement Actually Matters (Unlike Previous Attempts)
Let’s cut through the political noise. The legislation expands DMC coverage capacity by 20%, increasing the Tier I production cap from 5 million to 6 million pounds annually. This isn’t just bureaucratic shuffling, it means operations with up to 300 cows can now insure their entire production at premium rates while accessing maximum protection levels of $9.50 per hundredweight.
However, here’s what most won’t tell you: this enhancement emerged during an unprecedented period of genetic progress. U.S. dairy operations have achieved four consecutive years of record butterfat levels, reaching a national average of 4.23% in 2024. Protein content has similarly climbed to 3.29% in 2024, marking eight consecutive annual records from 2016 to 2024.
What This Means for You: A 280-cow Wisconsin operation producing 5.8 million pounds annually can now insure their entire production at Tier I rates, potentially saving $3,000-4,000 annually in premium costs while gaining comprehensive margin protection. With current milk production forecasts reaching 227.8 billion pounds for 2025, these enhanced protections couldn’t come at a better time.
The updated production baselines represent the second game-changer. Producers can now select their highest annual milk production from 2021, 2022, or 2023 as their new coverage foundation. This addresses the reality that modern genetics and precision feeding have driven dramatic productivity gains, yet most operations still use outdated baselines that don’t reflect their actual potential.
The Component Revolution That’s Reshaping Everything
Here’s where it gets interesting. While everyone obsesses over herd size, the real money is in milk composition. The industry’s adoption of genomic testing has transformed breeding decisions, with butterfat levels increasing from 3.70% to 4.40% over the past 20 years, while protein levels have risen from 3.06% to 3.40%.
Industry Example: Recent analysis confirms that genomic testing and precision nutrition deliver up to 12% higher milk solids and 8% lower feed costs. Every 0.1% increase in butterfat can add $6,570 monthly to a 1,000-cow herd’s bottom line when butterfat commands $3.06 per pound and protein reaches $2.32 per pound.
The numbers don’t lie, and they’re jaw-dropping. From 2011 to 2024, milk production increased 15.9% while protein climbed 23.6% and butterfat increased 30.2%. This isn’t a temporary blip, but the culmination of a decades-long genetic revolution that has fundamentally transformed what comes out of our cows.
Yet here’s the contradiction nobody discusses: while component levels surge to record highs, many operations still prioritize volume over value. The enhanced DMC program rewards precision, not just production.
Technology Integration: Where Smart Money Goes
The agricultural bill’s benefits coincide with the rapid adoption of precision dairy technologies, but most operations aren’t leveraging the synergies. The global precision dairy farming market is projected to exceed $5 billion by 2025; however, the USDA reports that only 19% of large-scale farms have adopted robotic milking systems, despite their proven returns.
Automated milking systems demonstrate proven economic returns, with research confirming that AMS operations achieve comparable performance to conventional systems while typically milking 150-240 cows with 3-4 robotic units. The USDA reported robotic milking adoption on 19% of large-scale dairy farms, creating massive competitive advantages for early adopters who combine enhanced DMC protection with technological efficiency gains.
Modern high-producing operations now achieve remarkable metrics, with dry matter intake exceeding 68 pounds daily while producing over 120 pounds of energy-corrected milk. These efficiency gains, combined with enhanced DMC protection, position forward-thinking operations for sustained profitability while competitors struggle with outdated approaches.
The Transparency Initiative Nobody Saw Coming
For the first time in dairy policy history, the legislation mandates biennial surveys of processor manufacturing costs, directly addressing pricing formulas that have remained static while processing technology and costs have evolved.
Current Federal Milk Marketing Order pricing changes took effect June 1, 2025, including updated make allowances for cheese ($0.2519), dry whey ($0.2668), butter ($0.2272), and nonfat dry milk ($0.2393). These adjustments will reshape milk pricing formulas by ensuring that the make allowance calculations reflect actual processing costs rather than outdated estimates.
The national average somatic cell count now sits at 181,000 cells per milliliter, representing the lowest recorded level in decades. This reflects improved management practices and genetic selection, yet many operations haven’t capitalized on quality premiums that could dwarf traditional volume-based thinking.
Global Competitive Reality Check
While U.S. operations benefit from enhanced risk management, global competitors face constraints. European Union milk production is forecast to decline by 0.2% in 2025 due to environmental regulations, while global milk production is expected to grow by only 1.0% to 992.7 million tonnes.
