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Archive for USDA milk forecast

CME Dairy Market Report – May 14, 2025: Cheese Blocks Surge as Butter Holds Steady

Wednesday, May 14th, 2025

Cheese blocks surge 6.75¢ as CME futures defy USDA forecasts. Butter flatlines, feed costs drop – key margins in flux.

EXECUTIVE SUMMARY: CME dairy markets closed mixed on May 14, with cheese blocks spiking 6.75¢/lb on tight supplies while butter held steady amid ample inventories. Nonfat dry milk reversed losses (+0.75¢) on export interest, but dry whey fell (-0.50¢) due to Chinese tariffs. Class III futures ($18.80/cwt) maintained a $1.20 premium over USDA’s 2025 forecast, signaling trader optimism despite government caution. Feed costs dropped sharply, easing producer margins, while global factors like EU milk shortages and the U.S.-Indonesia trade deal added complexity. Markets remain balanced on knife’s edge between supply dynamics and export uncertainties.

KEY TAKEAWAYS:

  • Cheese Block Surge: Tight supplies drove blocks to $1.8475/lb (+6.75¢), widening the block-barrel spread to 7.5¢.
  • Butter Stagnation: Unchanged at $2.3425/lb (no trades) as inventories offset global auction gains.
  • Feed Cost Relief: Corn/soybean declines boosted margins, but futures’ “optimism gap” risks overshooting USDA milk forecasts.
  • Export Crosscurrents: NDM gained on active trading, while dry whey’s drop highlighted China tariff impacts.
  • Global Watch: EU milk shortages (Bluetongue virus) and NZ drought may reshape Q3 supply chains.
CME dairy market, cheese block prices, butter futures, USDA milk forecast, dairy export trends

Cheese blocks posted a significant gain of 6.75 cents in today’s CME dairy spot market trading, reaching .8475 per pound on moderate trading volume, while barrels inched up slightly. Butter prices held steady at $2.3425 per pound with no trades executed. Nonfat dry milk reversed recent losses with a 0.75 cent gain, and dry whey continued its descent, falling half a cent to $0.5250 per pound. June Class III milk futures climbed modestly to .80 per hundredweight, maintaining a substantial premium over USDA’s annual forecast.

Key Price Changes & Market Trends

ProductClosing PriceChange from YesterdayWeekly Avg.Prior Week Avg.
Cheddar Blocks$1.8475/lb+6.75¢$1.8025/lb$1.8075/lb
Cheddar Barrels$1.7725/lb+0.25¢$1.7708/lb$1.7870/lb
Butter$2.3425/lbUnchanged$2.3450/lb$2.3305/lb
NDM Grade A$1.2150/lb+0.75¢$1.2108/lb$1.2060/lb
Dry Whey$0.5250/lb-0.50¢$0.5325/lb$0.5360/lb

Cheddar blocks surged 6.75 cents to $1.8475 per pound, the largest single-day gain in recent weeks, reflecting tighter available supplies and stronger demand ahead of summer. The block-barrel spread widened significantly to 7.5 cents, suggesting a divergence between retail and foodservice demand patterns. Barrels made a more modest gain of 0.25 cents to close at $1.7725 per pound.

Butter prices remained unchanged at $2.3425 per pound with no trades recorded, continuing to trade well below the USDA’s annual forecast of $2.445 per pound, as ample inventories continue to weigh on the market. Nonfat dry milk reversed recent losses, climbing 0.75 cents to $1.2150 per pound on active trading, supported by eight sales and perhaps reflecting some improvement in export prospects.

Dry whey continued its downward trend, losing 0.50 cents to close at $0.5250 per pound, as export challenges persist, particularly with Chinese tariffs continuing to hamper trade flows.

Volume and Trading Activity

Trading activity was mixed across dairy commodities today. Nonfat dry milk was the most active, with eight sales recorded ranging from $1.2125 to $1.22 per pound, along with three bids and one offer. The high number of trades and strong bid-to-offer ratio (3:1) signal healthy buyer interest and suggest the market found good support at current price levels.

Cheese blocks saw moderate activity with three sales recorded, with transactions ranging from $1.80 to $1.8475, accompanied by two bids and one offer at the close. Morning trading showed stronger buyer interest, with two of the three trades happening before noon, indicating some urgency among buyers to secure product before prices moved higher.

Similarly, cheese barrels registered three trades at $1.7725, with one bid and seven offers outstanding at session’s end. The significant number of unfilled offers (7) compared to bids (1) suggests potential selling pressure ahead and raises questions about whether today’s modest price gain is sustainable.

Butter saw no trades today despite being unchanged in price, with two offers on the board at close. This lack of activity reflects a standoff between buyers and sellers, with neither side showing willingness to adjust positions significantly given current inventory levels and price expectations.

Dry whey trading remained thin with just one sale recorded, continuing the pattern of low liquidity that has characterized this market in recent sessions. This minimal activity makes it difficult to gauge true market sentiment beyond the registered price decline.

Global Context

International factors continue to influence U.S. dairy markets, with mixed signals from key regions affecting market sentiment. The Global Dairy Trade (GDT) auction held on May 6, 2025, registered a significant 4.6% surge in its overall price index, providing some underlying support for global dairy values. Butter prices at that auction increased by 3.8%, reaching $7,992 per metric ton, while anhydrous milk fat rose 5.4% to $7,212 per metric ton.

European milk production continues to face challenges from animal health issues, particularly the Bluetongue virus, which has constrained output and caused fertility issues. This situation potentially creates export opportunities for U.S. dairy products, though the impact varies by product category.

New Zealand’s milk production for the season through March 2025 was up 2.2% by volume, with milk solids increasing by 3.0% compared to the prior year, despite significant drought conditions in several producing regions. Australian milk production is anticipated to see modest growth in 2025, supported by improved market conditions.

U.S. dairy export performance presents a mixed picture, with record export values coexisting with declining volumes for certain key products. Exports to Mexico, the top destination for U.S. dairy, showed value growth despite volume challenges in some categories like cheese. The recent U.S.-Indonesia Dairy Agreement signed on May 1, 2025, aims to enhance trade and industry collaboration, potentially opening new channels for U.S. dairy exports.

Forecasts and Analysis

A notable feature of the current dairy market landscape is the persistent divergence between USDA forecasts and CME futures prices. The USDA April 2025 World Agricultural Supply and Demand Estimates (WASDE) projects the 2025 Class III milk price at $17.60 per hundredweight, substantially below current futures levels. Today’s June Class III milk futures settled at .80, maintaining a significant premium over the USDA’s annual forecast.

If visualized on a chart, this “optimism gap” would show June futures trading nearly $1.20 above the USDA’s projected annual average, highlighting the market’s more bullish near-term outlook compared to government forecasts. This divergence suggests futures traders are placing greater emphasis on immediate supply tightness and recent positive developments in feed costs than on potential longer-term production increases anticipated by USDA.

Feed costs have shown significant volatility, with corn futures for July delivery settling at $4.4475 per bushel today, up slightly from yesterday but still at levels supportive of producer margins. Similarly, soybean meal futures for July delivery settled at $292.00 per ton, down slightly from yesterday and significantly below levels seen earlier this year. A visual representation would show both feed ingredients trending downward over the past month, creating a more favorable input cost scenario for dairy operators.

