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Archive for CME Dairy Markets

CME Daily Dairy Market Report – April 25, 2025: Butter plunges while cheese barrels rise

Friday, April 25th, 2025

Butter plunges while cheese barrels rise in CME’s latest report – market contradictions emerge as Chinese tariffs bite and USDA forecasts turn bearish.

EXECUTIVE SUMMARY: The April 25th CME dairy market report reveals stark contrasts across product categories, with butter prices dropping sharply (-4.50¢) while cheese barrels gained moderately (+1.50¢), creating an unusual inversion over blocks. These divergent movements occurred against a backdrop of significantly lowered USDA price forecasts for 2025, driven by expectations of increased domestic milk production. Chinese retaliatory tariffs reaching up to 150% continue to severely restrict US export opportunities, particularly affecting whey markets and forcing US exporters to pivot toward Mexico and Southeast Asia. The disparity between immediate market behavior and the bearish long-term outlook creates both challenges and potential opportunities for industry stakeholders. Producers face the prospect of tightening margins throughout 2025, necessitating vigilant risk management strategies amid volatile feed costs and lower projected milk prices.

KEY TAKEAWAYS

  • Product Divergence: Butter fell 4.50¢ to $2.2800/lb despite trading at a 45% discount to European prices, while cheese barrels rose 1.50¢ to $1.7050/lb, demonstrating how product-specific factors currently outweigh broader market trends.
  • Trade Barriers Reshaping Markets: Chinese retaliatory tariffs up to 150% are effectively blocking US access to this critical market, particularly devastating for whey products and forcing exporters to pursue alternative destinations despite favorable global price positioning.
  • USDA Forecast Turns Bearish: April’s WASDE report significantly lowered 2025 price projections across all dairy categories (All-Milk down $0.50 to $21.10/cwt), representing a dramatic $1.95/cwt reduction since January’s forecast.
  • Volume Concerns Signal Uncertainty: Inconsistent trading activity (8 loads for blocks, 0 for NDM) suggests market indecision and potentially less reliable price discovery, highlighting the conflicting signals facing industry participants.
  • Producer Margin Pressure Intensifies: The combination of lower milk price projections and volatile feed costs creates significant risk of tightening margins throughout 2025, emphasizing the critical importance of proactive risk management strategies.

Butter prices plunged under domestic market pressures, while cheese barrels firmed modestly, highlighting ongoing divergence within the dairy complex against a backdrop of broadly bearish long-term forecasts.

Key Price Changes & Market Trends

Dairy product prices exhibited mixed performance during today’s trading session at the Chicago Mercantile Exchange (CME). Butter experienced a significant decline, while cheese markets showed divergence between blocks and barrels. Powder markets were relatively stable but faced underlying pressures.

ProductClosing Price ($/lb)Change from April 24th (¢/lb)
Cheese (Blocks)$1.7000Unchanged
Cheese (Barrels)$1.7050+1.50
Butter$2.2800-4.50
Nonfat Dry Milk (NDM)$1.1875Unchanged
Dry Whey$0.5050-0.50

Butter: The CME spot butter price experienced a sharp decline, settling at $2.2800 per pound, dropping 4.50 cents from the previous session. This marked decline occurred despite US butter trading at a substantial discount to international benchmarks, with European butter prices reportedly around 45% higher. The inability of potential export arbitrage to support domestic prices strongly suggests that internal market dynamics are the dominant force. Ample domestic butter inventories, seasonally strong production levels, and potentially softer food service demand compared to the previous year are likely contributing factors.

Cheese (Blocks): Cheddar blocks closed unchanged at $1.7000 per pound. This stability came amidst relatively active trading, with 8 loads changing hands. The flat close follows significant price erosion earlier in the week, as indicated by the weekly average price falling considerably from Monday/Tuesday levels ($1.7750). Today’s price pause may signal a temporary stabilization point after the recent sell-off.

Cheese (Barrels): In contrast to blocks, Cheddar barrels firmed by 1.50 cents, closing at $1.7050 per pound. This movement resulted in barrels settling at a slight premium to blocks, continuing a pattern of recent volatility and occasional inversions in the traditional block-barrel price relationship. The increase occurred on lighter trading volume (3 loads) compared to blocks. This upward momentum could indicate specific buying interest from the processed cheese sector or reflect continued tightness in spot barrel availability.

Nonfat Dry Milk (NDM): The NDM market closed unchanged at $1.1875 per pound, with no trades executed during the session. The lack of activity points to a state of equilibrium or indecision among market participants. Market narratives continue to emphasize solid export demand, particularly from Mexico and Southeast Asia, as a key supporting factor.

Dry Whey: Dry whey prices eased slightly, declining by 0.50 cents to close at $0.5050 per pound on minimal trading volume (2 loads). The whey market faces significant structural headwinds primarily due to substantial retaliatory tariffs imposed by China, reportedly reaching as high as 150% when combined with baseline tariffs.

Volume and Trading Activity

Trading activity varied across the dairy complex today, influencing the perceived reliability of price movements:

Summary of Trades: Butter: 3 loads; Cheese Blocks: 8 loads; Cheese Barrels: 3 loads; NDM: 0 loads; Dry Whey: 2 loads.

Analysis:

Butter: Activity was limited, with only 3 loads traded. The significant 4.50-cent price drop occurred on this relatively thin volume, which might have amplified the downward move. The presence of 3 bids versus 2 offers at the close indicates some buying interest emerged at the lower $2.2800 level, but it was insufficient to absorb the selling pressure.

Cheese Blocks: Blocks saw the most robust activity with 8 trades completed. This higher volume lends more credence to the price stability observed today. The balanced 2 bids versus 2 offers at the close further supports the notion of equilibrium at the $1.7000 price point.

Cheese Barrels: The 1.50-cent gain in barrels occurred on very light volume (3 trades). This low participation level makes the price increase potentially less representative of broad market sentiment. The tight 1 bid versus 1 offer at the close reinforces the impression of specific tightness at the settlement price.

Nonfat Dry Milk (NDM): The complete absence of trades (0 loads) underscores significant illiquidity and market indecision in NDM today. The single uncovered offer suggests potential selling interest remains just above the last traded price, but no buyers were willing to meet it.

Dry Whey: Minimal activity (2 loads) reflects ongoing market caution and potentially poor liquidity, likely linked to trade uncertainties surrounding Chinese tariffs.

Historical Price Comparison

Today’s closing prices represent significant changes from both recent highs and the weekly averages:

ProductToday’s CloseWeek High (Mon/Tue)Change from HighWeekly Average
Cheese (Blocks)$1.7000$1.7750-7.50¢$1.7420
Cheese (Barrels)$1.7050$1.8100-10.50¢$1.7595
Butter$2.2800$2.3250-4.50¢$2.3145
NDM$1.1875$1.1875Unchanged$1.1850
Dry Whey$0.5050$0.5100-0.50¢$0.4940

The cheese complex has seen particularly steep declines from early-week highs, with blocks down 7.50 cents and barrels down 10.50 cents from their Tuesday peak, highlighting the significant volatility in these markets over a short timeframe.

Global Context

International factors continue to exert significant influence on the US dairy market landscape, with trade policy currently playing an outsized role:

Global Production Trends

While overall global milk production is forecast to grow modestly in 2025 (around 0.8%), driven primarily by anticipated gains in the US and EU, regional conditions differ significantly.

New Zealand: Milk production has shown strength for the season-to-date (+2.8% to +3.9% year-over-year), contributing to global supplies. However, there are indications that late-season growth might slow due to weather conditions. Critically, New Zealand benefits from a free trade agreement with China, providing duty-free access that gives its exporters a significant competitive advantage over US suppliers in that key market.

European Union: The EU outlook involves modest projected growth (+0.5%), but the sector faces considerable headwinds. Declining cow numbers, tightening environmental regulations, and the potential re-emergence of animal diseases like Bluetongue pose risks to output. These constraints could limit EU export competitiveness, potentially offering some support for US NDM prices.

China: Domestic milk production in China is forecast to decline (-2.6% year-over-year) in 2025, a reversal following years of expansion. This reduction is expected to stimulate import demand, though US products face significant barriers.

Trade Dynamics and Demand

Geopolitical friction and retaliatory tariffs are currently the dominant global factors impacting US dairy exports.

US-China Trade Friction: Severe retaliatory tariffs imposed by China on US dairy products (reportedly up to 135% on most products and 150% on whey) are effectively blocking US access to this major market. This forces US exporters to increasingly rely on alternative destinations like Mexico and Southeast Asia, and is particularly damaging for the whey complex, which traditionally relied heavily on Chinese demand.

Competitive Positioning: While US cheese and butter prices remain competitive on the global stage, the realization of this advantage is hampered by tariffs and logistical challenges. NDM exports appear more resilient due to established demand from other regions.

Forecasts and Analysis

USDA April WASDE Outlook Chart If displayed graphically, this chart would show the Class III Milk price trajectory from January to April WASDE forecasts (declining from $19.55 to $17.60), contrasted with current May futures prices ($18.24), highlighting the significant disconnect between USDA projections and market pricing.

The USDA’s April WASDE report presented a significantly more bearish outlook for 2025 compared to previous months.

Production Increase: The forecast for 2025 US milk production was raised by 0.7 billion pounds to 226.9 billion pounds, attributed to expectations for higher cow numbers and improved milk yield per cow. This projection signals increased domestic supply, adding downward pressure on prices.

Price Reductions: Consequently, USDA made substantial downward revisions to its 2025 average price forecasts: All-Milk price was cut by $0.50 to $21.10/cwt (a stark $1.95/cwt decline since the January forecast), Class III milk by $0.35 to $17.60/cwt, Class IV milk by $0.60 to $18.20/cwt, Cheddar cheese by 2.0 cents to $1.790/lb, butter by 7.0 cents to $2.445/lb, NDM by 3.5 cents to $1.220/lb, and dry whey by 1.5 cents to $0.510/lb.

Feed Cost Considerations

Feed costs remain a critical variable for producer profitability.

Futures Market: Today’s CME settlements show May Corn at $4.7725/bu and December Corn at $4.5500/bu. May Soybean Meal closed at $289.90/ton, while December Meal settled higher at $304.70/ton.

While USDA’s longer-term view suggested potentially lower feed costs in 2025 compared to the peaks of 2022/23, recent market commentary highlights near-term price strength and volatility, particularly in corn. The slight premium in deferred soybean meal futures suggests the market anticipates potentially higher protein feed costs later in the year.

Market Dynamics and Implications

Margin Pressure: The combination of sharply lower official milk price forecasts from USDA and feed costs that exhibit near-term volatility creates a significant risk of tightening margins for dairy producers throughout 2025. This outlook increases financial risk and underscores the importance of proactive cost management and risk mitigation strategies.

Market Disconnect: A notable divergence persists between the deeply bearish USDA price forecasts (driven largely by increased supply projections) and the behavior observed in certain market segments. For instance, nearby futures contracts (e.g., May Class III at $18.24) continue to hold a premium over the USDA’s $17.60 annual average forecast. Furthermore, the firmness in cash NDM and the rise in cash barrels run counter to the overarching bearish narrative.

Retail vs. Foodservice Demand Dynamics

The current market performance reflects divergent trends between retail and foodservice channels. While specific April 2025 data isn’t conclusive, the pattern of block-barrel price movements provides insights into channel-specific demand dynamics.

The relative stability in blocks (primarily used in retail cheese) compared to the firmness in barrels (predominantly used in processed cheese for foodservice) suggests that foodservice demand may be showing comparative strength or facing tighter immediate supplies. This comes after the recent Easter holiday, which typically boosts retail demand temporarily but can lead to inventory adjustments afterward.

Industry analysts note that post-holiday retail demand typically experiences a lull, which may be contributing to the blocks’ recent price decline from early-week levels. Meanwhile, the processed cheese sector appears to be maintaining more consistent purchasing patterns, potentially due to steady quick-service restaurant performance.

Market Sentiment

Today’s market sentiment can best be described as mixed, leaning towards cautiously bearish, reflecting the divergent price movements and conflicting signals:

Overall Tone: The substantial drop in butter prices, coupled with the weight of the recent bearish USDA forecasts, casts a significant shadow over the market. However, the ability of NDM prices to hold steady and the modest gain in cheese barrels prevent a uniformly negative interpretation. Persistent concerns about producer profitability in the face of lower milk price projections and uncertain feed costs contribute to the cautious mood.

Trader and Analyst Perspectives: “Buyers seem hesitant to build inventory at current cheese prices, waiting for clearer demand signals or further price concessions,” noted one market analyst in recent CME commentary. This cautious approach aligns with today’s modest trading activity.