U.S. operations benefit from favorable feed costs and expanding processing capacity. This competitive advantage, combined with enhanced risk management, enables U.S. producers to capture growing global demand while competitors contract.
Here’s the kicker:Over half of the increased global production is anticipated to come from India and Pakistan, which will jointly account for more than 32% of world production by 2032. U.S. technology adoption and genetic advancement create sustainable competitive moats that enhanced DMC protection helps preserve.
Implementation Strategy: What Winners Do Differently
The legislation extends critical dairy programs through 2029-2031, providing unprecedented long-term certainty. For 2025 coverage, DMC enrollment ran from January 29 to March 31, 2025.
Smart operators who enrolled by the March 31, 2025, deadline are:
Leveraging updated production baselines that reflect recent genetic gains from 2021-2023 data
Integrating genomic testing programs to maximize component production and quality premiums
Preparing for FMMO pricing changes that reshape milk pricing through transparent cost accounting
The premium structure remains unchanged:catastrophic coverage at $4 comes with no premium, while the highest level of $9.50 costs just 15 cents per hundredweight. At $0.15 per hundredweight for $9.50 coverage, Dairy Margin Coverage is a cost-effective tool for managing risk and providing security for your operations.
The Contrarian Perspective Nobody Wants to Hear
Here’s the uncomfortable truth: enhanced government support might actually encourage complacency instead of innovation. The most successful operations use risk management tools as safety nets, not business strategies.
Question for your operation: Will enhanced DMC coverage become a crutch that prevents necessary operational improvements, or will it provide the security needed to invest in transformative technologies?
The legislation’s broader SNAP reduction components create market contradictions. While Washington encourages production expansion through enhanced support, they’re simultaneously creating potential domestic demand pressures. Smart operators diversify into export markets and value-added products rather than betting everything on domestic fluid milk.
The Latest: Your Strategic Assessment for Mid-2025
The “One Big Beautiful Bill’s” $68.3 billion in agricultural program changes deliver transformative benefits to dairy producers through enhanced DMC coverage, now active for those who enrolled by the March 31, 2025, deadline. As we hit mid-2025, the industry achieves record component production and technological advancement while benefiting from enhanced risk management protection.
Your current strategic opportunities:
Audit your genomic testing program and component selection criteria to capitalize on record component premiums
Evaluate technology investments that complement enhanced risk management protection
Prepare for ongoing FMMO transparency changes that continue to reshape milk pricing formulas
Plan for 2026 DMC enrollment when the next enrollment period opens (typically January-March)
The bottom line: This legislation positions U.S. dairy operations for expanded production capacity while global competitors contract. The combination of enhanced risk management, record component production, and proven technology adoption creates the strongest financial foundation for U.S. dairy operations in over a decade.
But here’s what separates winners from whiners: Enhanced DMC coverage won’t save poorly managed operations or replace sound business fundamentals. It will, however, provide exceptional downside protection for producers who are smart enough to leverage genetic advancements, component optimization, and technological efficiency.
“We encourage producers to join the many dairy operations that have already signed up for this important safety net program,” emphasized USDA Farm Service Agency officials. “At $0.15 per hundredweight for $9.50 coverage, risk protection through Dairy Margin Coverage is a cost-effective tool to manage risk and provide security for your operations.”
The question isn’t whether Washington got dairy policy right for once, it’s whether you capitalized on their rare moment of clarity. Those who missed the 2025 deadline learned an expensive lesson about timing. Don’t let that be you when 2026 enrollment opens. The genetic revolution in component production is accelerating, technology adoption rates are climbing, and enhanced risk management tools have proven effective; the pieces are aligned for unprecedented dairy industry success if you’re positioned to capitalize on it.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
Your Milk Check Just Dropped 12% Because of Events 6,000 Miles Away – Reveals practical strategies for implementing multi-layered hedging protection (DMC + DRP + forward contracts) that complement enhanced government programs, demonstrating how to protect margins against geopolitical volatility while maximizing policy benefits.
USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers – Provides essential market intelligence on production constraints and price dynamics that directly impact DMC program effectiveness, helping producers align component optimization strategies with evolving market conditions for maximum profitability.