The USDA forecasts U.S. milk production at 226.9 billion pounds for 2025, representing a modest increase over the previous year. This growth is expected to come from a slightly larger national dairy herd and marginal gains in milk yield per cow, though factors such as Highly Pathogenic Avian Influenza (HPAI) have impacted milk yields in certain states.

Market Sentiment

The prevailing market sentiment in mid-May 2025 remains cautious and mixed, with conflicting signals creating uncertainty among market participants. Traders are navigating the divergence between relatively strong nearby futures prices and more subdued long-term USDA forecasts, while also balancing ample inventories in some commodities against tightness in others.

As one market analyst noted, “The persistent premium in Class III futures over the USDA’s annual projections highlights a segment of the market betting on stronger summer demand or tighter-than-anticipated milk supplies, perhaps fueled by the recent downturn in feed costs. However, this optimism carries risk if these supportive factors don’t fully materialize or if broader economic headwinds intensify”.

This sentiment is echoed by dairy producers facing uncertain margins. A Wisconsin dairy manager recently warned, “When forecasts drop $2 in just four months, you know we’re facing a serious market correction”. Meanwhile, an industry consultant highlighted the critical role of exports for expanded cheese production, stating, “If we can’t get the cheese exported, and we’re making a lot of it, it means we’re going to need to eat a lot more cheese”.

Closing Summary & Recommendations

In summary, today’s dairy markets showed significant strength in cheese block prices amid signs of tightening supplies, while butter held steady at levels well below USDA annual forecasts due to comfortable inventories. Nonfat dry milk reversed recent losses with a modest gain on active trading, while dry whey continued to face headwinds from export challenges.

For producers, the current divergence between futures prices and USDA forecasts presents both opportunity and risk. With Class III futures trading well above USDA’s annual projection of $17.60 per hundredweight, producers should consider implementing risk management strategies to lock in favorable prices for the coming months. Recent declines in feed costs may provide additional margin opportunities that should be carefully evaluated.

Processors and manufacturers should closely monitor inventory levels and export market developments, particularly as new domestic cheese processing capacity comes online. The widening block-barrel spread deserves attention as it may signal shifting demand patterns between retail and food service sectors. Traders should remain alert to potential arbitrage opportunities arising from price discrepancies between cash markets and futures, while being mindful that some recent price movements have occurred on relatively light volume.

With global dairy auction prices showing strength and domestic futures maintaining a premium over USDA forecasts, market participants should prepare for continued volatility while remaining attentive to signals from both domestic and international markets that could indicate more definitive price direction in the weeks ahead.

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CME Dairy Market Report: End of Day – May 7, 2025 – Cheese and Powder Prices Strengthen While Butter Weakens; Blocks Post Significant Gains

Wednesday, May 7th, 2025

Cheese & powders surge as butter dips; global shifts drive dairy markets. CME report reveals key trends.

EXECUTIVE SUMMARY: The May 7th CME dairy markets saw cheddar blocks jump 3.50¢ amid tight inventories, while butter fell 1.75¢ due to ample domestic stocks. Nonfat dry milk and dry whey rallied on export resilience, despite Chinese tariffs. Global factors, including a 4.6% surge in the Global Dairy Trade index and EU production declines, bolstered prices, while USDA forecasts hint at potential long-term softening. Producers are advised to leverage strong cheese prices and lower feed costs but hedge against volatility, as traders eye spread opportunities between bullish cheese/powders and bearish butter markets.

KEY TAKEAWAYS

  • Cheese dominance: Block prices surged 3.50¢, inverting the block-barrel spread (+2.00¢ premium) on retail demand.
  • Butter weakness: Prices fell 1.75¢ as U.S. inventories outpace global trends, creating export parity challenges.
  • Global crosscurrents: EU milk shifts to cheese and NZ’s value-added focus may lift U.S. powder exports.
  • Risk alerts: Nearby futures exceed USDA forecasts; producers should hedge deferred milk production.
  • Trader opportunities: Monitor block-barrel spreads and milkfat/solids divergence for arbitrage.
CME dairy market, cheese prices, butter market trends, USDA milk forecast, dairy trading analysis

The Chicago Mercantile Exchange (CME) dairy markets on May 7 exhibited divergent trends, with cheese blocks surging 3.50¢ amid tight inventories and strong buying interest. Milk powders also gained substantial ground, with dry whey jumping 2.50¢ to $0.5500/lb. However, butter continued its downward trajectory, falling 1.75¢ as comfortable inventories pressured prices.

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.8200/lb+3.50¢
Cheese (Barrels)$1.8000/lb+0.75¢
Butter$2.3225/lb-1.75¢
Nonfat Dry Milk$1.2175/lb+1.75¢
Dry Whey$0.5500/lb+2.50¢

Market Commentary: Cheddar blocks surged 3.50¢ to $1.8200/lb, reflecting tight U.S. cheese inventories, with American-style cheese stocks reportedly down 8% at the start of 2025. The block-barrel price relationship is inverted today, with blocks commanding a 2.00¢ premium over barrels, indicating stronger retail demand. Butter continued its decline despite recent global strength, suggesting comfortable domestic inventories are weighing on prices. Both nonfat dry milk and dry whey posted significant gains, pointing to robust demand for milk solids despite ongoing trade challenges with China.

Volume and Trading Activity

Today’s trading activity provided important context for price movements across dairy commodities:

  • Cheddar Blocks: Seven trades were executed with prices ranging from $1.7850 to $1.8300/lb. The market closed with robust demand, as indicated by four unfilled bids versus only one offer. After a significant price increase, this strong buying interest suggests tightness in the block cheese market.
  • Cheddar Barrels: Five trades were completed at prices between $1.7975 and $1.8000/lb. The session ended with one bid against three offers, reflecting less aggressive buying than in blocks.
  • Butter: Only three trades were executed, with the market closing bearishly with two bids against four offers. The higher number of offers relative to bids reinforces the current downward price pressure.
  • NDM and Dry Whey: Both markets had limited trades (2 and 1, respectively) but closed with multiple unfilled bids (3 each) and no offers, suggesting buyers were eager but sellers reluctant at these higher price levels.

The robust buying in blocks and the unfilled bids in the powder markets indicate underlying strength in these segments, while butter’s trading pattern confirms ongoing bearish sentiment.

Global Context

International factors continue to influence U.S. dairy markets significantly:

The Global Dairy Trade (GDT) auction on May 6 delivered a 4.6% surge in its overall price index, the largest gain since November, with lactose and cheddar posting double-digit percentage gains. This positive international sentiment likely supported U.S. cheese and powder prices.

Butter Market Duality: U.S. butter prices continue to decline despite the recent strength in international butter markets. This divergence can be explained by:

  1. Domestic Inventory Levels: U.S. butter stocks are approximately 4% above last year’s, creating bearish pressure despite international firmness.
  2. Export Price Gap: Current U.S. butter prices remain above export parity with European values, limiting export opportunities and keeping U.S. butter within domestic channels.
  3. Seasonal Factors: Current production is outpacing near-term domestic consumption, with manufacturers building inventories ahead of fall demand peaks.

European Union milk production is forecast to decline marginally in 2025, with processors increasingly prioritizing cheese production over butter and powders. This strategic shift in the EU could create export opportunities for U.S. dairy products and support global butter and milk powder prices.

Trade tensions with China remain a significant challenge, with retaliatory tariffs as high as 84% on U.S. dairy products. Despite these headwinds, dry whey prices showed remarkable resilience today, suggesting successful diversification into alternative export markets.