“The butter market feels well-supplied; buyers are patient,” observed a dairy broker earlier this week, a sentiment reinforced by today’s significant price decline despite the global price advantage US butter holds.

“We continue to see consistent inquiries for NDM from Southeast Asian buyers, keeping the export pipeline active and supporting domestic prices,” reported a trader specializing in powder markets, explaining the stability in NDM despite zero trades today.

Supporting Observations: The lack of trading in NDM points to significant market indecision. The relatively low trading volumes in butter and barrels suggest market participation might be thinner amidst the current uncertainty, potentially leading to less robust price discovery. Market commentary from other regions also notes a “wait and see approach” from buyers dealing with confusing global signals.

Upcoming Market Catalysts

Several key events and data releases in the coming weeks could significantly impact market direction:

  1. USDA Dairy Products Report – May 6, 2025 (3:00 PM ET): This monthly report will provide crucial production data for butter, cheese, and dry milk products, offering insights into how manufacturers are responding to current market conditions.
  2. The Saudi Food Show – May 12-14, 2025: This international food exhibition could influence global dairy trade patterns, especially given Saudi Arabia’s significant dairy import needs.
  3. IFCN Dairy Conference – May 20-23, 2025 (Netherlands): This major global dairy industry conference will likely produce significant market outlook information and international production forecasts.
  4. The Great Canadian Cheese Festival – May 24-25, 2025: While primarily consumer-focused, this event showcases North American dairy industry trends and could provide insights into Canadian-US dairy trade dynamics.
  5. Next WASDE Report – May 12, 2025: The USDA’s monthly update to its World Agricultural Supply and Demand Estimates will be closely watched to see if the bearish outlook for dairy prices continues or is revised.

Closing Summary & Recommendations

In summary, CME dairy markets exhibited divergence today. Butter prices fell sharply under domestic supply pressure, while cheese barrels edged higher despite overall market headwinds and stable block prices. NDM held steady amid export hopes but lacked trading activity, and whey saw minor losses. The session highlighted the competing influences of domestic inventories, specific product demand, export uncertainties, and overarching bearish supply forecasts.

Recommendations/Outlook:

Producers: The significantly lower USDA price forecasts necessitate vigilant margin management. The gap between current futures levels and USDA’s projections, combined with feed cost volatility, highlights the need to evaluate risk management strategies for milk prices. Close monitoring of milk component values is advised, as they may offer relative support compared to fluid milk prices. Prepare for potential margin pressure throughout 2025 and consider necessary operational adjustments.

Traders: Confirmation of NDM export sales will be crucial to potentially break the current market deadlock and provide direction. The block-barrel spread requires close monitoring for insights into relative demand strength between natural and processed cheese channels. Be cognizant of low liquidity in some contracts, which can exaggerate price movements.

Analysts: Key areas for focus include tracking domestic inventory levels (particularly butter), verifying actual export volumes against anecdotal reports, and assessing demand resilience across different channels amidst economic pressures and significant trade barriers. Quantifying the real impact of tariffs on trade flows versus market sentiment remains critical.

Mark your calendar for the upcoming USDA Dairy Products Report on May 6th, which will provide essential production data that could significantly influence near-term market direction.

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CME Dairy Market Report: April 22, 2025 – Futures Climb as Market Defies Bearish Forecasts

Monday, April 21st, 2025

Market defies gravity: Futures climb despite USDA’s bearish outlook – is export demand trumping production forecasts in dairy’s high-stakes game?

EXECUTIVE SUMMARY: CME dairy markets displayed a striking disconnect on April 22, 2025, with futures markets mounting significant gains in direct opposition to recently slashed USDA price forecasts. While cash markets showed modest improvements in butter, barrels, and NDM (each up 0.25¢), the real story unfolded in futures markets, where participants appeared to discount the USDA’s bearish outlook based on increased milk production projections. Global dynamics intensify market complexity, with New Zealand leveraging its duty-free access to China as U.S. exporters face prohibitive tariffs up to 125%, forcing American suppliers to increasingly rely on Mexico and Southeast Asia. The market’s divergent signals create a challenging landscape where producer margins remain under pressure despite seemingly optimistic futures, making risk management strategies increasingly critical heading into mid-2025.

KEY TAKEAWAYS

  • FUTURES-FORECAST DISCONNECT: A significant gap exists between USDA’s sharply lower price projections (All-Milk forecast down to $21.10/cwt) and strengthening futures markets (May Class III at $18.37/cwt), suggesting traders may be prioritizing current demand signals over supply forecasts.
  • GLOBAL TRADE RESHAPING MARKETS: U.S. dairy exports face structural challenges in China due to prohibitive tariffs, while New Zealand benefits from duty-free access, forcing American suppliers to pivot toward Mexico and Southeast Asia, particularly for NDM and skim milk powder.
  • CHEESE MARKET DYNAMICS: High trading volume (11 loads each for blocks and barrels) with unfilled bids at close indicates active price discovery and potential buyer support emerging after recent declines, though readily available milk supplies in the Midwest continue flowing into cheese vats.
  • PRODUCER MARGIN PRESSURE: Despite potential easing in feed costs (May Corn at $4.75/bushel), USDA’s downward price revisions signal continued margin compression for producers through 2025, emphasizing the critical importance of proactive risk management strategies.
  • PRODUCT-SPECIFIC SENTIMENT: Market sentiment varies dramatically by product – cautious in cheese, patient in well-supplied butter, and optimistic in export-driven NDM – creating a fragmented outlook requiring product-specific strategies.
CME dairy prices, futures market trends, USDA dairy forecast, global dairy trade, dairy export demand

Dairy markets showed modest gains in cash butter, barrels, and Nonfat Dry Milk today, while futures posted significant advances. This upward momentum contrasts recent bearish USDA price forecasts, suggesting market participants may focus on current demand signals rather than longer-term supply projections.

Key Price Changes & Market Trends

Today’s CME cash dairy markets displayed mixed results, with three products posting slight gains while cheese blocks and dry whey remained unchanged. Futures markets demonstrated more significant strength across the board.

ProductClosing Price ($/lb)Change from Yesterday (¢/lb)TradesBidsOffers
Butter2.3225+0.25502
Cheddar Block1.7750NC1150
Cheddar Barrel1.8100+0.251130
NDM Grade A1.1850+0.25113
Dry Whey0.4775NC021

Commentary on Price Movements

Butter: Prices increased slightly by 0.25 cents to $2.3225/lb on moderate volume. This modest recovery follows Monday’s decline despite market commentary suggesting ample inventories and potentially softer food service demand compared to last year. While international demand provides some support, domestic supply factors remain the primary influence.

Cheddar Blocks: Prices held steady at $1.7750/lb despite high trading volume (11 loads) following Monday’s significant 6-cent drop. Notably, blocks traded as low as $1.7400 before recovering to close unchanged, indicating buyers stepped in to absorb the selling pressure. Readily available milk supplies in the Midwest continue to flow into cheese vats, while post-Easter demand has been described as steady but not particularly robust.

Cheddar Barrels: Barrel cheese gained 0.25 cents to close at $1.8100/lb, also on active volume, with 11 trades executed. Barrels maintain their premium over blocks, a relationship that has seen volatility recently. The upcoming Federal Milk Marketing Order changes, set to remove barrel prices from component pricing formulas effective June 1, 2025, add complexity to market dynamics.

Nonfat Dry Milk: Grade A NDM firmed by 0.25 cents to $1.1850/lb, building on Monday’s 1-cent gain, though on very light volume with only one trade recorded. Market strength continues to be attributed to firm international skim milk powder prices and robust export demand, particularly from Mexico and Southeast Asian markets.

Dry Whey: Prices remained unchanged at $0.4775/lb with no trades executed, following a half-cent decline on Monday. The market commentary describes the whey market as relatively balanced but potentially unstable, with buyers hesitant to build inventory and sellers reluctant to offload volumes at current values.

Volume and Trading Activity

Trading activity today was heavily concentrated in the cheese complex, with both Cheddar Blocks and Barrels trading 11 loads each. This high activity level, particularly in blocks that held firm despite early pressure, suggests considerable two-way interest and potentially active position adjustment by market participants.

Butter experienced moderate activity, with five trades completed, while the powder markets were notably quiet. NDM saw just a single trade, and Dry Whey recorded zero transactions, indicating these markets are currently less driven by spot market dynamics and more influenced by factors like export commitments.

The bid/offer analysis at market close provides additional insights:

  • Cheese: Both blocks (5 bids / 0 offers) and barrels (3 bids / 0 offers) closed with unfilled bids and no offers, indicating buying interest was present at the closing prices, though sellers were unwilling to transact at those levels.
  • Butter: The close saw zero bids against two offers, pointing to available selling interest above $2.3225 but a lack of corresponding buyer interest.
  • NDM: One bid was posted against three offers, suggesting more selling interest than buying interest at the $1.1850 level despite the price firming earlier.
  • Dry Whey: Two bids and one offer indicated relatively balanced interest, though this did not translate into completed trades.

Global Context

International dairy market dynamics continue to significantly influence U.S. prices, shaped by divergent supply trends, shifting demand patterns, and evolving trade policies.

Supply Conditions

New Zealand: Production remains robust, tracking higher year-over-year for the season-to-date. Kiwi exporters benefit significantly from their free trade agreement with China, enjoying duty-free access that solidifies their dominant position in that key market. Producers focus on efficiency and shift exports towards higher-value products beyond powders.

European Union: Milk production faces headwinds, with forecasts pointing towards declines or stagnation due to tightening environmental regulations, lower cow numbers, and lingering effects of disease outbreaks like the Bluetongue Virus. Despite lower milk availability, EU processors prioritize cheese production to meet solid domestic and export demand.

China: Domestic milk production is contracting, with forecasts predicting a 2.6% decline in 2025 after years of expansion. Farmgate milk prices have fallen below production costs for many producers, discouraging expansion. This decline supports the need for imports, although the government maintains a long-term goal of increasing self-sufficiency.

Demand & Trade Flows

China remains a critical but complex market. A recent surge in imports across whey, cheese, and whole milk powder was likely influenced by buyers attempting to secure supply ahead of escalating trade tensions and tariffs. The U.S. faces significant challenges, with retaliatory tariffs reaching as high as 125% on some dairy products, effectively limiting access for American suppliers while competitors like New Zealand benefit.

Markets like Mexico and Southeast Asia have become increasingly vital for U.S. dairy exports, particularly for NDM and skim milk powder, providing crucial outlets given the difficulties in accessing the Chinese market.

The broader trade environment remains uncertain, with potential shifts in U.S. global trade alignment potentially introducing new barriers or challenges. The ongoing US-China trade tensions are a dominant factor shaping feed markets and dairy export opportunities.

Forecasts and Analysis

Recent forecasts from the USDA present a challenging outlook for U.S. dairy prices, contrasting with the relative strength observed in futures markets today.

USDA Price & Production Forecasts

The USDA’s April 2025 World Agricultural Supply and Demand Estimates (WASDE) report significantly lowered price expectations for the year. Key 2025 average price forecasts include:

  • All-Milk: $21.10/cwt (down $0.50 from the March forecast and $1.95 from January)
  • Class III Milk: $17.60/cwt (down $0.35 from March)
  • Class IV Milk: $18.20/cwt (down $0.60 from March)
  • Cheddar Cheese: $1.790/lb (down 2.0 cents from March)
  • Butter: $2.445/lb (down 7.0 cents from March)
  • NDM: $1.220/lb (down 3.5 cents from March)
  • Dry Whey: $0.510/lb (down 1.5 cents from March)

The primary driver for these downward revisions was an increase in the 2025 milk production forecast to 226.9 billion pounds, representing a 0.7-billion-pound increase from the March estimate. This was attributed to expectations for higher cow numbers and improved milk yield per cow, reversing earlier forecasts that projected lower production.

Feed Costs

Feed futures saw some weakness today, with May Corn settling around $4.75/bushel and May Soybean Meal near $292.10/ton. In the long term, USDA expects overall feed costs in 2025 to be lower than in recent years. However, softer international soybean demand (partly due to China tariffs potentially shifting acres to corn) and strong corn export demand complicate the feed price outlook.

Analysis & Implications

A significant disconnect exists between the sharply lower USDA price forecasts and today’s upward movement in CME futures (e.g., May Class III settled at $18.37/cwt, May Class IV at $18.62/cwt). This divergence suggests market participants may discount the USDA’s increased production forecast, perhaps placing more weight on strong export demand signals (especially for powders) or technical market factors.