The Future of Dairy Farming: Embracing Automation, AI, and Sustainability in 2025 – Demonstrates how to integrate cutting-edge automation and AI technologies with enhanced risk management programs, showing practical methods for leveraging robotic milking systems and precision analytics to capture component premiums while reducing operational vulnerability.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
GDT drops 1.0% but US milk prices RISE to $21.95/cwt? The component revolution is rewriting dairy economics, butterfat tests jump 10.4% since 2020.
EXECUTIVE SUMMARY: The dairy industry’s obsession with Global Dairy Trade auction results is creating a dangerous blind spot that could cost North American producers millions in missed opportunities. While commodity milk powders crashed 2.1% in June’s GDT auction, butter surged 1.4% and cheddar cheese exploded 5.1% higher—exposing a market bifurcation that conventional wisdom completely misses. The USDA raised its 2025 all-milk price forecast to $21.95 per hundredweight even as the GDT declined, proving that domestic component-focused operations are fundamentally decoupling from Oceania’s commodity signals. The data is undeniable: average butterfat tests have climbed from 3.95% in 2020 to 4.36% by March 2025, while protein content rose from 3.18% to 3.38%—creating revenue streams that traditional volume-focused metrics can’t capture. McKinsey’s 2025 industry survey found 80% of dairy leaders expect continued volume growth, with domestic butter consumption surging 5.8% and cheese consumption up 1.5% between 2023-2024. Canadian producers under supply management saw just a 0.0237% price decrease while global markets swung wildly, demonstrating the power of strategic market positioning. Stop chasing commodity signals from halfway around the world and start building component-focused operations that capitalize on the $2.33/lb US butter advantage over EU ($3.75) and Oceania ($3.54) pricing.
KEY TAKEAWAYS
Component Revolution Delivers Real ROI: Butterfat content increased 10.4% since 2020 (3.95% to 4.36%) while protein jumped 6.3% (3.18% to 3.38%), creating revenue streams worth $0.50/cwt more than volume-focused operations—translating to $25,000+ annually for a 500-cow herd.
Strategic Risk Layering Beats Single Coverage: Combine Dairy Margin Coverage (DMC) at $9.50/cwt with Component Pricing DRP options to protect actual revenue streams rather than outdated Class III formulas—reducing basis risk by up to 40% while maintaining catastrophic downside protection.
Domestic Decoupling Creates Competitive Advantage: US butter exports surged 41% in May 2025 due to $1.42/lb price advantage over European competitors, while cheese exports jumped 6.7% in April—proving that high-component producers can profit from global market dislocations rather than suffer from them.
Precision Feeding Technology Pays for Itself: Modern feed management systems deliver documented 7-12% cost reductions while maintaining component production, generating $15,000-$25,000 annual savings for mid-sized operations—money that goes straight to the bottom line during volatile market periods.
Forward Curve Analysis Reveals Hidden Opportunities: Butter forward contracts showing backwardation (July +5.09%, August +6.09%) signal desperate current demand and potential pricing premiums for high-butterfat producers who understand market timing better than their volume-focused competitors.
The Global Dairy Trade index dropped 1.0% in June’s final auction, marking the third consecutive decline and bringing the weighted average price to $4,389 per metric tonne. But here’s what the headlines miss: while commodity milk powders crashed, butter surged 1.4% and cheddar cheese exploded 5.1% higher, revealing a market that’s not collapsing, it’s evolving.
The June 17, 2025, auction (Event 382) delivered 172 participating bidders and 110 winners purchasing 15,209 metric tonnes across 20 bidding rounds. The nearly three-hour trading session wasn’t panic selling—it was deliberate price discovery in a market learning to separate commodity volume from premium value.
The Auction Autopsy: Two Markets Hiding in Plain Sight
Let’s cut through the noise and examine what actually moved prices in those 20 bidding rounds. The 1.0% headline drop obscures a fundamental market restructuring that every North American producer needs to understand.
The damage report for commodities:
Whole milk powder: Down 2.1% to $4,084/MT
Skim milk powder: Down 1.3% to $2,775/MT
The strength in value-added products:
Butter: Up 1.4% to $7,890/MT
Cheddar cheese: Surged 5.1% to $4,992/MT
Anhydrous milk fat: Down just 1.3% to $7,276/MT
This isn’t market weakness—it’s market intelligence. Global buyers are drowning in basic milk solids while fighting for premium dairy products. The forward curve tells an even more compelling story.