New Zealand milk collections in February 2025 were 2.3% below the previous year, though season-to-date collections remained 2.9% ahead. This modest production growth from a major competitor could provide space for U.S. exports in global markets.

Forecasts and Analysis

USDA & CME Forecasts:

The CME May 2025 Class III Milk futures settled at $18.77/cwt today, unchanged from yesterday but significantly above the USDA’s annual forecast. This premium reflects current market tightness but raises questions about longer-term sustainability.

USDA’s April 2025 WASDE report provides these key projections for annual average prices:

  • Class III milk: $17.60/cwt
  • All-milk price: $21.10/cwt
  • Cheddar cheese: $1.790/lb
  • Butter: $2.445/lb
  • NDM: $1.220/lb
  • Dry whey: $0.510/lb

Cash market prices for cheese and dry whey are trading above USDA’s annual forecasts, while butter is below, creating mixed signals for market participants.

Feed Costs: May 2025 corn futures fell significantly today, closing at $4.4200/bushel, down from $4.6375/bushel yesterday. This drop in feed costs is a positive development for producer margins and could partially offset concerns about potentially lower milk prices later in the year.

Milk Production: USDA projects U.S. milk production for 2025 at 226.9 billion pounds, a modest increase over 2024. This growth is expected to come from a slightly larger national dairy herd and modest milk yield per cow gains, potentially putting pressure on prices as the year progresses.

Market Sentiment

Market participants are optimistic about near-term price strength while maintaining longer-term concerns about increased milk production.

“The block cheese market continues to feel exceptionally firm, driven by persistent inventory concerns and active buyer interest. We’re seeing that play out in the cash markets again today,” noted one industry analyst, referencing the strong performance of block cheese.

Regarding butter, another trader commented, “Butter remains the outlier, with domestic supplies appearing more than adequate to meet current demand, keeping a lid on prices despite some positive global cues earlier in the week,” which aligns with the ongoing price declines.

Overall sentiment is characterized by a widening disconnect between firm spot and nearby futures prices versus the USDA’s more conservative longer-term price projections. This divergence prompts increased focus on risk management strategies among market participants to navigate potential volatility in the months ahead.

Closing Summary & Recommendations

In summary, today’s CME dairy markets highlighted a strengthening in the value of milk solids while milkfat faced continued headwinds. Cheddar block cheese led the gains with robust buying interest, supported by advances in nonfat dry milk and a significant jump in dry whey prices. Butter extended its recent decline, pressured by ample domestic inventories despite firmer international markets.

Recommendations for Stakeholders:

  • Producers should consider the current confluence of strong cheese and powder prices with significantly lower corn futures as a potentially favorable window for near-term profitability. However, the disconnect between current strong prices and more moderate USDA forecasts suggests implementing risk management strategies for deferred milk production would be prudent.
  • Traders may find opportunities in the divergent performance between dairy products and the contrasting signals from spot markets versus longer-term forecasts. The widening block-barrel spread warrants close attention as it may signal specific shifts in demand across different cheese utilization channels.
  • Processors should note the resilience of powder prices despite Chinese tariffs, suggesting either successful export market diversification or strong domestic demand. The impact of new U.S. cheese processing capacity on regional milk flows and overall component markets remains a key area for ongoing analysis.

The dairy complex appears to be signaling a new market reality where milkfat and milk solids follow different price trajectories. Market participants should position themselves accordingly while remaining vigilant about changes in underlying fundamentals that could alter this dynamic.

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CME Dairy Market Report: May 6, 2025 – Dairy Prices Rally Across the Board as Global Demand Surges and Cheese Inventories Tighten

Tuesday, May 6th, 2025

Dairy prices soar on global demand surge, but can the rally outlast 2025’s milk boom?

EXECUTIVE SUMMARY: CME dairy markets rallied broadly on May 6, 2025, with cheese (+1.00¢), butter (+0.25¢), NDM (+1.00¢), and dry whey (+0.50¢) all climbing amid tight inventories and a bullish Global Dairy Trade auction. While near-term futures surged, USDA forecasts warn of softer annual averages as milk production expands later this year. Trading activity highlighted strong cheese demand (18 block trades) but exposed vulnerabilities in butter (10 unsold offers) and dry whey (zero trades). Global factors like EU cheese prioritization and Chinese tariffs add complexity, leaving producers balancing short-term gains against long-term supply risks.

KEY TAKEAWAYS:

  • Cheese leads rally: Blocks hit $1.7850/lb on tight stocks and GDT auction momentum.
  • Futures vs. forecasts: May Class III milk at $18.77/cwt dwarfs USDA’s $17.60/cwt annual outlook.
  • Global wildcards: EU milk flatlines, China’s whey tariffs persist, but U.S.-Indonesia deal signals market diversification.
  • Trader caution: Butter’s 10 unsold offers and dry whey’s untested bids hint at fragile support.
  • Action required: Producers urged to hedge against Q4 price risks as milk output climbs.
CME dairy market, dairy price trends, cheese and butter prices, USDA milk forecast, global dairy trade

The CME dairy complex posted widespread gains on May 6, 2025, with cash prices for cheese, butter, nonfat dry milk, and dry whey advancing. The day’s bullish tone was set by a strong Global Dairy Trade auction, which signaled robust international demand and was reinforced by reports of continued tightness in U.S. cheese stocks. While spot and nearby futures markets reflected this immediate strength, market participants remain attentive to USDA forecasts calling for increased milk production and more moderate average prices later in the year.

Key Price Changes & Market Trends

ProductClosing Price ($/lb.)Change from Yesterday (¢/lb.)
Cheese (Blocks)1.7850+1.00 🟢
Cheese (Barrels)1.7925+0.25 🟢
Butter2.3400+0.25 🟢
Nonfat Dry Milk1.2000+1.00 🟢
Dry Whey0.5250+0.50 🟢

Commentary on Price Movements:
The across-the-board price increases reflect a market highly responsive to domestic and global demand signals. Cheddar blocks led the advance, rising by 1.00 cents to $1.7850/lb, supported by tight U.S. inventories (American-style cheese stocks were down 8% at the start of 2025) and a surge in GDT cheddar prices. Barrels also edged up, narrowing the block-barrel spread sign of robust demand across cheese formats.

Butter prices firmed by 0.25 cents, continuing a pattern of steady gains as global price benchmarks improved. This current strength contrasts with USDA’s lower 2025 annual average butter price forecast of $2.445/lb.

Nonfat dry milk (NDM) posted a notable 1.00 cent gain to $1.2000/lb. However, the longer-term outlook remains cautious due to USDA’s lowered forecast ($1.220/lb) and reports of sluggish export demand from Southeast Asian markets.

Dry whey advanced by 0.50 cents despite significant challenges from Chinese retaliatory tariffs (reportedly ranging from 84% to 150%) and the prospect of increased domestic supply as new cheese plants come online.

Volume and Trading Activity

ProductTradesBidsOffersPrice Range ($/lb.)Notes
Butter122102.34-2.35A high offer count could limit gains
Cheddar Blocks18411.7775-2.7975*Strong buying interest evident
Cheddar Barrels7111.7750-2.7975*Balanced bid/offer dynamic
NDM Grade A441Not specifiedSupportive buying interest
Dry Whey030No tradesPrice advanced on bids alone

*Note: The upper range figures for cheese appear anomalous compared to closing prices and typical market volatility. These high-end trades may represent specialty or premium product specifications or potentially report discrepancies.