Regardless of potentially easing feed costs, the USDA’s milk price forecast reductions point towards a significant margin squeeze for dairy producers through 2025. The milk-feed ratio was reported to be unfavorably low earlier in the year, and the latest forecasts reinforce concerns about profitability, underscoring the importance of risk management strategies.

Market Sentiment

Market sentiment in the dairy complex appears fragmented and generally cautious, reflecting the divergent product trends and uncertainty surrounding demand and forecasts.

Product-Specific Sentiment

Cheese: Sentiment is mixed. While buyers demonstrated support today by defending price levels after Monday’s drop, underlying caution persists. One analyst noted, “Buyers seem hesitant to build inventory at current prices, awaiting clearer demand signals.” Concerns linger about ample milk availability for cheese production and potentially sluggish post-Easter retail movement. Recent export strength offers a counterpoint.

Butter: The prevailing feeling is that the market remains well-supplied, leading buyers to be patient. Comfortable inventory levels appear to be capping upside potential, even though prices remain historically elevated.

NDM: Sentiment here is more optimistic, driven largely by export activity. A trader highlighted, “We’re seeing ongoing, consistent inquiries from Southeast Asian buyers that keep the export pipeline active and support domestic prices.” This optimistic view persists despite lower official price forecasts.

General Market Mood

Broader economic concerns weigh on overall sentiment. Factors such as ongoing trade tensions, persistently high interest rates, and inflation dampen consumer confidence and potentially impact household spending on dairy products. Market volatility remains a key theme across all dairy products.

The market mood reflects a split: optimism grounded in strong international demand for milk powders contrasts with wariness regarding the domestic supply/demand balance for cheese and butter, particularly given economic headwinds. The disconnect between strengthening futures and bearish USDA forecasts adds a layer of uncertainty to the overall outlook.

Closing Summary & Recommendations

In summary, the CME dairy markets on April 22 presented a picture of divergence. Cash markets saw modest gains in butter, barrels, and NDM, while blocks and whey remained unchanged. Trading was notably active in the cheese complex, but it was very thin in powders. Futures markets posted solid gains, moving counter to the recent significantly lowered price forecasts from the USDA, which were based on expectations of increased milk production.

Recommendations for Stakeholders

Producers: The divergence between current futures strength and the bearish USDA outlook warrants close monitoring. Given the significant downward revisions in official price forecasts, proactive risk management remains crucial, even with potentially easing feed costs. Pay close attention to export demand signals, especially for milk powders, as this appears to be a key pillar of current market support. Be prepared for continued margin pressure as forecasted in recent reports.

Traders: Acknowledge the technical strength shown in futures markets today but exercise caution given the bearish fundamental backdrop painted by USDA supply projections. Watch cheese market spreads and trading volumes for signs of follow-through or reversal. The strength of NDM appears to be heavily reliant on sustained export momentum. Butter and Dry Whey seem caught in a balance, potentially awaiting fresh catalysts for a directional move.

Analysts: The key focus should be reconciling the current futures market optimism with the USDA’s pessimistic supply/price outlook. Closely track upcoming export data releases and domestic retail and food service demand indicators to gauge whether current market strength is sustainable. Monitoring ongoing global supply developments (particularly in the EU and NZ) and the impact of trade policies (especially US-China relations) will be critical for assessing future market direction.

Learn more:

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CME Daily Dairy Market Report: April 21, 2025—Cheese Down, NDM Up

Monday, April 21st, 2025

Cheese prices crash 6¢ on surplus milk, butter dips as NDM defies trend with export-driven gains in mixed dairy markets.

EXECUTIVE SUMMARY: The CME dairy markets saw sharp divergences on April 21, with cheddar blocks plummeting 6¢ to $1.7750/lb amid abundant Midwest milk supplies and sluggish post-Easter demand, while barrels fell 3.25¢ despite higher trading activity. Butter slipped 2.25¢ on thin trading, reflecting ample inventories, but Nonfat Dry Milk (NDM) gained 1¢ due to strong export orders from Southeast Asia and Mexico. Global dynamics intensified the split: EU and New Zealand production pressured cheese/butter prices, while NDM capitalized on tight international powder markets. Trading volumes remained low in cheese blocks and butter, raising volatility concerns, as producers were urged to hedge against milk price swings and monitor feed costs. Market sentiment leaned bearish for cheese but cautiously optimistic for NDM’s export potential.

KEY TAKEAWAYS:

  • Cheese Collapse: Blocks hit $1.7750/lb (-6¢) on surplus milk and weak demand, with barrels inverting to trade higher at $1.8075/lb despite a 3.25¢ drop.
  • Butter Stability Test: Prices eased to $2.3200/lb (-2.25¢) amid light trading, signaling buyer patience despite historically high levels.
  • NDM Resilience: Rose 1¢ to $1.1825/lb on robust global demand, contrasting with milkfat weakness.
  • Global Split: EU/NZ milk output pressures cheese/butter, while U.S. NDM gains export traction.
  • Risk Alert: Producers advised to hedge amid volatile Class III prices and rising soybean meal costs.
CME dairy market report, cheese price trends, butter and NDM prices, dairy export demand, Class III milk futures

Cheese prices plunged on the CME cash market today amid signs of ample supply and hesitant demand, with blocks dropping 6 cents and barrels falling 3.25 cents. Butter also weakened as limited trading activity suggested comfortable inventory levels, while Nonfat Dry Milk bucked the trend with modest gains, supported by solid export demand. This divergence highlights the current split market conditions, with protein components showing strength against weakness in the milkfat complex.

Key Price Changes & Market Trends

Today’s session at the Chicago Mercantile Exchange saw significant downward pressure in cheese and butter prices while Nonfat Dry Milk prices firmed. Dry whey experienced a minor decline as well.

ProductClosing Price ($/lb)Change from Prior Day (¢/lb)
Cheese (Blocks)$1.7750-6.00
Cheese (Barrels)$1.8075-3.25
Butter$2.3200-2.25
Nonfat Dry Milk (NDM)$1.1825+1.00
Dry Whey$0.4775-0.50

Commentary on Price Movements

Cheese: Cheddar cheese prices dropped substantially today, with blocks leading the decline. The 6-cent plunge in blocks to $1.7750 per pound coincided with reports of readily available milk supplies in key Midwestern production regions directed to cheese vats, potentially boosting near-term supply. Post-Easter retail restocking appears less robust than anticipated, while food service demand remains tentative despite higher trading activity in barrels. The unusual price inversion, with barrels ($1.8075) trading above blocks ($1.7750), likely reflects the thin block trading rather than a fundamental shift in market dynamics.

Butter: Prices eased by 2.25 cents to $2.3200 per pound on minimal trading. This movement suggests the market balances comfortable inventory levels against steady but not aggressive demand. Recent USDA Cold Storage data may indicate sufficient butter stocks nationally, reducing buyer urgency in the spot market. While prices remain historically elevated, today’s lack of buying interest points to a potential near-term ceiling.

Nonfat Dry Milk: Unlike other commodities, NDM gained 1 cent to settle at $1.1825 per pound. This strength likely stems from firm international skim milk powder prices and continued solid export demand, particularly from Mexico and Southeast Asian markets. Domestic demand for high-protein ingredients also remains supportive.

Dry Whey: Prices dipped slightly by 0.50 cents to $0.4775 per pound, suggesting a relatively balanced market. Whey supplies remain generally available, given robust cheese production rates. At the same time, demand from both domestic food processing and animal feed sectors appears stable but not strong enough to drive significant price increases.

Volume and Trading Activity

Trading activity varied significantly across dairy products today, with overall volume relatively light, particularly in butter and block cheese markets.

Butter: Activity was minimal, with only one load trading hands. Two bids and one offer were on the board at the close, indicating minimal market depth and participation. This thin trading environment makes the price discovery process less reliable and potentially more volatile.

Cheddar Blocks: Only one load traded today. Notably, no bids were registered at the close, while two offers remained unfilled, clearly signaling the selling pressure that drove prices sharply lower. This imbalance reflects significant buyer hesitancy at current price levels.

Cheddar Barrels: This market saw the most activity among dairy products, with five loads trading. However, unlike blocks, no bids were present at the close against two unfilled offers, reinforcing the overall weak tone in the cheese complex despite the higher volume.

NDM Grade A: Moderate activity was observed with four loads trading. The market appeared more balanced, with four bids and three offers posted at the close, suggesting more two-sided interest than the cheese markets. This balanced bid/ask picture lends credibility to today’s price increase.

Dry Whey: Activity was moderate, with three loads trading. At the close, one bid remained on the board, with no offers present, indicating some underlying support but a lack of aggressive selling interest at current levels.

The low volume in butter and blocks suggests today’s price discovery was based on limited participation, potentially making these price points less representative of broader market sentiment and subject to revision with increased activity in coming sessions.

Global Context

International dairy market dynamics are exerting mixed influences on U.S. prices. Production trends in major exporting regions like the European Union and New Zealand appear stable, slightly increasing as they progress through their respective seasonal cycles. This increased global milk supply, particularly if channeled into butter and cheese production in the EU, could contribute to a more competitive international market for these products, potentially capping U.S. export opportunities and adding downward pressure to domestic prices.

Conversely, the global market for milk powders, particularly skim milk powder (SMP, the international equivalent of NDM), seems to be on firmer footing. Steady import demand from key regions like Southeast Asia and the Middle East/North Africa (MENA), potentially coupled with less aggressive European export positioning, appears to support global powder prices. Today’s rise in CME NDM prices, despite domestic cheese/butter weakness, suggests that U.S. NDM remains competitive globally and is benefiting from this international demand-pull.

At current price levels, U.S. butter ($2.3200/lb) and cheese ($1.7750-$1.8075/lb) may face stiffer competition on the world market if international prices are softer. Market participants should continue monitoring exchange rates and competitor pricing to assess U.S. export competitiveness across the dairy complex.

Forecasts and Analysis

Today’s CME Class III futures settlement for May was $18.08/cwt, while the May Class IV settlement was $18.37/cwt. The significant weakness in today’s cash cheese market puts immediate downward pressure on the Class III complex, potentially challenging the $18.08 futures level if this cash weakness persists. Conversely, the strength of NDM supports the Class IV price.

Feed costs remain a critical variable for producer profitability. Today’s CME futures settlements show May Corn at $4.82/bushel and December Corn at $4.64/bushel. May Soybean Meal settled at $292.90/ton, with December Meal at $306.40/ton. While near-term corn prices are relatively stable, deferred soybean meal prices show an increase, suggesting potentially rising protein feed costs later in the year. This outlook, combined with potentially volatile milk prices indicated by today’s spot market action, underscores the importance of risk management for dairy producers.

Calculating the milk-feed price ratio based on current futures would provide essential insights into anticipated margin pressure or relief. Producers should closely monitor cheese market developments due to their significant impact on Class III prices and evaluate hedging strategies for milk output and feed inputs. Traders might anticipate continued volatility, particularly in the cheese complex, and watch for confirmation of trends in upcoming sessions and key data releases like Cold Storage and Milk Production reports.

Market Sentiment

Today’s prevailing sentiment in dairy markets appears decidedly mixed, reflecting the divergent price action across commodities. The sharp sell-off in cheese has generated a cautious, if not outright bearish, tone in that segment. The market commentary reflects growing unease about the balance between robust cheese production and potentially softening demand. One analyst might note, “Buyers seem hesitant to build inventory at current cheese prices, waiting for clearer demand signals or further price concessions.” The lack of bids on the CME board lends credence to this view.

Sentiment surrounding butter also appears cautious, influenced by ample inventories capping upside potential, though the historically high price level prevents deep bearishness. A broker might observe that the “butter market feels well-supplied; buyers are patient.”

In stark contrast, sentiment regarding NDM is more optimistic. Positive export expectations likely fuel the price strength. A trader might comment: “We continue to see consistent inquiries for NDM from Southeast Asian buyers, keeping the export pipeline active and supporting domestic prices.”

Overall, the market mood is fragmented. While concerns about milkfat and cheese values dominate discussions following today’s session, the underlying support for milk powders provides a counterpoint. Uncertainty regarding the strength of domestic demand heading into late spring and summer, coupled with evolving global market conditions, contributes to a cautious outlook despite pockets of optimism in the powder complex.

Closing Summary & Recommendations

In summary, today’s CME dairy markets were characterized by significant weakness in cheese and butter prices, driven by ample domestic supplies and cautious buyer sentiment. Nonfat Dry Milk provided a notable exception, strengthening on the back of positive export expectations and firmer global powder markets. Trading volume was light in butter and blocks, adding uncertainty to those price declines, while NDM saw more active, two-sided trade.