Reading the Tea Leaves: What Forward Contracts Reveal
The auction’s forward pricing structure exposes the market’s true expectations. Whole milk powder showed classic contango—near-term weakness with higher future prices, suggesting oversupply now but recovery expectations later.
But butter painted the opposite picture. Near-term contracts jumped 5.09% and 6.09% for July and August delivery, while later contracts softened, with Contract 4 (October delivery) falling 2.86%. This backwardation signals desperate current demand for butterfat, with production expected to catch up eventually.
Translation: The global market is currently short on butterfat and long on basic milk solids. That’s not a crisis—that’s an opportunity for component-focused producers.
The Global Supply-Demand Tug of War
Three massive forces are reshaping dairy markets right now, and understanding them is crucial for strategic positioning.
The U.S. Production Surge
The USDA cranked up its 2025 milk production forecast by 0.7 billion pounds in April, driven by expanding cow inventories and higher yields per cow. By May 2025, U.S. production was running 1.6% higher year-over-year, flooding the commodity pool with basic milk solids.
China’s Desperate Demand
Chinese dairy imports jumped 12% year-over-year through April 2025, with February alone seeing 16% volume growth and 20% value increases. But this isn’t prosperity-driven consumption—it’s crisis management.
China’s domestic production collapsed 9.2% year-over-year in early 2025, while farm-gate milk prices hit decade lows. Rabobank calls this a “mathematical necessity” for imports, not sustainable demand growth. Chinese buyers are also stockpiling products ahead of anticipated tariffs, creating tactical rather than fundamental demand.
The Currency Factor
ANZ Bank forecasts the New Zealand dollar strengthening to an annual average of 0.640 NZD/USD through 2025. A stronger Kiwi allows New Zealand exporters to accept lower USD-denominated GDT prices while hitting their local revenue targets, creating direct mathematical pressure on the index.
Why Your Milk Check Tells a Different Story
Here’s the contrarian reality that challenges everything you’ve heard about GDT weakness: the USDA raised its 2025 all-milk price forecast to $21.95 per hundredweight, even as production surged and GDT declined.
The reason? Domestic demand is absolutely crushing it. Natural cheese consumption grew 1.5% and butter consumption surged 5.8% between 2023 and 2024. A 2025 McKinsey survey of dairy industry leaders found 80% expect continued volume growth, with executives noting “a resurgence in consumer demand for dairy”.
The Component Revolution Changes Everything
While everyone obsesses over volume, smart producers are focused on components. Average butterfat tests climbed from 3.95% in 2020 to 4.36% by March 2025, while protein content rose from 3.18% to 3.38%.
This is massive. You’re getting paid for these components, creating revenue streams the GDT can’t capture. In May 2025, U.S. butter was priced at $2.33 per pound—far below EU ($3.75) and Oceania ($3.54) levels—helping drive a 41% surge in butter exports.
Regional Reality: Why Geography Matters More Than GDT
For U.S. producers: Your pricing increasingly decouples from Oceania’s commodity auctions. Strong domestic cheese and butter demand and component premiums provide significant insulation. Even cheese exports surged 6.7% in April while powder exports fell.
For Canadian producers: You’re operating in a parallel universe. The Canadian Dairy Commission announced just a 0.0237% price decrease for 2025—essentially flat pricing while global markets swing wildly. Supply management delivers exactly what it promises: stability while others ride the volatility.
Strategic Risk Management for the New Reality
The current environment demands sophisticated risk management that goes beyond traditional approaches, as outlined in the research findings.
Layer Your Protection
For U.S. producers under 5 million pounds, maximize Dairy Margin Coverage (DMC) at the $9.50/cwt level for Tier I production. Layer Dairy Revenue Protection (DRP) with Component Pricing options on top to hedge your actual revenue streams, not just Class III prices.
Focus on Components, Not Volume
The market is screaming one message: components matter more than volume. Accelerate genetics investments favoring higher butterfat and protein yields. Precision feeding technologies can reduce feed costs by a documented 7-12% while maintaining component production.
Build On-Farm Resilience
With HPAI outbreaks in U.S. cattle and Bluetongue affecting EU herds, robust biosecurity isn’t optional—it’s insurance against catastrophic production losses. Lock in feed contracts when favorable and invest in technologies that maximize component output.
The Bottom Line
The GDT’s weakness reflects commodity oversupply, not the collapse of the dairy industry. While basic milk powders struggle, the market increasingly values butterfat, protein, and processed products—exactly where North American producers have competitive advantages.