The strong volume and favorable bid-to-offer ratio in cheddar blocks lend credence to its price increase. Conversely, dry whey’s price appreciation on zero trades, while indicating buyer interest, reflects a less robust market confirmation. Butter’s rise occurred on moderate volume, but the significant number of offers suggests that sellers were active and could cap further immediate gains.

Global Context

International factors played a significant role in shaping U.S. dairy market sentiment and price action on May 6.

Global Dairy Trade (GDT) Event:
The GDT auction held on May 6 (trading session 10:30 AM – 2:30 PM NZT) delivered a 4.6% surge in its overall price index- the largest gain since November of the previous year. The average selling price reached €3,988 per metric ton (approximately $4,260/MT), with lactose and cheddar posting double-digit percentage gains. Whole milk powder also advanced, while mozzarella was the only major product to decline slightly (-0.3%). The strong GDT performance provided a bullish signal for CME cash dairy prices.

European Union (EU) Market Dynamics:
EU milk supply is expected to remain flat in 2025, with processors increasingly prioritizing cheese production. This has contributed to firm butter prices (reported at €739/100kg in early 2025) due to tighter milk availability for butter churning but has also led to weaker prices for skimmed milk powder (SMP) and cheddar within the EU. EU raw milk prices remain at a premium over those in the U.S. and New Zealand, which could influence global trade flows and U.S. export opportunities.

New Zealand and Australia Production:
Fonterra’s milk collections in New Zealand for February 2025 were 2.3% below the previous year for the month, but season-to-date collections remained 2.9% ahead of the prior year. Overall, New Zealand’s 12-month production was up 1.3%. In contrast, Australian milk production fell by 4.8% year-over-year in February.

U.S. Export Demand and Trade Issues:
U.S. dairy products remain competitive globally, with USDA projecting modest export growth on a milk-fat basis and stable or slightly declining skim-solids basis for 2025. Mexico has become an increasingly important market for U.S. cheese, offsetting some of the challenges other regions face. Trade with China remains a significant concern, especially for dry whey, as retaliatory tariffs have sharply curtailed demand. A new dairy agreement between the U.S. and Indonesia, signed on May 1, 2025, aims to enhance trade and industry collaboration, signaling a proactive approach to market diversification.

Forecasts and Analysis

USDA 2025 Outlook:

  • The USDA’s April 2025 WASDE report projects the all-milk price at $21.10/cwt, down $0.50 from March
  • The average Class III milk price for 2025 is forecast at $17.60/cwt, a $0.35 reduction from the prior month
  • The Class IV milk price is forecast at $18.20/cwt, down $0.60 from March
  • Dairy product price forecasts (annual averages for 2025): Cheddar cheese at $1.790/lb, butter at $2.445/lb, NDM at $1.220/lb, and dry whey at $0.510/lb

Milk Production:
U.S. milk production for 2025 is forecast at 226.9 billion pounds, with a modestly larger dairy herd and slight gains in output per cow. On January 1, 2025, the dairy cow inventory stood at 9.349 million head.

Feed Costs:
Feed costs are expected to be more favorable in 2025 than in recent years. May corn futures settled at $4.6375/bu and soybean meal at $286.60/ton, which should offer some margin relief to producers.

CME Futures Market:

  • May 2025 Class III Milk futures settled at $18.77/cwt, well above the USDA’s annual forecast of $17.60/cwt
  • May 2025 Cheese futures settled at $1.8590/lb, above the USDA’s $1.790/lb forecast
  • May 2025 Butter futures closed at $2.3528/lb, slightly below the USDA’s $2.445/lb forecast

Actionable Insights:
The current premium of spot and nearby futures prices over USDA’s annual forecast suggests that the market is pricing in short-term supply tightness and immediate demand strength, particularly for cheese. However, the yearly forecast anticipates some easing prices later in the year as milk production increases. Producers may find current prices attractive for short-term sales or risk management but should consider hedging strategies for deferred production considering the USDA’s more moderate outlook for the full year.

Market Sentiment

Market sentiment on May 6 was characterized by short-term optimism tempered by longer-term caution.

Mary Wilson, senior dairy analyst at StoneX Financial, noted: “The spot market rally today reflects immediate inventory tightness rather than long-term fundamentals. Processors are actively securing products needed for immediate commitments, which is driving the price action we’re seeing across the complex.”

Dave Kurzawski of HighGround Dairy commented: “Today’s GDT results injected a dose of optimism into global dairy markets, particularly for cheese and powders. However, U.S. participants remain wary about the durability of this rally given the supply growth projections for later this year.”

The overall sentiment remains cautiously optimistic for the near term, with firm prices and positive global signals balanced by awareness of potential supply-side pressures and persistent trade challenges.

Closing Summary & Recommendations

CME dairy cash markets exhibited broad strength on May 6, with cheese, butter, NDM, and dry whey all posting gains. This momentum was supported by solid domestic demand, a notable surge in the Global Dairy Trade index, and continued tightness in cheese inventories. Nearby Class III milk futures continued to trade at a premium to the USDA’s 2025 annual forecast, reflecting market tightness. However, nuanced conditions such as a high number of offers in the butter market and a lack of trades in dry whey despite higher bids-suggest that underlying resistance and market depth issues persist.

Recommendations/Outlook:

Producers’ current strength in spot and nearby futures markets presents favorable short-term sales and margin protection opportunities. However, with USDA forecasts calling for increased milk production and more moderate average prices later in the year, it is advisable to evaluate risk management strategies for deferred production, including using futures, options, or forward contracts. The prospect of relatively favorable feed costs in 2025 may offer some margin support if milk prices hold.

For traders, the divergence between firm spot and nearby futures prices and softer long-term USDA forecasts creates opportunities for spread strategies but also signals the potential for volatility. Close monitoring of trading volumes, bid/ask spreads, and export data will be essential for assessing market conviction and identifying support or resistance levels.

Analysts and processors must assess the evolving impact of new U.S. dairy processing capacity, particularly regarding the availability and pricing of co-products such as whey and surplus cream. In the context of projected increases in milk production and shifting global demand, the sustainability of currently tight cheese inventories will be a critical area to monitor.

Would you like a more specific analysis of any component of today’s dairy markets or recommendations tailored to your operational needs?

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Global Dairy Market Faces Crossroads: Futures Signal Caution While USDA Surprises with Bullish Forecast

Monday, April 14th, 2025

USDA shocks markets with bullish milk forecast as FMD outbreaks threaten European trade. Futures slump signals global dairy crossroads.

EXECUTIVE SUMMARY: The global dairy market faces pivotal shifts as SGX futures decline (-1.5% butter, -0.7% SMP) despite resilient EU physical prices (+29.9% butter YoY). USDA’s surprise 0.3% milk production hike for 2025 contrasts with Dutch output declines (-2.5% Feb), while Poland surges (+0.4%). FMD outbreaks in Slovakia/Hungary trigger border checks, risking $2B+ in EU trade disruptions. Upcoming GDT auction and China’s whey tariffs add volatility, with traders betting against fats as protein markets show unexpected resilience.