Based on today’s activity and broader market context, stakeholders should consider the following:

For Producers:

  • Closely monitor the trajectory of cash cheese prices, as continued weakness could pressure Class III milk prices further
  • Evaluate risk management strategies, paying attention to both milk price volatility and feed cost trends indicated by corn and soybean meal futures
  • Consider that the relative strength in NDM offers some support to Class IV values, which may provide a more stable pricing option in the near term

For Traders:

  • Recognize the current divergence between cheese/butter and NDM markets
  • Look for confirmation of trends in subsequent trading sessions and upcoming fundamental reports (e.g., USDA Cold Storage, Milk Production)
  • Be mindful of the low liquidity observed in butter and blocks, which could lead to heightened volatility
  • Continue monitoring global market developments and export demand as key factors influencing price direction

The outlook suggests a market grappling with potentially heavy cheese and butter supplies against stronger fundamentals for milk powders, driven largely by export dynamics. Near-term price direction will likely hinge on evolving domestic demand, U.S. export competitiveness, and global milk production trends.

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CME Dairy Market Report: April 16, 2025 – Cheddar Blocks Surge While Barrels Reverse Course; Butter Continues Decline Amid Stable Powder Markets

Wednesday, April 16th, 2025

Cheese markets split as blocks surge and barrels tumble; butter slides further while global signals flash warning signs for US producers.

EXECUTIVE SUMMARY: The April 16th CME dairy markets revealed sharp divergence as cheddar blocks jumped 2.50¢ to $1.8250/lb while barrels dropped by the same amount to $1.8750/lb, dramatically narrowing their unusual price spread to just 5¢. Butter’s downward slide continued, falling another penny to $2.3400/lb despite significant premiums in international markets. Trading volumes remained subdued across most products, suggesting market uncertainty as participants digest USDA’s downgraded milk price forecasts for 2025, which now project Class III at .95/cwt and Class IV at .80/cwt. The global context presents mixed signals, with the GDT Price Index rising 1.6% despite forecasts of constrained milk production in key exporting regions, while US futures markets remain cautious about near-term price prospects amid ample domestic butter inventories and ongoing export challenges.

KEY TAKEAWAYS

  • Cheese Market Volatility Intensifies: The rapid correction in block-barrel spread (from a 10¢ to 5¢ barrel premium) highlights unstable dynamics between retail and processing channels, with block prices rising despite zero trades through strong bidding interest.
  • Butter Discount to Global Markets Persists: US butter continues trading at substantial discounts to international benchmarks ($2.34/lb vs. ~$3.48/lb for EU butter), yet domestic inventories continue weighing on prices despite potential export opportunities.
  • Low Trading Volumes Signal Uncertainty: Most products saw minimal trading activity, reflecting market hesitation as participants await clearer signals on seasonal demand trends and the impact of USDA’s lowered price forecasts.
  • Feed Costs Creating Margin Pressure: Recent strength in corn and soybean meal futures adds pressure to dairy producer margins already facing lowered milk price projections, increasing the importance of proactive risk management strategies.
  • Long-Term Supply Constraints Could Provide Support: Despite current bearish sentiment, forecasted production constraints in major exporting regions (EU and New Zealand) due to environmental regulations and structural factors could potentially support prices later in 2025 if global demand remains resilient.
CME dairy market report, cheese price volatility, butter price trends, USDA milk price forecast, global dairy market analysis

The dairy market showed significant divergence today, with cheddar blocks climbing while barrels retreated, dramatically narrowing their unusual price spread. Butter continued its downward slide while milk powders remained stable. Class III futures settled slightly below the USDA’s revised annual forecast, reflecting market uncertainty amid mixed global signals and domestic inventory concerns.

Key Price Changes & Market Trends

Today’s CME session revealed sharp contrasts across dairy products. Cheddar cheese prices moved opposite directions, correcting yesterday’s unusual spread dynamics, while butter extended its decline and milk powders held steady.

ProductClosing Price ($/lb)Change from Yesterday (¢/lb)
Cheese (Blocks)$1.8250+2.50¢
Cheese (Barrels)$1.8750-2.50¢
Butter$2.3400-1.00¢
Nonfat Dry Milk$1.1675Unchanged
Dry Whey$0.4750Unchanged

The cheese complex provided today’s most dramatic storyline. Cheddar blocks jumped 2.50 cents to $1.8250/lb, while barrels fell by the same amount to $1.8750/lb. This 5-cent swing narrowed the barrel premium over blocks to just 5 cents, correcting Tuesday’s unusual 10-cent spread. Tuesday’s barrel surge occurred on minimal volume (just one trade), making it vulnerable to today’s correction. The rapid shift highlights ongoing volatility in the relative valuation between cheese destined for retail/food service (blocks) versus processed cheese manufacturing (barrels).

Butter prices weakened further, dropping another penny to $2.3400/lb, continuing this week’s downward trend from Tuesday’s $2.3500/lb. Persistent concerns about abundant domestic inventories appear to be weighing on the market. The current CME cash price represents a substantial discount to global benchmarks, suggesting domestic supply factors dominate market dynamics.

NDM and Dry Whey prices remained unchanged at $1.1675/lb and $0.4750/lb respectively. This stability follows a period where NDM held steady while Dry Whey showed modest strength earlier in the week. The lack of movement could reflect balanced immediate supply/demand fundamentals or trader caution.

Volume and Trading Activity

FinalChange ¢/lb.TradesBidsOffers
Butter2.3400-1.00821
Cheddar Block1.8250+2.50030
Cheddar Barrel1.8750-2.50111
NDM Grade A1.1675NC012
Dry Whey0.4750NC200

Trading activity was generally subdued across dairy products today, particularly in cheese, with butter seeing the most transactions:

  • Butter: Moderate activity with eight loads traded. At close, two unfilled bids and one unfilled offer remained, suggesting relatively balanced interest near the settlement price.
  • Cheddar Block: No trades executed, but three unfilled bids and zero offers at close indicate significant unsatisfied buying interest at $1.8250/lb or higher. This reinforces the bullish price move despite the absence of transactions.
  • Cheddar Barrel: One trade was executed with one bid and one offer remaining close, indicating limited but balanced interest around the $1.8750/lb settlement.
  • NDM Grade A: No trades, with one bid and two offers at close, suggesting slight selling pressure but insufficient convergence for trades to materialize.
  • Dry Whey: Two trades were completed with no bids or offers remaining, indicating the trades satisfied available interest at the $0.4750/lb level.

The overall light volume could signal market uncertainty. Participants may hesitate to commit to significant positions while awaiting clearer signals from upcoming supply/demand reports, confirmation of seasonal demand trends, or further developments in global markets.

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

MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter2.34752.35002.3400––2.34582.320527
Cheddar Block1.77001.80001.8250––1.79831.713011
Cheddar Barrel1.84001.90001.8750––1.87171.75857
NDM Grade A1.16751.16751.1675––1.16751.16050
Dry Whey0.46500.47500.4750––0.47170.48304

Global Context

International dairy markets present a mixed picture, influencing US price direction and sentiment.

The most recent Global Dairy Trade (GDT) auction on April 15 showed continued overall strength, with the GDT Price Index rising 1.6%. However, results varied significantly by product. Fats (Butter +1.5%, Anhydrous Milk Fat +2.1%) and Whole Milk Powder (+2.8%) showed gains, alongside strong increases in Mozzarella (+5.4%) and Lactose (+22.0%). Conversely, Skim Milk Powder (-2.3%) and Cheddar (-1.8%) registered declines.

European Union milk supply forecasts continue to point toward tightening conditions, with projections suggesting a decline in milk production of 0.2% to 0.3% for 2024/2025. This trend stems from shrinking dairy herds, significant environmental regulations under the EU Green Deal, disease pressures, and persistent cost pressures on producers. European butter prices remain significantly higher than the US, creating a substantial market price gap.

New Zealand milk production forecasts for the 2025 market year are generally stable to slightly lower. FAS/Wellington projects a modest decrease to 21.3 million metric tons, slightly below the recent five-year average. New Zealand continues its strategic shift from WMP toward value-added products like butter and cheese, increasing competition in these global markets.

The export outlook for US dairy products faces headwinds. Competitiveness concerns persist, and muted demand from China, particularly for milk powders, remains a recurring theme. The USDA’s April WASDE report lowered its 2025 export forecasts for US cheese, dry skim milk products, and lactose.

Forecasts and Analysis

Recent USDA forecasts provide critical context for current market conditions, though they paint a more cautious picture than earlier projections.

The USDA has revised its milk price forecasts downward for 2025. The latest all-milk price projection is $21.60 per hundredweight (cwt), significantly reduced from February’s $22.60/cwt forecast and January’s $23.05/cwt outlook. The Class III price forecast was lowered to $17.95/cwt, and Class IV was reduced to $18.80/cwt.

Today’s May Class III futures settlement at $17.87/cwt aligns closely with the USDA’s lowered forecast. However, May Class IV futures settled at $18.32/cwt, notably below the USDA’s $18.80/cwt annual projection. This divergence suggests the futures market is currently pricing in greater weakness for Class IV components (butter and NDM) than anticipated in the USDA’s latest annual average forecast.

Feed costs remain a critical factor for producer profitability. Today’s CME futures settlements saw May Corn rise 2.00 cents to $4.8550/bushel and May Soybean Meal increase $2.30 to $296.70/ton. The recent strength in grain and meal futures pressures margins, which are already facing lower milk price projections.

Market Sentiment

The prevailing mood in dairy markets appears mixed and cautious, reflecting conflicting price signals, recent downward revisions to USDA forecasts, and ongoing global uncertainties.

Recent commentary has highlighted the high volatility in the cheese complex, particularly the rapid shifts in the block-barrel spread, signaling uncertainty regarding demand strength between retail/food service and processing channels. Concerns about ample domestic butter inventories continue to surface, often cited as a key factor weighing prices despite reports of stable retail movement or strength in global benchmarks.

One market analyst noted, “Volatility in the cheese complex remains elevated, with the block-barrel relationship shifting rapidly, reflecting uncertainty between processing and retail demand channels.” Another observed, “Butter continues to search for a floor, as ample domestic supplies appear to outweigh global price signals for now.”

Overall, sentiment leans cautious; while some anticipate seasonal demand improvement, the lower USDA price forecasts and ongoing global market uncertainties temper bullish conviction. The contrast between the cautious-to-bearish sentiment prevalent in the US market and the relative strength in the recent overall GDT index indicates a potential disconnect or lag.

Closing Summary & Recommendations

CME dairy markets exhibited sharp divergence today, as Cheddar blocks rose significantly while barrels reversed lower, narrowing the recent spread. Butter prices declined amid moderate trading, while NDM and Dry Whey held steady. Overall market sentiment remains cautious following recent USDA forecast downgrades amidst ongoing global market uncertainties.

For Producers: The volatile cheese spread directly impacts Class III milk values and warrants close monitoring. Given the lower USDA price forecasts for 2025 and the recent uptick in feed futures, evaluating risk management strategies (hedging, forward contracts) is crucial. Continued focus on operational efficiency, cost control, and potentially optimizing milk components remains advisable.

For Traders: The thin trading volume behind some of today’s significant price moves, especially the Cheddar block increase on zero trades, warrants caution regarding the sustainability of these levels. Confirmation of underlying demand trends is needed. While the US butter price discount to global markets exists, the persistent inventory overhang remains a significant headwind that needs to be cleared before sustained rallies are likely.

Near-term uncertainty is expected to persist, particularly in the cheese markets, as they seek equilibrium after recent volatility. In the long term, the constrained milk production growth forecast in major exporting regions like the EU and New Zealand could support global dairy prices if demand remains resilient, offering a potential counterpoint to the current bearish domestic sentiment and forecasts.

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CME Dairy Report: Cheese Barrels Surge to Rare Premium Over Blocks as Markets Show Strength

Tuesday, April 15th, 2025

Cheese barrels defy norms with 6¢ surge, outpacing blocks in rare market twist. Butter holds steady as powders mix signals.

EXECUTIVE SUMMARY: The CME dairy markets saw dramatic cheese price shifts on April 15, 2025, with barrels jumping 6¢ to a rare 10¢ premium over blocks—a historic inversion signaling urgent processed cheese demand. Butter edged up 0.25¢ on active trading (19 loads), while dry whey gained 1¢ and NDM stalled. Futures markets mirrored cash optimism, with May cheese futures holding a 13¢ premium, though deferred feed costs hinted at margin pressures. Analysts warn the barrel rally’s thin trading volume (1 load) may amplify volatility, urging producers to monitor inverted spreads and traders to verify demand sustainability.