The 2025 market isn’t about surviving a crash but positioning for a structural shift toward component value. Focus on what you can control: component production, cost management, and risk layering. Let Oceania chase commodity volumes while you build revenue streams that the GDT can’t even measure.
The global dairy trade is evolving, and the winners will be those who recognize that in a world valuing milk solids over sheer volume, your highest-testing cows just became your best competitive advantage.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
US Dairy Market in 2025: Butterfat Boom & Price Volatility – Demonstrates tactical implementation of Dairy Revenue Protection strategies and component-focused breeding decisions that directly support the risk management framework outlined in the GDT analysis, with specific hedging benchmarks and processor negotiation tactics.
The Future of Dairy Farming: Embracing Automation, AI, and Sustainability in 2025 – Explores precision feeding technologies and whole-life monitoring systems that deliver the documented 7-12% cost reductions mentioned in the component revolution strategy, with specific ROI timelines and implementation roadmaps for maximizing milk solids production.
Join the Revolution!
Join over 30,000 successful dairy professionals who rely on Bullvine Weekly for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
Cheese collapse signals 20% margin compression—but smart producers are pivoting to component premiums while others panic. $12/cwt reality check inside.
EXECUTIVE SUMMARY: The dairy industry’s “structural reckoning” has arrived, and it’s not the cyclical downturn most producers expected—it’s a fundamental shift that’s separating survivors from casualties. Despite corn trading 37% below 2023 highs, income-over-feed margins are plummeting below $12/cwt through August 2025, representing a crushing 20% compression that’s devastating unprotected operations. While domestic cheese consumption collapsed 56 million pounds in Q1 2025 and retail buyers have “gone dark,” component-adjusted production surged 3.0%—creating a $1.50/cwt premium opportunity for producers who understand the new rules. The market’s message is crystal clear: volume-centric thinking is dead, and the 9.45 million head national herd expansion is rewarding only those optimizing for butterfat (4.40%) and protein (3.40%) content. With July Class III futures crashing from $18.67 to $17.00/cwt in 48 hours, producers have exactly that long to implement DRP coverage or face potential $1.75/cwt additional pressure. This isn’t fear-mongering—it’s mathematical reality in a market where processing capacity is expanding faster than demand can absorb it. Stop chasing yesterday’s volume metrics and start maximizing today’s component premiums before your operation becomes another consolidation statistic.
KEY TAKEAWAYS
Component Premium Goldmine: Butterfat levels hitting 4.40% and protein at 3.40% are generating $0.75-$1.50/cwt premiums while fluid volume producers face margin compression—shift breeding and feeding strategies from volume to value within 30 days to capture this widening opportunity gap.
48-Hour Risk Management Window: With Class III futures dropping $1.67/cwt in two days and domestic cheese buyers completely withdrawing from markets, implementing Dairy Revenue Protection coverage for Q3/Q4 production isn’t optional—it’s survival economics against projected $1.25-$1.75/cwt additional pressure.
Feed Cost Arbitrage Play: Lock corn contracts below $4.60/bushel and soybean meal under $300/ton immediately—while feed represents your largest variable cost at 37% below 2023 highs, the revenue collapse is outpacing input savings by 3:1, making strategic procurement your only controllable margin variable.
Geographic Reality Check: Texas milk production surging 10.6% year-over-year while California drops 9.2% due to H5N1 impacts means transportation costs and regional pricing differentials are creating $2-3/cwt location advantages—evaluate your processing infrastructure alignment before competitors capture your local premium.
Export Market Lifeline: With U.S. markets decoupling from 21.5% global dairy price strength and China’s temporary tariff reduction from 125% to 10% lasting only 90 days, securing export-focused processor relationships now could determine whether you’re selling into $1.61/lb domestic weakness or $1.95/lb international strength.
Cheese blocks stage modest recovery with 1.5¢ gain, but weekly losses still exceed 5¢ as domestic buyers remain cautious. Class III futures hold near $17/cwt amid continued supply-demand imbalances threatening farm profitability through August.