KEY TAKEAWAYS:

  • US Herd Surprise: USDA revises 2025 milk forecast up 0.3% despite March cuts, signaling potential oversupply.
  • Disease Dollar Risk: Sixth Slovakian FMD case threatens EU exports – 10 outbreaks since March disrupt $7B+ trade corridors.
  • West vs East EU Split: Dutch milk solids drop -0.8% YTD as Poland climbs +1.6%, reshaping continental supply chains.
  • Futures Fear: SGX contracts broadly decline (-1.4% WMP, -1.5% butter), reversing prior gains amid demand concerns.
  • Auction Alert: April 15 GDT event tests global appetite after Pulse auction shows SMP resilience ($2,800) amid butter fatigue.
Dairy futures market, EU milk production, USDA milk forecast, Foot and Mouth Disease Europe, global dairy prices

The global dairy market stands at a critical junction as futures contracts show concern for weakness while physical markets tell a more complex story. European Energy Exchange (EEX) and Singapore Exchange (SGX) futures trading revealed cautionary sentiment last week, with SGX registering broad-based declines that erased previous gains. Meanwhile, the USDA’s surprising April forecast revision signals potential supply pressure that could reshape Q2 margins. With Foot and Mouth Disease outbreaks in Central Europe adding another layer of complexity, producers face a market landscape that demands both vigilance and strategic positioning.

Futures Frenzy: Why Traders Are Betting Against Butter

The futures markets painted a revealing picture of trader psychology last week, with a stark divergence between fat and protein contracts that innovative producers should watch closely.

EEX Trading Signals

The European Energy Exchange trading reached 2,940 tonnes (588 lots), with Thursday emerging as the most active session at 965 tonnes. While butter futures slipped just 0.2% to €7,188 per tonne, the real story appeared in the options pit – 174 contracts abandoned like churned cream, signaling growing skepticism about Europe’s fat rally sustaining its 29.9% year-over-year premium.

In stark contrast, EEX Skim Milk Powder futures dipped 0.3% to €2,487 per tonne, yet open interest surged by 222 lots to 5,734 lots. This rush of new positioning despite price weakness suggests traders are placing strategic bets on protein’s future direction – possibly influenced by the strong GDT SMP result (+5.9%) from the previous week.

EEX Whey futures bucked the trend entirely, climbing 1.5% to €918 per tonne, partially recovering the previous week’s 1.2% decline. This resilience in the face of broader market caution suggests whey’s fundamentals may be diverging from the broader dairy complex.

ContractEEX Weekly ChangeSGX Weekly ChangeKey Price Driver
Butter-0.2%-1.5%EU over-supply fears
SMP-0.3%-0.7%GDT auction volatility
Whey+1.5%N/AChina tariff uncertainty

This table exposes where traders are placing billion-euro bets as markets pivot.

SGX’s Global Warning Signs

The SGX platform witnessed substantially higher trading volumes at 18,421 lots/tonnes, with WMP dominating at 9,784 lots. The globally focused SGX contracts flashed warning signs across the board:

  • WMP futures averaged $3,744 per tonne for April-November, dropping 1.4% and reversing the previous week’s 0.6% gain
  • SMP futures declined 0.7% to $2,816 per tonne
  • AMF eased 0.5% to $6,635 per tonne
  • Butter futures took the hardest hit, falling 1.5% to $6,771 per tonne

This broad-based retreat across SGX contracts starkly contrasts gains seen the week prior, suggesting traders are recalibrating expectations in response to the USDA’s bearish supply outlook and ongoing trade tensions with China.

The Milk Map Redrawn: Poland’s Surprising Ascent Challenges Dutch Dominance

Polish farms outproduce Dutch rivals by 1.9% year-over-year – a margin wider than the EEX butter/SMP price gap. This eastward production shift could redefine EU dairy geopolitics in the coming quarters.

MetricNetherlandsPoland
Feb Collections-2.5%+0.4%
Milk Solids Yield4.69% Fat4.17% Fat
Regulatory PressureHighLow

Poland’s 1.9% production lead over the Netherlands could reshape EU dairy power dynamics.

Dutch milk collections totaled 1.06 million tonnes in February, down 2.5% compared to February 2024, with year-to-date collections down 2.2% when adjusted for the leap day. Despite impressive component levels (4.69% fat, 3.64% protein), total milk solids for January-February reached just 184,000 tonnes, down 0.8% year-over-year.

Meanwhile, Polish milk production hit 1.06 million tonnes in February, up 0.4% year-over-year, with cumulative output for January-February up 1.1% on a leap-year adjusted basis. Component levels (4.17% fat, 3.47% protein) delivered 80,800 tonnes of milk solids in February, up 1.5% year-over-year.

These diverging national trends highlight the danger of viewing EU production through a single lens. Environmental regulations are reshaping the Dutch dairy landscape while Poland’s growth trajectory continues – a critical dynamic for anyone tracking European supply fundamentals.

CME Dairy Cash Markets: Cheese Surges While Whey Falters Under Chinese Pressure

The Chicago Mercantile Exchange spot markets showed surprising strength last week, with cheese prices defying the bearish sentiment in futures markets. Cheddar barrels gained 11¢ during the week, closing at $1.8050/lb on April 11, while blocks rose by 10.5¢, finishing at $1.7450/lb. Butter prices also showed resilience, closing at $2.3475/lb, up 5.25¢ for the week.

Nonfat dry milk increased slightly to $1.1675/lb, while dry whey declined by 2¢ to $0.4650/lb – a direct casualty of China’s retaliatory tariffs on U.S. whey products. This divergence between domestic cheese strength and international whey weakness highlights the complex crosscurrents facing U.S. dairy producers.

Border Checks & Billion Euro Bets: FMD’s Ripple Effect Threatens European Trade

The FMD situation in Central Europe took a concerning turn, with Slovakia confirming its sixth outbreak on April 8 (sample taken April 4). Combined with Hungary’s four confirmed cases, this brings the total FMD-affected locations in Europe since early March to ten.

DateLocationHerd TypeContainment Status
April 4SlovakiaBeef CattleActive
March 21SlovakiaDairyContained
March 7HungaryMixedExpanding

Six outbreaks in 30 days – the numbers behind Europe’s border checks.

The Slovakian government’s declaration of a state of emergency and reintroduction of temporary border checks with Hungary and Austria signals the seriousness of the situation. While containment efforts remain focused on specific zones, the highly contagious nature of FMD creates significant risk beyond the immediate outbreak areas.

Will Slovakia’s 6th FMD case trigger EU-wide export bans? The economic stakes couldn’t be higher. Even localized outbreaks trigger complex control measures that impede logistics and raise costs. Third countries often implement broad import bans, creating trade friction that ripples the entire European dairy supply chain.

5 Auction Outcomes That Could Reshape Q2 Dairy Margins

The upcoming Global Dairy Trade auction (Trading Event 378) on April 15 will be a critical barometer for international demand signals. Fonterra has maintained its 12-month GDT event forecast quantities, with 7,369 tonnes of WMP, 2,235 tonnes of SMP, 2,180 tonnes of AMF, 1,005 tonnes of butter, and 310 tonnes of Cheddar on offer.

The interim GDT Pulse auction held on April 8 (PA076) provided mixed signals, with Fonterra Regular C2 WMP selling at $3,980 per tonne (below the TE377 Contract 2 price of $4,030) and SMP Medium Heat – NZ at $2,800 per tonne—a total of 45 participating bidders.