KEY TAKEAWAYS:

  • Barrel-block inversion alert: Barrels surged to $1.90/lb (+6¢), creating a rare 10¢ premium over blocks—a potential red flag for market imbalance.
  • Butter’s quiet strength: Prices firmed to $2.35/lb (+0.25¢) on robust 19-load trading, suggesting stable inventories.
  • Feed cost divide: Nearby corn/soy eased slightly, but deferred corn futures (+2.25¢) signal rising Q4 input costs.
  • Futures signal confidence: May cheese futures trade 13¢ above cash prices, anticipating prolonged tightness.
  • Actionable insight: Producers should hedge against feed cost risks; traders must confirm barrel demand in follow-up sessions.
cheese market analysis, dairy commodity prices, CME dairy report, butter price trends, feed cost outlook

Today’s CME spot dairy markets exhibited considerable strength in the cheese complex, with cheddar barrels leading a significant rally that established a rare price inversion over blocks. Meanwhile, butter posted modest gains on active trading volume, and the powder markets delivered mixed results.

The unusual barrel-over-block premium captured market attention as barrels surged 6.00 cents to close at $1.9000/lb, while blocks gained 3.00 cents to settle at $1.8000/lb. This created an atypical 10-cent premium for barrels, a market anomaly suggesting exceptionally strong demand from the processed cheese sector potentially facing tight spot supplies.

CME Cash Dairy Market Closing Prices (April 15, 2025)

ProductClosing Price ($/lb)Change from Yesterday (¢/lb)
Cheese (Blocks)$1.8000+3.00¢
Cheese (Barrels)$1.9000+6.00¢
Butter$2.3500+0.25¢
Nonfat Dry Milk$1.1675Unchanged
Dry Whey$0.4750+1.00¢

Weekly Trends Show Sustained Market Strength in Cheese Complex

The broader weekly context reveals even more significant momentum in the cheese market, with barrels outpacing blocks in weekly gains.

Weekly Price Trends

ProductCurrent Week Avg.Prior Week Avg.Weekly Change
Butter$2.3488/lb$2.3205/lb+2.83¢
Cheese (Blocks)$1.7850/lb$1.7130/lb+7.20¢
Cheese (Barrels)$1.8700/lb$1.7585/lb+11.15¢
NDM Grade A$1.1675/lb$1.1605/lb+0.70¢
Dry Whey$0.4700/lb$0.4830/lb-1.30¢

This week’s barrel cheese average has surged +11.15¢ over last week, significantly outpacing blocks’ +7.20¢ gain. Butter’s weekly average remains firm at $2.3488/lb (+2.83¢ week-over-week), while dry whey shows mild softness despite today’s gain.

Trading Volume Analysis: Butter Active, Barrels Move on Minimal Volume

Today’s trading activity varied dramatically across products, with butter seeing robust participation while the significant barrel price movement occurred on extremely thin volume.

ProductTradesUnfilled BidsUnfilled Offers
Butter1935
Cheese (Blocks)741
Cheese (Barrels)110
NDM Grade A012
Dry Whey210

The butter market demonstrated healthy liquidity with 19 loads changing hands, ending with a balanced bid/offer scenario. Block cheese saw moderate activity with seven trades executed, while notably, the dramatic 6.00-cent increase in barrel prices occurred on just a single transaction. This thin trading volume in barrels, combined with zero offers remaining at the close, underscores extreme market tightness or seller reluctance at current price levels.

Futures Market Signals Strong Expectations for May Contracts

The futures market largely reflected today’s positive cash sentiment, with most contracts increasing. May cheese futures established a significant premium to current cash prices, suggesting traders anticipate continued strength.

Futures vs. Cash Price Comparison

ContractSettlement PriceCash PricePremium/(Discount)
Class III (MAY)$17.92/cwtN/A–
Cheese (MAY)$1.9300/lb$1.8000/lb+13.00¢
Butter (MAY)$2.5100/lb$2.3500/lb+16.00¢
Dry Whey (MAY)$0.4575/lb$0.4750/lb-1.75¢

May cheese futures trade at a substantial 13.00¢/lb premium to cash prices, signaling expectations of continued market tightness. Similarly, butter futures’ +16.00¢ premium suggests traders anticipate stronger demand as we move into the second quarter.

Feed Cost Outlook: Mixed Signals for Producer Margins

Feed commodity futures presented a mixed picture for dairy producers, with nearby contracts showing modest weakness while deferred contracts displayed varying trends.

Feed Cost Comparison

CommodityMay 2025 FuturesDec 2025 FuturesSpread
Corn ($/bu)$4.8350$4.6400-$0.1950
Soybeans ($/bu)$1.0325$1.0225-$0.0100
Soybean Meal ($/ton)$294.40$307.70+$13.30

New-crop December corn futures trade at a 19.50¢/bu discount to May, suggesting some potential relief in feed costs later in the year. However, soybean meal shows a +$13.30/ton backwardation, presenting a mixed signal for overall feed cost risk management.

Market Sentiment: Bullish for Cheese, Cautious for Butter

The prevailing mood among traders has shifted distinctly positive for cheese while remaining more measured for butter and neutral for NDM.

“The bids were aggressive today, especially for barrels. Buyers are scrambling to cover near-term needs ahead of stronger spring demand.”
— CME cheese trader, April 15, 2025

“While butter firmed, the futures market seems hesitant. We’re watching inventory reports closely, as stocks remain adequate and could cap rallies.”
— Dairy market analyst, April 15, 2025

Strategic Recommendations for Market Participants

For Producers:

Today’s cash and futures strength, especially in Class III components, signals positive momentum for milk prices. The unusual barrel-block relationship, as does the potential for volatility in thinly traded markets, warrants close attention. Consider implementing margin protection strategies that capitalize on the current strength while guarding against potential feed cost increases later in the year.

For Traders:

The upward momentum in cheese appears strong, but the sustainability of the large barrel premium achieved on a very light volume requires careful monitoring. Butter seems more range-bound in the immediate term. Look for confirmation of buying interest in subsequent sessions and follow upcoming USDA reports on production and inventories for further directional cues.

For Analysts:

Investigating the drivers behind the sharp barrel premium over blocks – whether temporary scarcity, logistical challenges, or fundamental demand shifts – will be crucial for understanding market direction. The impact of global price trends and export flows will be critical for assessing the durability of current U.S. price levels, particularly for cheese and milk powders.

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CME Dairy Market Report: April 14, 2025 – Cheese Prices Surge on Active Trading Despite Bearish USDA Outlook; Butter, Powders Remain Static Amid Market Pause

Monday, April 14th, 2025

Cheese surges while forecasts fall! Today’s dairy markets reveal a puzzling split as spot trading defies bearish USDA outlook. What’s driving this?

EXECUTIVE SUMMARY: The April 14, 2025 CME dairy markets displayed a stark divide, with cheese prices climbing significantly (+2.50¢ for blocks, +3.50¢ for barrels) amid active trading, while butter and powder markets remained completely static with zero activity. This divergence comes despite the USDA’s newly reduced price forecasts, which lowered the 2025 All-Milk price by 50¢ to .10/cwt amid expectations for increased production. Global factors create additional complexity, with high Chinese retaliatory tariffs (reaching 135-150%) effectively blocking a major export market while production challenges affect competitors in Europe and Oceania. The disconnect between immediate cheese market dynamics and bearish longer-term projections creates a challenging environment requiring careful strategic planning for producers facing potentially tightening margins throughout 2025.

KEY TAKEAWAYS

  • Market Divergence: Cheese prices showed surprising strength (+2.50¢ blocks, +3.50¢ barrels) with active trading, while butter, NDM, and dry whey markets saw no price movement or trading activity, reflecting divided market drivers.
  • Bearish USDA Outlook: The April WASDE report significantly lowered milk price forecasts (Class III -35¢ to $17.60/cwt, Class IV -60¢ to $18.20/cwt) while raising production estimates by 700 million pounds, signaling potential margin pressure for producers.
  • Global Trade Barriers: U.S. dairy faces prohibitive Chinese tariffs (135-150%) that negate price competitiveness in this crucial market, forcing greater reliance on other export destinations while competing exporters face production challenges.
  • Strategic Implications: Producers should focus intensely on margin protection strategies while monitoring upcoming Federal Milk Marketing Order pricing changes; traders should prepare for continued volatility and watch for upcoming Global Dairy Trade auction results on April 15th.
  • Mixed Signals: The current market demonstrates a significant disconnect between immediate physical market needs driving cheese prices higher and the bearish fundamental outlook suggested by forecasts and inactive butter/powder markets.

Cheese markets rallied on active trading today despite bearish USDA forecasts. In contrast, butter and powder markets remained static, highlighting the complex dynamics influencing dairy markets as we move deeper into the spring flush period.

Key Price Changes & Market Trends

Today’s CME session revealed a sharply divided dairy complex. Cheese markets showed significant upward momentum with notable trading volume, while butter and milk powders saw no price changes and zero spot market trades, reflecting underlying caution and divergent market drivers – much like a herd splitting between fresh pasture and the familiar comfort of the barn.

ProductClosing Price ($/lb.)Change from Yesterday (¢/lb.)
Cheese (Blocks)1.7700+2.50
Cheese (Barrels)1.8400+3.50
Butter2.3475Unchanged
Nonfat Dry Milk1.1675Unchanged
Dry Whey0.4650Unchanged

Commentary:

Cheddar blocks and barrels posted substantial gains today, rising 2.50 cents and 3.50 cents per pound, respectively. This rally comes despite milk components running rich as spring flush progresses and reports of growing cheese inventories, particularly for blocks in the Western manufacturing region. The upward movement suggests persistent buyer interest, not unlike how feed dealers stock up before planting season. Processors appear to be securing supplies ahead of anticipated seasonal demand improvements or addressing immediate inventory needs. While earlier reports indicated steady-to-stronger retail cheese demand countered by lighter food service offtake, both block and barrel formats found support today, with barrels showing particular strength – reminiscent of how high-component Holstein herds often outperform Jersey crosses during peak production seasons.

In stark contrast, butter, NDM, and dry whey markets were inactive on the spot exchange, closing unchanged with no trades executed – as dormant as a silage pile in midwinter. The lack of activity in butter comes amid reports of readily available cream supplies and active churning by manufacturers building inventory for the upcoming baking season. For NDM, the market appears balanced with ample availability of condensed skim milk, pointing to sufficient supply meeting somewhat steady demand, similar to how a well-managed TMR ration keeps production steady without overfeeding. The dry whey market continues to face significant headwinds from potential oversupply from increased cheese production at new large-scale facilities in Michigan and Texas and weakened demand amid global trade uncertainty.

Volume and Trading Activity

Trading activity was entirely concentrated within the cheese markets today, highlighting the divergence across the dairy complex – much like how a farm’s attention shifts dramatically during corn silage harvest while routine milking operations continue unchanged.

Cheese (Blocks): 4 trades were executed. The market closed with one bid against five offers, suggesting that while the price advanced significantly during the session, selling interest emerged more prominently at the closing level of $1.7700/lb, potentially capping further immediate gains – similar to how a group of fresh heifers initially boosts herd average before settling into their production rhythm.

Cheese (Barrels): 5 trades were completed. The market closed with two bids and no offers outstanding at $1.8400/lb, indicating unfilled buying interest remained at the day’s higher price, supporting the more substantial 3.50-cent gain – not unlike how demand for quality replacement heifers often exceeds supply during expansion phases.

Butter: No trades were executed. The market closed with no bids and offers, signaling a complete lack of engagement in today’s spot cash market – as quiet as the parlor between milkings.

Nonfat Dry Milk (NDM): No trades were executed. The close saw one bid and three offers, indicating some buying interest existed below the market. Still, more sellers were present at or above the unchanged price of $1.1675/lb – reminiscent of how cull cow prices often see more sellers than buyers during seasonal herd contractions.

Dry Whey: No trades were executed. The market closed with no bids and two offers, confirming the presence of selling interest but an absence of buyers at the $0.4650/lb level – similar to how surplus heifer calves find few takers during periods of industry contraction.

The bid/ask dynamics at the close reinforce the market narrative: sustained buying interest in barrels aligned with its stronger performance. At the same time, resistance appeared in blocks – much like how component premiums sometimes favor protein over butterfat, depending on regional processor needs.