Today’s Price Action & Farm Impact
Product
Price
Daily Change
Weekly Trend
Impact on Farmers
Cheese Blocks
$1.61/lb
+1.5¢
-10.4¢ (-6.1%)
Modest relief from severe Class III pressure
Cheese Barrels
$1.63/lb
+1.25¢
-9.4¢ (-5.4%)
Slight improvement in protein values
Class III (JUL)
$16.97/cwt
-$0.01
-$1.28 (-7.0%)
July milk checks under continued pressure
Butter
$2.52/lb
-1.5¢
-2.7¢ (-1.1%)
Limited Class IV support weakening
NDM Grade A
$1.25/lb
No Change
-1.9¢ (-1.5%)
Export demand is steady but fragile
Dry Whey
$0.57/lb
-0.5¢
+1.3¢ (+2.3%)
Protein markets showing relative stability
Market Commentary: Today’s cheese market provided a glimmer of hope after a devastating two-week selloff that erased over 15¢ from block values. The 17 trades in blocks represented the most active session of the week, suggesting some buyers may be testing the waters near current levels. However, the modest 1.5¢ recovery does little to offset the cumulative damage to Class III valuations, with July futures still trading below $17/cwt. The continued weakness in butter, dropping 1.5¢ today, limits any meaningful support for Class IV milk prices.
Trading Activity & Market Sentiment
Volume Analysis: Trading activity showed signs of life with 17 cheese block transactions compared to previous sessions with minimal activity. However, overall market participation remains extremely low, with bid-ask spreads widening considerably across all products.
Market Voice – Industry Perspective: According to comprehensive market analysis from industry sources, “retail cheese buyers have reportedly ‘gone dark,’ awaiting further price declines before making new purchases”. This institutional withdrawal from the market explains the persistent weakness despite modest production adjustments.
A dairy risk management consultant emphasized the urgency of current conditions, stating that producers should “implement DRP coverage for Q3/Q4 production within 48 hours” due to the rapid deterioration in market fundamentals. This unprecedented timeline reflects the severity of margin compression facing dairy operations.
Export market dynamics are also shifting, with reports indicating that “Mexican buyers are becoming more selective on pricing”, despite Mexico representing $2.47 billion in annual U.S. dairy purchases. This selectivity signals broader international pressure on U.S. competitiveness.
Feed Cost & Margin Analysis
Current Feed Situation:
Corn (September): $4.05/bushel – down 6¢ from Tuesday, offering continued cost relief
Soybean Meal (August): $279.60/ton – down $7.10 from Tuesday, providing protein cost savings
Milk-to-Feed Ratio: Currently under severe compression despite favorable feed costs
Margin Reality Check: Despite corn trading 37% below 2023 highs and soybean meal remaining manageable, income-over-feed costs are projected to plummet below $12/cwt through August 2025. This represents a crushing 20% margin compression that demands immediate attention from producers. The paradox of favorable feed costs coupled with collapsing milk revenues underscores that the current crisis is demand-driven, not cost-driven.
Production & Supply Insights
Production Surge Continues: U.S. milk production reached 19.9 billion pounds in May 2025, marking a 1.6% year-over-year increase with the national dairy herd expanding to 9.45 million head – the largest since 2021. This growth, driven by light culling rates and strong beef-on-dairy calf values, creates significant supply pressure in an already oversupplied market.
Component Quality Hits Records: Average butterfat levels reached 4.40% and protein 3.40% in 2025, with component-adjusted production surging 3.0% in April. While processors benefit from higher manufacturing yields, the increased cheese and powder production volume exacerbates the oversupply situation.
Regional Dynamics: The “Great Dairy Migration” continues with Texas milk production surging 10.6% year-over-year, while California faces a 9.2% decline due to H5N1 impacts affecting approximately 650 herds. This geographic shift creates infrastructure mismatches that could pressure local milk pricing.
Market Fundamentals Driving Prices
Domestic Demand Crisis: The most concerning factor remains the collapse in domestic cheese consumption, which declined 56 million pounds in Q1 2025. Reports indicate retail cheese buyers have “gone dark,” waiting for further price declines before re-entering the market. Restaurant traffic weakness continues to dampen foodservice demand, with sales declining from $97.0 billion in December to $95.5 billion.
Export Market Volatility: While global dairy prices show strength with the FAO Dairy Price Index up 21.5% year-over-year, U.S. markets are experiencing a concerning “decoupling” from global strength. China’s temporary tariff reduction from 125% to 10% on certain U.S. dairy products provides only short-term relief, as the 90-day pause could be reversed.
Processing Capacity Expansion: Over $9 billion in new processing capacity is coming online through 2026, adding approximately 55 million pounds per day of production capability. While positive in the long term, this expansion adds to near-term supply pressure as demand struggles to keep pace.