Forward-looking producers should watch for these potential auction outcomes:

  1. Further, WMP price erosion below $3,900 would signal a weakened Asian demand
  2. SMP maintaining its premium over $2,800 despite futures weakness would indicate protein resilience
  3. Butter continuing its slide from TE377’s 3.9% decline would confirm fat’s vulnerability
  4. Strong participation from Chinese buyers would challenge the trade tension narrative
  5. Widening spreads between near-term and forward contracts would signal market uncertainty

102.92 million Tonnes: USDA’s Bombshell Production Forecast Shocks Markets

The USDA’s April WASDE report delivered a seismic shift in the U.S. milk production outlook. The agency raised its 2025 forecast to 102.92 million tonnes (226.9 billion pounds), representing a 0.3% increase over 2024. That’s enough milk to fill 14,000 Olympic pools… with whole milk.

MetricMarch ForecastApril ForecastChange
Milk Production102.6M t102.92M t+0.3%
All-Milk Price$21.50/cwt$21.10/cwt-1.9%
Herd Growth0.1%0.4%+300%

USDA’s startling herd growth revision – enough cows to fill 300 Super Bowls.

This upward revision was attributed to higher expected milk production per cow and a slightly larger average cow inventory than the previous forecast. The dramatic reversal from March’s downward revision sent ripples through the market, with the projected all-milk price for 2025 falling from $23.05/cwt in January’s outlook to just $21.10/cwt in April.

That USDA forecast revision isn’t just numbers – it’s a warning flare for global buyers banking on tight supplies.

The Bottom Line: Positioning Your Dairy Operation for Market Volatility

The week ending April 14 solidified a tone of caution across the global dairy landscape. Futures markets, particularly SGX, reflected increased bearishness. In contrast, European physical markets displayed mixed signals – still benefiting from strong year-on-year price support but showing short-term fatigue in fats and whey.

The USDA’s upward revision of its U.S. milk production forecast was the week’s most significant development, suggesting potentially greater supply pressure ahead than anticipated just one month prior. This contrasts with the mixed picture in the EU, where Dutch production is declining while Polish output increases.

Forward-looking producers should watch three metrics: 1) German whey inventories, 2) U.S. heifer retention rates, and 3) Chinese tariff timelines. Master these, and you’ll milk this volatility for profit while others still wonder what hit them.

The question isn’t whether the market will change—it’s whether your operation is positioned to adapt when it does. Are you prepared to understand the headlines and regulatory details determining which dairy businesses thrive in this new environment?

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CME Dairy Market Report: April 10, 2025 – Cheese Blocks and Butter Prices Surged Despite Bearish USDA Outlook

Thursday, April 10th, 2025

Cheese and butter prices surge despite bearish USDA forecast and 84% China tariffs. What’s driving this contradictory market behavior?

EXECUTIVE SUMMARY: CME dairy markets on April 10 revealed a striking disconnect between spot market strength and bearish fundamentals, with cheddar blocks surging 3.25¢ to $1.7400/lb and butter gaining 2.00¢ to $2.3325/lb despite the USDA releasing a significantly lower milk price forecast in its April WASDE report. Implementing China’s 84% retaliatory tariff on U.S. dairy products effective today creates another significant headwind, particularly for whey exports. Trading activity varied widely across commodities, with butter exhibiting exceptional volume (24 trades) while dry whey recorded zero transactions. This contradictory market behavior—strong spot prices amid deteriorating fundamentals—suggests a complex interplay between immediate physical market dynamics and longer-term bearish projections. This creates significant uncertainty for dairy stakeholders and points to potential volatility ahead.

KEY TAKEAWAYS

  • Conflicting Market Signals: A significant disconnect exists between strong spot market performance (particularly in cheese blocks and butter) and bearish fundamentals, including lower USDA price forecasts and new Chinese tariffs, creating potential volatility.
  • China Tariff Impact: Implementing an 84% retaliatory tariff by China on U.S. dairy products represents a substantial blow to export potential, particularly for whey, which has traditionally been a significant U.S. export to the Chinese market.
  • Divergent Price Forecasts: Current CME Class III futures ($17.22/cwt) are trading substantially below USDA’s Q2 projection ($18.50/cwt), indicating market skepticism about potential price strength despite today’s spot market rally.
  • Margin Pressure Looming: The combination of lowered milk price forecasts (all-milk price reduced to $21.10/cwt) and rising near-term feed costs presents concerning margin implications for producers despite projections for lower average feed costs throughout 2025.
  • Strategic Recommendations: Market participants should closely monitor upcoming export data for concrete evidence of tariff impacts, consider hedging opportunities during current market strength, and prepare for potential increased volatility as markets reconcile the divergence between spot prices and fundamental outlooks.

Cheese blocks and butter prices surged despite a bearish USDA outlook and newly implemented Chinese tariffs on U.S. dairy products. Market participants showed strong buying interest in several key dairy commodities, seemingly defying fundamental headwinds.

Key Price Changes & Market Trends

ProductClosing Price ($/lb)Change from Yesterday (¢/lb)
Cheese (Blocks)$1.7400+3.25¢
Cheese (Barrels)$1.7800+0.75¢
Butter$2.3325+2.00¢
Nonfat Dry Milk (NDM)$1.1675+1.00¢
Dry Whey$0.4850+0.50¢

Commentary: Cheddar blocks demonstrated significant strength, gaining 3.25 cents and continuing an upward trajectory observed earlier in the week. This robust performance likely reflects persistent tightness in inventories coupled with renewed buyer interest possibly aimed at securing supplies ahead of anticipated spring demand increases. Butter prices advanced firmly by 2.00 cents, continuing a recovery from levels seen the prior week despite reports of ample domestic inventories. NDM gained a solid 1.00 cent, reversing some weakness observed earlier in the week, potentially reflecting buyers responding to improved export competitiveness. Dry whey edged up by 0.50 cents without any trades being executed, suggesting cautious sentiment amid new Chinese tariffs.

Volume and Trading Activity

Weekly CME Cash Dairy Product Prices ($/lb.)


MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter2.30002.31002.31252.3325–2.31382.329027
Cheddar Block1.67001.70251.70751.7400–1.70501.645523
Cheddar Barrel1.68001.75501.77251.7800–1.74691.66058
NDM Grade A1.15751.15251.15751.1675–1.15881.166510
Dry Whey0.49250.49250.48000.4850–0.48750.49354

Butter led the market with exceptionally high activity, recording 24 trades with relatively balanced bids (6) and offers (5) at close. This high volume underscores butter’s position as the most actively contested market today, aligning with its significant price movement. Cheese blocks saw moderate activity, with nine trades completed and balanced bids (4) and offers (5), providing reasonable volume support for the day’s price increase.

Cheese barrels experienced lower activity with only four trades executed, though slightly more bids (2) than offers (1) remaining at close suggests underlying support despite limited transactions. NDM recorded four trades with closely matched bids (5) and offers (4). Dry Whey saw no trades executed today, though four outstanding bids against only one offer at close indicate buying interest remained present despite no confirmed transactions.

Global Context

International market dynamics continue to exert significant influence on U.S. dairy markets. Most notably, China implemented an 84% retaliatory tariff on U.S. dairy products effective today, severely hindering U.S. competitiveness in the Chinese market, particularly for whey products. This action comes despite reports of declining Chinese domestic milk production.

The European Union is projected to see a slight decline in milk production (-0.2%) in 2025, driven by regulatory pressures, shrinking herds, and disease concerns, potentially tightening global supplies. EU processors are expected to prioritize cheese production, potentially impacting butter and powder availability. Meanwhile, New Zealand’s 2025 milk production is forecast to be around 21.3 MMT, slightly below the five-year average, influenced by weather and input costs.