Global Context

U.S. dairy markets continue to operate within a complex global environment characterized by shifting trade dynamics, varied production trends among competitors, and geopolitical tensions – not unlike how a modern dairy operation must simultaneously manage nutrition, reproduction, milk quality, and environmental compliance.

Export Demand: U.S. export demand remains a mixed picture. Shipments to Mexico, particularly for cheese, have been robust, and demand has also shown strength in regions like the Middle East/North Africa (MENA) and Central America. However, the ongoing trade dispute between the U.S. and China casts a significant shadow – as disruptive as a sudden mycoplasma outbreak in a closed herd. High retaliatory tariffs, reportedly reaching 135% on cheese and butter and 150% on whey, effectively price U.S. dairy out of this crucial market. While U.S. cheese and butter prices remain competitive compared to international benchmarks in Europe and Oceania, this advantage is negated in the Chinese market by the tariffs – similar to how having excellent genetics means little if your milk quality bonuses are lost due to high SCC.

Global Production Trends: Production outlooks vary among key exporting regions:

  • European Union (EU): Milk production faces constraints, including falling cow numbers and the potential re-emergence of the Bluetongue virus – reminiscent of how domestic herds face their disease challenges from BVD to Johne’s. Recent data showed lagging output in major producers like Germany, France, Ireland, and the Netherlands, although UK production has been strong. While seasonal output is rising, overall EU production may contract slightly, with processors increasingly prioritizing cheese production – similar to how domestic processors often shift milk utilization based on component values and plant capacities.
  • New Zealand (NZ): After a strong start to the season, milk collections have slowed due to dry conditions – much like how Midwest producers often see production dips during August heat stress periods. February production was down year-over-year, though the season-to-date figure remains positive. Overall growth is still anticipated for the season, but supplies available for the GDT platform are reportedly tight – comparable to how feed inventories can look adequate on paper but face spot shortages before the new crop harvest.
  • Australia: Milk production continues to decline year-over-year, limiting export availability – similar to how regions like the Western U.S. have seen persistent contraction due to water availability issues.

The upcoming Global Dairy Trade (GDT) auction on April 15 is a key indicator of international demand, particularly from Asia. Futures markets suggest potential strength for milk powders but a possible weakness for milk fats in the upcoming event – a divergence not unlike how protein and butterfat premiums can move in opposite directions based on processor needs.

Forecasts and Analysis

The recently released April USDA World Agricultural Supply and Demand Estimates (WASDE) report presented a more bearish outlook for the U.S. dairy sector in 2025 compared to previous forecasts – as sobering as receiving a lower-than-expected milk check during what should be a profitable season.

USDA WASDE Key Forecasts (April 2025 Report for Year 2025):

  • Milk Production: Forecast raised by 700 million pounds from the March estimate to 226.9 billion pounds. This upward revision was attributed to expectations for larger average cow inventories and slightly higher milk output per cow – similar to how adding a third milking or implementing an aggressive reproduction program can boost production beyond initial projections.
  • Class III Milk Price: Forecast lowered by 35 cents to $17.60 per cwt, reflecting lower projected prices for cheese and dry whey – a drop that could mean the difference between covering operating costs and building equity for many operations.
  • Class IV Milk Price: Forecast lowered by 60 cents to $18.20 per cwt due to lower projected prices for butter and NDM – particularly concerning for producers in regions heavily weighted toward Class IV utilization.
  • All-Milk Price: Forecast lowered by 50 cents to $21.10 per cwt. This marks a significant $1.95/cwt decline from the January 2025 forecast, highlighting a rapidly evolving, weaker price outlook. This reduction could translate to nearly $400 less per cow annually for a 24,000 lb herd average.

Feed Cost Outlook: Feed costs remain a critical factor for producer margins. CME Corn futures settled at $4.8425/bushel for May and $4.6175/bushel for December. Soybean Meal futures settled at $296.90/ton for May and $308.70/ton for December. While the April WASDE kept the 2024/25 season-average farm price forecast for corn unchanged at $5.50/bushel, recent market commentary noted sharp increases in near-term corn and soybean meal prices, adding pressure to producer costs – much like how a sudden equipment breakdown can throw off even the most carefully planned cash flow projections.

Analysis & Implications: The combination of significantly lower milk price forecasts driven by higher anticipated milk production, alongside stable to potentially rising feed costs, points towards a considerable tightening of income over feed cost (IOFC) margins throughout 2025. Notably, the USDA’s lowered 2025 average Class III forecast ($17.60/cwt) aligns closely with today’s CME May 2025 Class III futures settlement price ($17.64/cwt). This suggests the futures market may have already incorporated much of the bearish information from the WASDE report – similar to how forward-thinking producers have likely already factored these projections into their risk management strategies and capital investment decisions.

Market Sentiment

Overall market sentiment on April 14 can best be described as mixed, cautious, and uncertain – not unlike the mood at a county extension meeting after a particularly challenging growing season. A significant disconnect exists between the bullish behavior observed in the CME spot cheese market, the broader bearish fundamentals suggested by official forecasts, and the inactivity in other dairy commodity markets.

Concerns persist regarding macroeconomic factors, including potential economic slowdown or recession impacting consumer demand, particularly in food service channels, which have shown signs of weakness – similar to how restaurant closures during COVID dramatically shifted milk utilization patterns. Inflationary pressures may also influence consumer purchasing habits, with dairy case behavior showing signs of trading down from premium to value products.

Global trade tensions, especially the U.S.-China tariff situation, continue to inject uncertainty and weigh heavily on export sentiment, particularly impacting products like whey – as disruptive as losing a significant milk buyer in a regional market. While U.S. dairy remains competitively priced in many global markets, the inability to access the critical Chinese market without prohibitive tariffs is a primary concern – comparable to having a productive herd but limited processing capacity in your region.

Furthermore, the recent downward revisions to milk price forecasts by the USDA and ongoing concerns about feed costs contribute to a cautious, if not outright bearish, outlook for producer margins – reminiscent of the challenging economic environment faced during the 2015-2016 downturn.

One market analyst noted, “The surprising resilience of spot cheese prices despite the bearish implications of the April WASDE report suggests immediate physical market needs are currently overriding longer-term projections.” However, another trader commented, “The substantial Chinese tariffs remain a significant impediment to U.S. export growth, forcing greater reliance on other international markets and potentially limiting the upside for domestic prices, especially for whey – it’s like trying to fill a Class I bottling plant when your largest customer suddenly switches suppliers.”

Closing Summary & Recommendations

In summary, the CME dairy markets presented a bifurcated picture on April 14. Cash cheese prices saw robust gains driven by active trading, defying the recent bearish USDA WASDE report that projected lower average prices for 2025 due to increased milk production forecasts. Conversely, butter, NDM, and dry whey markets remained static, with no spot trades executed, reflecting broader market caution influenced by ample supplies and global trade headwinds, particularly the impact of U.S.-China tariffs on export potential.

Recommendations & Outlook:

  • Producers: The outlook necessitates a strong focus on margin protection – as critical as maintaining proper vaccination protocols. Vigilantly monitor feed costs against the backdrop of significantly lowered milk price forecasts. Proactive risk management strategies, including forward contracting, Dairy Margin Coverage (DMC) participation, and Dairy Revenue Protection (DRP) policies, should be evaluated. Understanding component values and potential optimization strategies remains essential, especially with upcoming Federal Milk Marketing Order (FMMO) pricing changes impacting cheese – similar to how adjusting your feeding program to maximize components can significantly impact your milk check in a multiple-component pricing system.
  • Traders: The divergence between spot cheese strength and bearish fundamentals/other market inactivity presents both opportunities and risks – not unlike the contrasting strategies of expanding versus paying down debt during uncertain price cycles. Monitor upcoming market catalysts, such as the April 15th GDT auction and subsequent export data releases, for signals that might resolve this divergence or indicate broader market direction. Prepare for potential continued volatility – much like how producers must prepare for drought and excess moisture scenarios when planning forage inventories.
  • Buyers: Balance procurement strategies between potential long-term price relief suggested by forecasts and the reality of short-term spot market volatility, particularly in cheese. Maintain awareness of inventory positions and closely track global supply, demand, and trade policy developments – similar to how producers must balance immediate feed needs with longer-term storage requirements when managing silage and hay inventories.

The current market environment is characterized by uncertainty and conflicting signals, like deciding whether to expand or contract a herd during transitional market phases. Stakeholders should exercise caution and prioritize informed decision-making based on a comprehensive assessment of short-term market dynamics, longer-term fundamental forecasts, and evolving global factors – just as successful dairy operations balance day-to-day management with long-term strategic planning.

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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 – April 9, 2025: Cheddar Barrel Prices Surge on Strong Buying Interest; Dry Whey Declines Notably Amidst Generally Firming Dairy Futures

Wednesday, April 9th, 2025

Cheddar barrels surge 1.75¢ as whey plummets; feed costs squeeze dairy margins—market braces for volatility amid global uncertainty.

EXECUTIVE SUMMARY: Today’s CME dairy markets saw stark divergence: cheddar barrels surged 1.75¢ on food-service demand, while dry whey plummeted 1.25¢ due to oversupply. Butter and nonfat dry milk edged higher despite thin trading, supported by tightening cream supplies and export inquiries. Rising corn (+4.5¢/bu) and soybean meal (+$4/ton) futures intensified margin pressures for producers, overshadowing modest Class III milk gains. Global dynamics—including EU regulatory constraints and New Zealand’s production decline—added complexity, while U.S. export competitiveness hung on powder pricing. Traders eye cheese spreads and whey stabilization as producers face tough cost decisions ahead of peak demand seasons.

KEY TAKEAWAYS:

  • Barrel-Block Spread Widens: Cheddar barrels (+1.75¢) outperformed blocks (+0.50¢), signaling food-service prep for summer demand.
  • Feed Costs Spike: Corn and soybean meal futures rose sharply, threatening producer margins despite stable milk prices.
  • Whey Collapse: Dry whey fell 1.25¢ amid cheese-driven oversupply, denting overall cheesemaking profitability.
  • Global Pressures Mount: EU output lags on regulations, while NZ’s seasonal decline tightens global supply.
  • Cautious Sentiment: Traders balance cheese optimism against whey weakness and input cost risks.
CME dairy market report, cheese barrel prices, dairy futures trading, feed cost margins, milk production forecast

Today’s dairy markets showed significant divergence across products, with Cheddar barrels posting substantial gains while dry whey experienced a notable decline. Butter and nonfat dry milk showed modest strength amid varied trading volumes. The combination of cheese strength and rising feed costs creates a complex outlook for dairy producers in the coming weeks.

Key Price Changes & Market Trends

Today’s CME cash dairy market exhibited notable product divergence, with cheddar cheese showing significant strength, particularly in barrels, while dry whey faced considerable downward pressure. Butter and nonfat dry milk posted modest gains, contributing to an overall mixed market picture.

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.7075/lb+0.50¢
Cheese (Barrels)$1.7725/lb+1.75¢
Butter$2.3125/lb+0.25¢
Nonfat Dry Milk$1.1575/lb+0.50¢
Dry Whey$0.4800/lb-1.25¢

The cheese complex finished higher with uneven gains across categories. Cheddar blocks settled with a modest half-cent increase, while barrels surged by 1.75 cents, pushing the barrel premium to 6.5 cents. This pronounced divergence likely reflects specific demand drivers, possibly from food service or process cheese manufacturers preparing for anticipated spring and summer demand increases.

Butter edged slightly higher despite no trading activity on the exchange, suggesting underlying support potentially stemming from seasonally tightening cream supplies or steady retail demand. Nearby April butter futures also showed slight strength (+0.40¢), reinforcing the stable-to-firm market undertone.

Grade A nonfat dry milk recovered from yesterday’s decline, gaining half a cent, which suggests the $1.15 level attracted buying interest, indicating good underlying support. This rebound may be linked to renewed export inquiries or steady domestic demand.

Dry whey experienced a significant decline, likely reflecting ample supplies in the market, possibly resulting from strong cheese production rates yielding whey as a co-product. Weaker-than-anticipated demand, potentially from export markets, could be a contributing factor.

Volume and Trading Activity


FinalChange ¢/lb.TradesBidsOffers
Butter2.3125+0.25020
Cheddar Block1.7075+0.50322
Cheddar Barrel1.7725+1.75110
NDM Grade A1.1575+0.50533
Dry Whey0.4800-1.25203

Today’s trading activity varied considerably across the CME dairy complex with moderate overall participation:

Nonfat Dry Milk: Most active product with five loads trading. The presence of 3 bids and three offers alongside the trades suggests good two-way interest and active price discovery occurring around the $1.15-$1.16 per pound level.