Forward-Looking Analysis
Class III Outlook: July Class III futures at $16.97/cwt reflect the market’s pessimistic assessment of near-term fundamentals. The USDA’s more optimistic projection of $18.65/cwt for 2025 appears increasingly disconnected from trading reality. August futures at $17.71/cwt suggest only modest improvement in the coming months.
Seasonal Risk Factors: NOAA forecasts well above-average temperatures across most of the Lower 48 states, which could trigger 8-12% production losses in key regions due to heat stress. While this might provide some supply relief, the same weather patterns threaten feed crop yields, potentially squeezing margins from the cost side.
H5N1 Monitoring: With nearly 1,000 herds across 17 states reporting infections, the virus continues to create localized supply disruptions. Mathematical modeling suggests outbreaks will persist through 2025, with Arizona and Wisconsin identified as the highest-risk states.
Regional Market Spotlight: California vs. Southern Plains
California Struggles: The Golden State’s 9.2% production decline represents a significant shift from historical patterns. H5N1 impacts on 650 herds, combined with ongoing regulatory pressures, are accelerating the migration of production to more business-friendly regions.
Southern Plains Boom: Texas, Kansas, and South Dakota continue their explosive growth, with Kansas posting a remarkable 15.7% increase in May production. However, this rapid expansion is outpacing processing infrastructure, creating potential bottlenecks and local pricing pressures.
Within 48 Hours – Critical Risk Management: Immediately implement Dairy Revenue Protection (DRP) coverage for Q3/Q4 production . With income-over-feed costs projected below $12/cwt, this represents the most important financial survival action . The cheese market collapse signals potential $1.25-$1.75/cwt additional Class III pressure.
Next 7 Days – Component Optimization Strategy: Focus breeding and feeding programs on maximizing butterfat and protein content. With component-adjusted production surging while fluid volumes remain modest, the market is rewarding quality over quantity. Target butterfat levels of 4.50%+ to capture $0.75-$1.50/cwt pricing premiums.
Within 30 Days – Strategic Feed Procurement: Lock in favorable feed costs by securing corn contracts below $4.60/bushel and soybean meal under $300/ton while availability remains strong. Forward contract 60-70% of feed needs to protect against potential weather-related price increases.
Ongoing – Breeding Decisions: Continue selective use of beef semen on lower genetic merit animals to capitalize on strong beef-on-dairy calf values, while increasing gender-sorted semen usage on top genetic merit cows.
Industry Intelligence
FMMO Reform Impact: The June 1st implementation of Federal Milk Marketing Order reforms is creating regional winners and losers. Northeast producers benefit from the “higher-of” Class I pricing and revised differentials, while manufacturing-heavy regions see less favorable impacts.
Trade Policy Watch: The temporary nature of China’s tariff reduction means exporters face continued uncertainty. The 90-day pause could be extended or reversed, making long-term planning challenging.
Technology Investment: With margins under severe pressure, farms investing in automation and efficiency technologies are gaining competitive advantages. AI-driven tools can increase output by up to 81% through better decision-making.
The Bottom Line
Today’s modest cheese recovery provides little comfort for dairy farmers facing the most challenging margin environment in years. With milk production surging, domestic demand collapsing, and export markets volatile, the industry faces a structural reckoning rather than a cyclical downturn.
Immediate Actions Required (Next 48 Hours):
Secure DRP coverage for Q3/Q4 production immediately
Lock in favorable feed contracts while available
Optimize breeding programs for components, not volume
Engage processors about component premiums and quality bonuses
Key Risk: Income-over-feed margins below $12/cwt represent a financial emergency for many operations. Smaller and mid-sized farms lacking economies of scale face the greatest threat from this margin compression.
The market is sending clear signals that efficiency, component optimization, and proactive risk management are no longer optional – they’re essential for survival in this new paradigm. Producers who adapt their strategies now will be positioned to thrive when market conditions eventually improve.
Stay ahead of volatile markets with daily insights from TheBullVine.com. Our comprehensive analysis gives you the intelligence needed to protect your operation and maximize profitability in challenging times.
5 Technologies That Will Make or Break Your Dairy Farm in 2025 – Practical implementation guide for the automation and efficiency technologies mentioned as competitive advantages, showing how smart sensors and AI systems deliver ROI within 7 months during margin compression periods.
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