Southeast Asia remains a vital growth region for dairy imports, though U.S. NDM/SMP exports have faced challenges recently due to uncompetitive pricing. While U.S. prices have moderated, potentially stimulating renewed interest, competition may intensify if New Zealand diverts products from China to this region. Mexico continues to be a cornerstone market for U.S. dairy, especially NDM/SMP, with domestic production challenges, including drought, potentially sustaining demand for U.S. imports.

Forecasts and Analysis

Today, the USDA released its April World Agricultural Supply and Demand Estimates (WASDE) report, presenting a more bearish picture than previous forecasts. The report raised milk production forecasts, attributing this to more extensive expected cow inventories and slightly higher output per cow. Consequently, annual average price forecasts for 2025 were lowered across the board for butter, cheese, NDM, and dry whey compared to the March forecast.

The all-milk price forecast for 2025 was lowered significantly to $21.10 per cwt. This marks a substantial downward revision from the $21.60 projected in March and $22.60 in February, highlighting rapidly evolving expectations toward a weaker price environment.

Feed cost analysis presents a mixed picture. While nearby feed futures showed strength this week, with May Corn settling at $4.8250/bushel and May Soybean Meal at $297.60/ton, the broader outlook suggests lower average feed costs throughout 2025 compared to 2024. The combination of rising near-term feed futures and sharply lower milk price forecasts suggest potential margin pressure for producers in the immediate term.

Market Sentiment

Market sentiment today appeared fragmented and somewhat contradictory. The firm price action in spot cheese and butter, supported by moderate to high volume, suggests resilience and perhaps a degree of short-term optimism among physical market participants. This aligns with earlier observations of buyers returning to the market after price dips or seeking to secure inventory ahead of seasonal demand.

However, this apparent spot market confidence contrasts sharply with the more cautious, if not bearish, longer-term outlook implied by the significantly lowered USDA price forecasts in today’s WASDE report. Furthermore, China’s imposition of steep retaliatory tariffs introduces a significant negative externality, particularly for export-sensitive commodities like whey.

Overall sentiment can best be described as mixed and divergent. Participants focused on the immediate physical market demonstrated confidence today, pushing prices higher. Yet, this occurred against deteriorating official forecasts and escalating trade tensions.

Closing Summary & Recommendations

In summary, the CME dairy markets on April 10 exhibited notable strength in cheese blocks and butter, with butter seeing particularly high trading volume. This positive price action occurred despite the release of a bearish USDA WASDE report forecasting lower average dairy prices for 2025 and China’s simultaneous implementation of substantial retaliatory tariffs on U.S. dairy products.

Given these conflicting signals and the potential for increased volatility, stakeholders should consider several key strategies. First, closely monitor price action and trading volumes in coming sessions to gauge whether today’s spot strength persists or if markets begin to price in WASDE implications and trade tariffs. Second, producers should actively review risk management strategies given the lower official price forecasts, as current market rallies may present hedging opportunities. Finally, close attention should be paid to upcoming export data releases, providing crucial evidence regarding the impact of U.S. price competitiveness and newly imposed trade barriers, particularly for whey exports to China.

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CME Dairy Market Report, February 26, 2025: Cheese Barrels Buck the Trend in Volatile Trading

Wednesday, February 26th, 2025

Dairy markets on edge as tariffs loom! Butter slides 1¢ on Canadian retaliation fears, while cheese barrels inch up 0.25¢. Class III futures stabilize at $18.91/cwt, but USDA cuts 2025 milk price forecast. Get the scoop on global impacts, feed costs, and actionable strategies for farmers in today’s CME report.

Summary

In today’s CME dairy market report, butter prices dipped 1.00¢ to $2.3350/lb as Canada’s impending 25% retaliatory tariff sparked preemptive selling, particularly impacting Midwest processors. Cheese markets showed mixed results, with blocks falling 1.00¢ to $1.8700/lb on thin trading, while barrels edged up 0.25¢ to $1.7950/lb, supported by steady foodservice demand. Class III futures stabilized at $18.91/cwt, up 0.18¢, despite ongoing trade policy uncertainties. The USDA revised its 2025 all-milk price forecast down to $22.60/cwt, reflecting tighter margins due to persistent feed cost pressures and export challenges. Global factors, including New Zealand’s 3.1% seasonal milk output growth and the EU’s push for sustainable dairy practices, continue to shape market dynamics. Farmers are advised to consider hedging feed costs, plan for potential tariff impacts, and explore niche markets like direct-to-consumer sales to navigate the evolving landscape.

Key Takeaways

  • Butter prices fell 1.00¢ to $2.3350/lb due to Canada’s upcoming 25% tariff.
  • Cheese blocks dropped 1.00¢ to $1.8700/lb, while barrels rose 0.25¢ to $1.7950/lb.
  • Class III futures stabilized at $18.91/cwt (+0.18¢).
  • USDA lowered 2025 all-milk price forecast to $22.60/cwt.
  • New Zealand’s milk production up 3.1%, increasing global competition.
  • Feed costs remain high, pressuring the milk-feed ratio (2.10 vs. breakeven 2.25).
  • EU sustainability trends are influencing U.S. export competitiveness.
  • Farmers advised to hedge feed costs and consider diversifying into niche markets.
  • Mexico’s pending tariff decision (due March 5) could significantly impact cheese prices.
  • Direct-to-consumer raw milk sales offering premiums of +$4.50/cwt in the Midwest.

Butter prices fell 1.00¢/lb as Canada’s retaliatory tariffs loom, while cheese barrels gained 0.25¢ on limited bids. Class III futures stabilized at $18.91/cwt despite heightened trade policy risks. USDA revised its 2025 all-milk price forecast down to $22.60/cwt, reflecting tighter margins.

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.8700/lb-1.00¢
Cheese (Barrels)$1.7950/lb+0.25¢
Butter$2.3350/lb-1.00¢
Nonfat Dry Milk$1.2075/lb+0.75¢
Dry Whey$0.5350/lbUnchanged

Commentary:

  • Butter slid 1.00¢ as Canada’s 25% tariff announcement (effective March 1) triggered preemptive inventory liquidation, particularly impacting Midwest processors.
  • Cheese blocks saw minimal trading (1 sale) amid uncertainty over Mexico’s tariff review, while barrels edged up 0.25¢ on steady foodservice demand.
  • NDM rose 0.75¢ on renewed Southeast Asian buying interest, though USDA’s 2025 skim-solids export forecast remains cautious (-3% YOY).

Volume and Trading Activity

  • Butter: 26 trades executed (range: $2.3275–$2.34/lb), dominated by pre-tariff sell orders.
  • Cheese: Blocks saw 1 trade, while barrels attracted 2 bids at $1.7950/lb amid thin liquidity.
  • NDM: 6 trades ($1.1975–$1.2075/lb) with aggressive bidding (22 bids vs. 2 offers).
  • Dry Whey: No trades, with 4 offers lingering at $0.5350/lb.

Global Context

  • Canada’s Tariffs: 25% duty threatens $450M in annual Wisconsin butter exports, forcing processors to redirect supplies domestically.
  • New Zealand Production: RaboResearch reports 3.1% seasonal milk output growth, increasing competition in Asian markets and pressuring U.S. butter prices.
  • EU Sustainability Push: Rising consumer demand for carbon-neutral dairy is pressuring U.S. exporters to adopt greener practices or risk losing EU market share.