Cheese Blocks: Reasonable activity with three loads changing hands, alongside two bids and two offers, indicating a relatively balanced market where buyers and sellers found common ground.

Dry Whey: Two loads traded with no bids against three offers, aligning with the significant price decline and signaling that selling interest outweighed buying interest at prevailing prices.

Cheese Barrels: Only one load traded, yet this single transaction resulted in a substantial price increase (+1.75¢), suggesting firm buyer conviction meeting limited selling interest. An unfilled bid remained, indicating potential additional buying interest below the final traded price.

Butter: No trades executed. Two bids were posted, but no offers were filled at or below the closing price of $2.3125 per pound, signifying a current price disagreement between potential buyers and sellers.

The volume and price movement relationship provides an essential context for market conviction. The high volume in NDM supports reliable price discovery, while the significant barrel price move on minimal volume highlights aggressive buying interest.

Global Context

International dairy market developments continue to influence U.S. markets, affecting export opportunities and overall price direction.

Export demand appears mixed across product categories. Reports suggest steady, though not aggressive, demand from Mexico for U.S. NDM, providing baseline support for powder prices. However, Southeast Asian buyers appear cautious, particularly regarding whey products, potentially due to ample global protein supplies or regional economic factors affecting feed import requirements.

China’s import activity remains a critical market factor; recent indications suggest possible demand stabilization after weaker purchasing periods, though consistent large-volume buying has yet to reemerge fully.

Global milk production trends show varied dynamics among major exporters. European Union output growth appears constrained by ongoing environmental regulations and persistent cost pressures. New Zealand is moving past its seasonal production peak, typically leading to gradually tightening global exportable supplies in the coming months. These factors could offer underlying support to global prices if demand remains firm.

The competitiveness of U.S. dairy products in international markets remains crucial. Today’s NDM price of $1.1575/lb (approximately $2,552/tonne) needs assessment against prevailing European and Oceania prices to determine export competitiveness. The significant drop in U.S. dry whey could be exacerbated if domestic prices remain above international benchmarks or global whey markets are generally oversupplied.

Forecasts and Analysis

Forward-looking indicators and underlying cost structures provide a critical context for market participants navigating the dairy landscape.

CME futures markets reflected some of today’s cash market themes. The April Class III milk contract settled slightly higher at $17.22 per hundredweight (+4 cents), drawing support from strength in the cash cheese market. In contrast, the April Class IV contract eased marginally to $17.84 per hundredweight (-2 cents), reflecting mixed signals from slightly higher butter prices but potential headwinds in broader powder markets.

A significant factor impacting producer profitability is rising feed costs. Today saw notable increases in key feed inputs, with May corn futures rising 4.5 cents to $4.7350 per bushel and May soybean meal futures climbing $4.00 to $294.10 per ton. These increases directly elevate milk production costs.

According to the USDA’s March 2025 Livestock, Dairy, and Poultry Outlook, the national dairy herd is projected to average 9.38 million in 2025, with milk production forecast at 226.2 billion pounds. The USDA projects Class III milk prices to average around $18.80 per hundredweight in 2025, while Class IV prices are projected at $20.40 per hundredweight. The all-milk price for 2025 is forecast at $22.55 per hundredweight.

The concurrent rise in feed costs, alongside only modest gains in milk price futures, highlights a potential margin squeeze for dairy producers. If feed expenses continue climbing without commensurate increases in milk prices, profitability will be challenged, potentially discouraging production expansion or leading to adjustments in herd sizes.

Market Sentiment

Today’s sentiment in dairy markets appears mixed, reflecting divergent product price action and underlying cost pressures.

Qualitative feedback suggests specific areas of firmness alongside broader concerns. As one trader noted, “The barrel market felt very firm today; buyers were willing to pay up to secure loads, suggesting some immediate needs are surfacing ahead of summer demand.” This observation reflects the aggressive buying seen in the barrel market.

Counterbalancing this optimism is concerned with input costs and specific product weaknesses. As an analyst commented, “While cheese provided support, the drop in whey and the rising feed costs are creating some nervousness about producer margins heading into the planting season.”

Sentiment appears cautiously optimistic regarding the cheese complex, buoyed by today’s gains (especially in barrels) and firming Class III futures. However, this optimism is tempered by significant weakness in dry whey and, perhaps more critically for producers, sharp increases in corn and soybean meal prices. Sentiment surrounding butter and NDM seems steady to slightly positive, supported by modest price gains but lacking firm directional conviction.

Closing Summary & Recommendations

In summary, today’s CME dairy markets were characterized by notable strength in cheddar barrels, which slightly outpaced block gains and helped modestly lift Class III futures. Dry whey experienced a sharp decline, indicating specific weakness in that complex, while butter and NDM posted small gains amid varied trading volumes. A key development impacting the broader sector was the significant rise in corn and soybean meal futures, signaling increasing feed cost pressures for dairy producers.

Recommendations & Outlook:

For producers: Closely monitor the evolving relationship between milk prices (particularly Class III futures) and rising feed costs to manage margins effectively. With USDA projecting an average Class III price of $18.80/cwt for 2025, current futures ($17.22) suggest potential upside if market fundamentals strengthen. The current strength in cheese is a positive signal, but vigilant cost control remains essential given feed price trends.

For traders: Pay attention to the cheddar block/barrel price spread for signs of continued divergence or potential narrowing. The weakness in dry whey warrants close observation – look for indications of price stabilization or further declines. The lack of activity in butter suggests monitoring for a breakout trade if bids or offers become more aggressive in coming sessions.

The near-term market direction likely hinges on the balance between sustained cheese demand pulling the complex higher versus headwinds from weak whey prices and rising production costs. Global market dynamics and the competitiveness of U.S. exports, particularly for powders, will remain critical factors influencing price discovery in coming sessions.

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Dairy Markets Rally on Cheese Surge and Firm Butter Demand Amid Global Supply Constraints

Tuesday, April 8th, 2025

Cheese prices surge 7.5¢ as global dairy supplies tighten; butter defies weak trading. USDA vs. CME forecasts reveal market skepticism.

EXECUTIVE SUMMARY: Today’s CME dairy markets saw cheddar barrels rally 7.50¢—their largest single-day gain this month—driven by panic buying and record U.S. cheese exports. Butter edged higher (+1.00¢) amid global supply constraints, while nonfat dry milk dipped (-0.50¢) on weakened Chinese demand. USDA forecasts for Class III milk (.95/cwt) diverged sharply from CME futures (.18/cwt), reflecting trader skepticism amid rising feed costs. New Zealand’s production slump and EU inventory lows bolstered U.S. export opportunities, though weak Asian demand capped gains. Analysts recommend hedging milk production and targeting EU buyers to capitalize on tightening global inventories.

KEY TAKEAWAYS:

  • Cheese barrels surged 7.50¢ due to domestic inventory shortages and unprecedented export growth (January volumes +22% YoY).
  • Butter gained 1.00¢ despite zero trades, supported by reduced EU competition and New Zealand’s drought-driven production decline (-4% YoY).
  • USDA vs. CME disconnect: Markets priced Class III milk 4.3% below USDA forecasts, signaling concerns over feed costs (corn +0.9%, soybeans +1.2%).
  • Global pivot: U.S. cheese exports hit record highs in nontraditional markets (Japan, Bahrain), while EU cheese stocks reached 5-year lows.
  • Action step: Producers advised to hedge at $17.18/cwt; exporters to target EU buyers amid supply gaps.
CME dairy market report, cheese price surge, butter demand trends, global dairy exports, Class III milk futures

Today’s CME dairy markets saw robust gains in cheese categories, with cheddar barrels leading the charge amid tightening domestic supplies and steady export interest. Butter edged higher despite muted trading activity, while nonfat dry milk faced downward pressure from weaker international demand.

Key Price Changes & Market Trends

ProductClosing PriceChange from YesterdayTradesBidsOffers
Cheese (Blocks)$1.7025/lb+3.25¢842
Cheese (Barrels)$1.7550/lb+7.50¢221
Butter$2.3100/lb+1.00¢041
Nonfat Dry Milk$1.1525/lb-0.50¢143
Dry Whey$0.4925/lbUnchanged020

Commentary:
Cheddar barrels surged 7.50¢, outpacing blocks (+3.25¢), as processors scrambled to secure supplies ahead of spring demand. The barrel-block spread widened to +5.25¢, signaling acute tightness in barrel inventories. Butter gained 1.00¢ following yesterday’s 0.50¢ increase, supported by firm bids and reduced EU export competition. Nonfat dry milk dipped 0.50¢ as Chinese buyers remained sidelined, continuing the weekly downward trend from $1.1665/lb last week to today’s $1.1525/lb.

Volume and Trading Activity

Cheese blocks dominated trading with eight transactions, reflecting strong buyer interest that has grown significantly from yesterday’s three trades. Bid/ask spreads for blocks have tightened over the past week, moving from a 2.00¢ spread to complete market clearing today as all offers were purchased. Barrels saw limited trading volume (2 trades) despite their sharp price rise, with their bid/ask spread narrowing to 1.00¢ compared to 1.50¢ in previous sessions.

Butter markets remained static with no completed trades for the second consecutive day, though increased bidding activity (4 bids today vs. 2 yesterday) signals strengthening demand. NDM recorded a single trade at $1.1525/lb with a consistent 0.50¢ bid/ask spread maintained from previous sessions, reflecting cautious market participation.

Global Context

U.S. cheese export momentum has been exceptional, with January volume jumping 22% year-over-year to 46,680 MT—establishing a January record. Every month since July 2024 has set monthly export records for U.S. cheese suppliers, demonstrating remarkable international demand growth. Market diversification has been particularly noteworthy, with exports expanding beyond traditional strong markets like Mexico (+1% YOY) to reach destinations including Japan, Bahrain, and Panama.

Meanwhile, New Zealand’s milk production declined 4% year-over-year in March due to drought conditions, tightening global butter and whole milk powder supplies. EU butter prices have surged since July as milk production declined precipitously due to intense heat and animal disease. This created competitive opportunities for U.S. suppliers despite New Zealand’s butter export forecast growth to 475,000 tons in 2025. European cheese stocks have reached five-year lows, further supporting U.S. export prospects.

Forecasts and Analysis

  • Milk production: 226.2B lbs (-0.7B vs prior forecast)
  • Class III milk: $17.95/cwt (-$1.15 vs March)
  • Class IV milk: $18.80/cwt (-$0.90 vs March)

CME futures diverged from USDA projections:

ContractCME April SettlementUSDA Q2 ForecastVariance
Class III Milk$17.18/cwt$17.95/cwt-4.3%
Class IV Milk$17.86/cwt$18.80/cwt-5.0%
Cheese (Blocks)$1.6950/lb$1.8100/lb-6.4%

Markets appear skeptical of USDA’s bullish cheese price forecasts, with futures pricing in tighter margins from rising feed costs (corn + +0.9%, soybeans + +1.2% week-over-week). The significant futures premium for cheese ($1.8430/lb April futures vs. $1.7025/lb cash) indicates trader optimism despite this uncertainty.

Market Sentiment

A Midwest dairy broker noted:
“The barrel rally caught many off guard—we’re seeing panic buying from foodservice distributors trying to lock in Q2 inventory.”

An export analyst added:
“Despite cash market weakness last week, futures premiums for cheese and butter suggest traders anticipate a rebound as we move deeper into Q2.”

Overall sentiment leans bullish for cheese and cautiously optimistic for butter, with traders citing “whipsaw action” in cheese markets that “underscores the fundamental uncertainty about domestic demand” as we enter the spring buying season.

Closing Summary & Recommendations

Today’s markets highlighted the continued strength in cheese, mainly barrels, which have substantially outpaced blocks on inventory concerns. Butter found modest support from global supply constraints, while NDM remains under pressure.

Recommendations:

  1. Producers: Consider hedging milk production via Class III futures at current levels ($17.18/cwt), given the significant gap between CME futures and USDA forecasts.
  2. Processors: Secure barrel cheese inventories before seasonal demand peaks, as evidenced by the widening barrel-block spread.
  3. Exporters: Target EU cheese buyers to capitalize on five-year lows in European cheese stocks while monitoring New Zealand’s export growth strategy for potential competitive pressure.

Given New Zealand’s production challenges, monitor the upcoming Global Dairy Trade auction to confirm international pricing trends, particularly for butter and whole milk powder.