Forecasts and Analysis

  • USDA 2025 Milk Price: Revised to $22.60/cwt (-0.45¢ from January), reflecting tighter margins from feed costs and export headwinds.
  • Feed Costs: Corn settled at $4.7900/bu (-0.3% weekly), while soybean meal dipped to $302.00/ton (-0.3%), maintaining pressure on the milk-feed ratio (2.10 vs. breakeven 2.25).
  • Class III Futures: March contract edged up to $18.91/cwt (+0.18¢), aligning with USDA’s Q2 projection of $18.50/cwt.

Visual Trend:
Class III milk futures remain 3.6% below February’s peak of $19.50/cwt, with USDA forecasting sideways movement through Q2 amid tariff uncertainty.

Market Sentiment

  • Trader Quote: “Butter’s tariff-driven drop overshadows cheese’s resilience – the real test comes when Mexico’s tariff decision drops March 5.” – CME Floor Trader.
  • General Outlook: 62% of traders remain bearish on near-term butter markets, while cautiously optimistic about NDM export demand recovering in Q2.

Closing Summary & Recommendations

Today’s market highlighted tariff-driven volatility (butter) versus cautious stability (cheese, NDM). Feed costs and trade policies now outweigh production trends as margin drivers.

Actionable Steps:

  1. Hedge Feed: Lock in 50% of Q2 corn needs at $4.70/bu (December futures) to offset soybean meal’s 8% YoY surge.
  2. Tariff Contingency Planning: Diversify 15-20% of milk to NDM production if Mexico imposes cheese tariffs.
  3. Explore Niche Markets: Direct-to-consumer raw milk sales now offer premiums of +$4.50/cwt in Midwest markets.

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CME Dairy Market Report February 13, 2025: Mixed Signals Amid Global Shifts

Thursday, February 13th, 2025

CME dairy markets show mixed results as global supply growth meets shifting demand. Cheese strengthens while butter and whey face pressure. USDA revises production forecasts amid changing cow yields. International factors and economic shifts reshaped the landscape. What’s driving these trends? Find out in our comprehensive report.

Summary:

The CME Dairy Market Report from February 13, 2025, shows a mixed performance for dairy products. The cheese is doing well, but the price of butter and dry whey has dropped. The USDA has lowered its prediction for milk production because of fewer cows and lower yields. However, worldwide, milk supply is expected to grow by 0.8%. U.S. dairy exports are strong, and more demand from China could boost prices. All milk will likely rise to $23.05 per hundred weight, and feed costs might decrease by 10.1%. Dairy farmers are dealing with challenges like labor shortages and new rules, while global markets are affected by EU and New Zealand changes. These various factors create a dynamic market that needs careful tracking by those in the industry.

Key Takeaways:

  • Butter prices decline slightly, but demand remains steady.
  • Cheddar blocks are stable, while cheddar barrels show a slight increase, suggesting balanced supply-demand conditions.
  • Nonfat dry milk and dry whey remain stable, with dry whey seeing a slight price decline.
  • Class III and IV milk futures suggest mixed expectations for upcoming months.
  • Global milk supply is expected to grow despite a revised downward forecast for US production.
  • US dairy exports continue to perform strongly, boosted by increased import demand from China.
  • USDA forecasts indicate higher all-milk prices and reduced feed costs, potentially benefiting dairy farm profitability.
  • Global dairy trade dynamics affected by regional challenges and economic factors are crucial for stakeholders to monitor.
CME dairy markets, cheese prices, butter decline, USDA milk forecast, global supply growth

The Chicago Mercantile Exchange (CME) dairy market showed mixed results on February 13, 2025, reflecting the complex interplay of supply, demand, and global economic factors. 

Cash Market Overview 

  • Butter closed at $2.4000 per pound, down 0.50 cents from the previous day. The market saw active trading with eight trades, three bids, and four offers. Despite the slight dip, butter prices remain relatively strong, supported by steady demand.
  • Cheddar blocks held steady at $1.9200 per pound, with no trades but one offer recorded. The stability in block prices suggests a balanced supply-demand situation in the cheese market.
  • Cheddar barrels showed strength, increasing by 0.25 cents to close at $1.8300 per pound. There was one bid indicating potential buying interest.
  • Nonfat dry milk (NDM) Grade A remained unchanged at $1.3000 per pound, with two offers but no trades. The lack of movement in NDM prices suggests a steady market for milk powders.
  • Dry whey experienced the most significant decline of the day, dropping 0.75 cents to close at $0.5600 per pound. Three offers were recorded, but no trades took place.

Weekly Price Trends 

Comparing the current week’s averages to the prior week:

  • Butter is slightly down, averaging $2.4038 compared to $2.4100 last week.
  • Cheddar blocks and barrels increase, with blocks averaging $1.9125 (up from $1.8685) and barrels at $1.8225 (up from $1.7970).
  • NDM has weakened, with the current average at $1.3063, down from $1.3380.
  • Dry whey has significantly decreased, averaging $0.5706 compared to $0.6055 last week.

Futures Market 

Class III milk futures for February held steady at $20.33 per hundredweight, while Class IV futures slightly decreased to $19.42. These prices reflect expectations for milk prices in the coming month. Cheese futures for February increased slightly to $1.8980 per pound, indicating a positive outlook for cheese prices. 

Market Analysis 

The dairy market is showing signs of mixed sentiment, influenced by several key factors: 

  1. Milk Production Forecast: The USDA has revised its 2025 milk production forecast downward to 227.2 billion pounds, a decrease of 0.8 billion from earlier estimates. This reduction is due to lower-than-expected milk per cow yields (24,200 pounds, down 85 pounds) and adjustments in dairy cow inventories.
  2. Global Supply Growth: Despite the U.S. forecast reduction, global milk supply is expected to grow by 0.8% in 2025, with all significant exporting regions anticipating gains for the first time since 2020. Favorable feed costs and improved weather conditions support this increase.
  3. Demand Dynamics: U.S. dairy exports remain strong, reaching $8.2 billion in 2024. China’s projected 2% year-on-year growth in dairy import volumes in 2025 could also support prices for certain products, particularly whole milk powder.
  4. Economic Factors: The USDA projects an all-milk price of $23.05 per hundredweight for 2025, a $0.50 increase from previous forecasts. Feed costs are expected to decrease by 10.1%, potentially improving dairy farm profitability.
  5. Regional Challenges: Dairy farmers face ongoing challenges such as labor shortages, environmental regulations, and production constraints. However, innovative cost management and technology adoption are helping farmers navigate these issues.

Global Factors 

The global dairy trade landscape continues to evolve: 

  • The European Union’s butterfat market is weakening due to higher seasonal availability, with the H1-2025 outlook heavily dependent on spring pasture conditions and disease impacts.
  • New Zealand producers have carefully matched ingredient output to demand, firming prices while meeting opportunities in high-protein markets.
  • The U.S. milk output is expected to grow by just over 1% in volume in 2025, constrained by a shortage of heifers.

Conclusion 

The dairy market remains dynamic, with varied performance across different products. While cheese appears to be the most substantial segment, butter and dry whey face some downward pressure. The industry continues to navigate challenges such as shifting production patterns, changing consumer preferences, and global trade dynamics. Producers and buyers should continue to monitor these trends closely, as they may impact pricing and procurement strategies in the coming weeks. 

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Style_Bullvine
Style_Bullvine
Style_Bullvine
Slide 8
Slide 8
Slide 8
Slide 5
Slide 5
Slide 5
Slide 5
Slide 5
Slide 5
Overlays

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