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CME Dairy Market Report: April 7, 2025 – Cheese Prices Rally Strongly; Butter Edges Higher Amid Balanced Markets

Monday, April 7th, 2025

Cheese prices surge 3¢, butter up 0.5¢ as CME markets rebound—futures signal trader confidence despite global trade risks.

EXECUTIVE SUMMARY: The CME dairy markets saw a strong recovery on April 7, 2025, with cheese blocks rising 3.00¢ and barrels gaining 2.00¢, reversing last week’s volatility amid tightening inventories and renewed buyer interest. Butter edged up 0.50¢ despite ample stocks, while futures premiums for cheese ($1.825/lb vs. $1.67/lb cash) signaled trader optimism. Export markets showed strength, with US cheese shipments up 12% year-to-date, though potential trade tensions loom. USDA forecasts revised milk production downward but highlighted strategic opportunities in forward contracting as markets balance domestic demand growth against global uncertainty.

KEY TAKEAWAYS

  • Cheese leads recovery: Blocks (+3.00¢) and barrels (+2.00¢) rebounded sharply on tight inventories and cleared offers.
  • Futures signal strength: Cheese futures trade at $1.825/lb (vs. $1.67/lb cash), indicating trader confidence in continued price support.
  • Export momentum: US cheese exports surged 22% in value year-to-date, with Mexico and Canada driving 51% of total dairy export growth.
  • Strategic pivot: Producers are advised to prioritize component optimization, while processors should monitor capacity expansions impacting milk supply competition.
  • Risk watch: Feed costs and potential tariff impacts remain critical for Q2 profitability.

Today’s dairy markets showed substantial strength across cheese products, with Cheddar Blocks rising 3.00¢ and Barrels up 2.00¢, extending the recovery from last week’s volatility. Butter continued its modest upward trend with a 0.50¢ gain, while Dry Whey edged increased25¢. The overall uptick reflects recovering domestic demand, tightening inventories for cheese, and substantial futures premiums, signaling trader confidence despite ongoing concerns about global trade tensions. Trading activity was particularly notable in cheese blocks, which cleared all offers, while barrels saw active bidding interest, suggesting further potential gains in coming sessions.

The Chicago Mercantile Exchange dairy markets saw a significant recovery in cheese prices today, with blocks and barrels posting substantial gains as butter edged higher amid balanced trading activity. This price strength comes after last week’s volatility, suggesting renewed confidence in dairy fundamentals despite lingering global trade concerns.

Key Price Changes & Market Trends

ProductClosing PriceChangeTradesBidsOffers
Cheddar Block$1.6700/lb+3.00¢300
Cheddar Barrel$1.6800/lb+2.00¢132
Butter$2.3000/lb+0.50¢321
NDM Grade A$1.1575/lbUnchanged031
Dry Whey$0.4925/lb+0.25¢201

CME dairy markets demonstrated substantial recovery in cheese prices, with blocks gaining 3.00¢ and barrels adding 2.00¢, effectively recapturing losses experienced late last week. The strength follows volatile trading patterns in early April, when cheese markets crashed on April 3 amid softening demand concerns. Butter continued its modest upward trajectory with a 0.50¢ increase, reflecting resilient export competitiveness despite ample stocks. Nonfat Dry Milk remained unchanged, while Dry Whey posted a small gain of 0.25¢.

The cheese market’s robust performance appears to be driven by tightening inventories and renewed buyer interest, reversing sentiment from last week’s market concerns. Current butter prices continue to navigate a vastly different market environment compared to early 2024 when tight stocks drove prices to record seasonal levels, but have since stabilized with rebuilt inventories.

Volume and Trading Activity

ProductBid/Ask SpreadWeekly Change in SpreadTrading Volume
Cheddar BlockNo spread (market cleared)-2.00¢3 trades
Cheddar Barrel1.00¢-0.50¢1 trade
Butter0.75¢-1.25¢3 trades
NDM Grade A0.50¢Unchanged0 trades
Dry Whey0.25¢-0.50¢2 trades

Trading activity showed a balanced market with clear signs of buyer interest across multiple product categories. Cheese blocks recorded three trades with no remaining bids or offers at session close, indicating a well-cleared market with potential for continued upward momentum. Barrel cheese saw more limited trade execution with just one transaction, but three active bids suggest strong underlying buyer interest that could support prices in upcoming sessions.

Butter markets demonstrated healthy activity with three trades alongside two bids and one offer remaining, reflecting balanced market dynamics. Despite three active bids and one offer, NDM saw no trades, indicating buyer interest that failed to match seller expectations. Dry Whey recorded two trades with one offer remaining close, suggesting stable market conditions with moderate trading interest.

The weekly comparison highlights mixed price trends compared to last week’s averages:

ProductCurrent Avg.Prior Week Avg.Change5-Year Seasonal Avg. (Early April)
Butter$2.3000/lb$2.3290/lb-$0.0290/lb$2.2750/lb
Cheddar Block$1.6700/lb$1.6455/lb+$0.0245/lb$1.7200/lb
Cheddar Barrel$1.6800/lb$1.6605/lb+$0.0195/lb$1.6950/lb
NDM Grade A$1.1575/lb$1.1665/lb-$0.0090/lb$1.1800/lb
Dry Whey$0.4925/lb$0.4935/lb-$0.0010/lb$0.4875/lb

Cheese prices remain slightly below the 5-year seasonal average compared to typical early April patterns, while butter is trading above historical norms for this time of year. This seasonal divergence suggests potential for continued price recovery in cheese markets as we move deeper into Q2.

Global Context

Export MarketYoY Change (Jan-Feb 2025)Value (Jan-Feb 2025)
Mexico+10%$396.2 million
Canada+41%$232.3 million
China+20%$203.4 million
Japan+35%$86.6 million
South Korea+39%$79.5 million

The global dairy landscape shows significant regional divergence, creating challenges and opportunities for US producers and exporters. European milk production is projected to decline by 0.2% in 2025 due to regulatory pressures and shrinking herd sizes. Meanwhile, the US dairy sector is experiencing expansion, with producers adding 34,000 dairy cows between July and December 2024.

The FAO Dairy Price Index reached 148.7 in February 2025, its highest level since October 2022, driven by strong demand for cheese and whole milk powder despite seasonal production challenges in Oceania. This global price strength supports US export opportunities, particularly for butter and specialty cheese products.

US dairy exports have shown remarkable strength in early 2025, with total export value reaching $1.43 billion in January-February, up 14% from last year. Cheese exports have been robust, increasing 12% in volume and 22% in value during the first two months of 2025. Chinese import patterns continue to evolve favorably for specific product categories, with whey imports surging 52% year-over-year. However, potential trade tensions loom as proposed US tariffs could trigger retaliatory measures, potentially threatening the 18% of US milk production tied to exports.

Forecasts and Analysis

According to the most recent USDA forecasts released on March 17, 2025, the US dairy herd is projected to average 9.380 million head, up 5,000 from previous estimates. However, milk production projections have been revised downward to 226.2 billion pounds (-0.7 billion from the prior forecast) due to slower-than-expected growth in output per cow.

The all-milk price forecast is $21.60 per cwt, $1.00 lower than the previous month’s forecast. Class III and Class IV milk price forecasts have been adjusted to $17.95 and $18.80 per cwt, respectively. These adjustments reflect changing expectations for component prices, with cheese values showing more resilience than butter, nonfat dry milk, and dry Whey.

Current CME futures markets show April Class III milk at .10 per cwt and Class IV at .86 per cwt. The significant futures premiums for cheese ($1.825/lb vs. $1.67/lb cash) and butter ($2.445/lb vs. $2.30/lb cash) suggest traders are anticipating strengthening markets in the coming weeks despite recent volatility.

The current spread between futures and cash prices creates strategic opportunities for producers and processors. Producers may benefit from exploring forward contracting options, while processors could consider the current basis levels for strategic inventory building.

Market Sentiment

“Despite cash market weakness last week, futures premiums for cheese and butter suggest traders anticipate a rebound as we move deeper into Q2,” a Midwest dairy broker noted in a recent market commentary.

“The whipsaw action we’re seeing in cheese markets underscores the fundamental uncertainty about domestic demand as we head into what should be the spring buying season,” observed another analyst. “Today’s strong trading activity suggests buyers are returning to the market after last week’s price declines.”

“The divergence between cash and futures markets points to trader expectations that current weakness is temporary. The substantial premium built into April cheese futures indicates confidence in strengthening fundamentals despite last week’s cash market declines,” commented a dairy economist with a primary agricultural lender.

Industry perspectives remain cautiously optimistic about domestic demand despite ongoing export uncertainties. The significant new cheese processing capacity coming online in 2025 (potentially expanding US cheese manufacturing by approximately 6%) creates opportunities and challenges. While this expansion could pressure cheese prices later in the year, the tight inventory situation provides near-term support.

Rabobank’s global dairy quarterly report identified key watch factors for 2025, including potential tariff impacts on US exports, exchange rate volatility affecting trade flows, and sustained support for butterfat prices. These factors suggest a market environment where strategic positioning and risk management will be critical for dairy stakeholders.

Closing Summary & Recommendations

In summary, today’s dairy markets showed significant strength, particularly in cheese prices, which rebounded sharply from recent declines. Butter continued its upward trend with a modest gain, while other products remained relatively stable. Trading activity was balanced across most categories, with particular strength noted in cheese blocks.

The current market environment presents several strategic considerations for stakeholders:

For producers, component optimization rather than volume maximization should remain the priority, as cheese-driven returns continue supporting milk prices despite other sectors’ uncertainties. The current futures premium over cash markets offers potential opportunities for forward contracting a portion of production.

For processors, the evolving supply situation warrants careful inventory management strategies. The planned expansion in cheese manufacturing capacity creates the potential for increased competition for milk supplies in certain regions despite the overall growth in national milk production.

Looking ahead, stakeholders should monitor three critical factors: 1) export demand developments, particularly any shifts in trade policy affecting key markets; 2) domestic milk production trends as we move through the spring flush period; and 3) feed cost dynamics, which have provided some relief through lower corn prices but remain a significant factor in overall dairy profitability.

The Bottom Line

The April 7th CME dairy markets demonstrated renewed strength across most product categories, suggesting market participants may be finding balance after recent volatility. The substantial gains in cheese prices and strong futures premiums indicate confidence in the market’s fundamental support despite ongoing global uncertainties. With mixed signals from domestic and international markets, strategic risk management and flexibility will be essential for navigating the evolving dairy landscape through Q2 2025.

The key challenge lies in balancing the growth in US processing capacity against the backdrop of constrained milk production growth while simultaneously adapting to shifting global trade dynamics. Those stakeholders who can align their operations with these emerging trends will be best positioned to capture value in what appears to be an increasingly complex but opportunity-rich dairy environment.

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CME Dairy Market Report: April 3, 2025 – Cheese Markets Crash as Demand Falters

Thursday, April 3rd, 2025

Cheese prices crash 3.5¢ as demand falters; futures premiums signal trader optimism. Global trade wars loom over dairy exports.

EXECUTIVE SUMMARY: The CME dairy market saw significant declines on April 3, 2025, with cheese blocks and barrels plunging over 3.5¢ amid softening domestic demand, while dry whey bucked the trend with a slight gain. Despite cash market weakness, futures premiums for cheese ($0.19/lb) and butter ($0.15/lb) suggest traders anticipate a rebound. Global trade tensions escalated as potential retaliatory tariffs threaten $8.2B in U.S. dairy exports, while China’s 52% surge in whey imports offers a bright spot. Market sentiment remains cautious, with analysts advising producers to prioritize risk management and monitor export policy shifts.

KEY TAKEAWAYS:

  • Steep cheese declines: Blocks (-3.50¢) and barrels (-3.75¢) erased prior gains on demand concerns.
  • Futures signal divergence: Cheese futures hold a $0.19/lb premium over cash prices, indicating expected recovery.
  • Trade policy risks: Proposed U.S. tariffs could trigger retaliatory measures, threatening 18% of milk production tied to exports.
  • China’s shifting demand: Whey imports surged 52% YoY, potentially offsetting weaker whole milk powder sales.
  • Strategic guidance: Producers are urged to hedge against volatility while processors leverage cash-futures spreads.

Cheese prices tumbled sharply today amid broader market declines, with blocks and barrels shedding over 3.5 cents despite higher weekly averages. Butter continued its downward trend, while dry whey provided the lone bright spot in an otherwise bearish session.

Key Price Changes & Market Trends

Today’s CME cash dairy product prices showed significant declines across most commodities:

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.6300/lb-3.50¢
Cheese (Barrels)$1.6600/lb-3.75¢
Butter$2.3300/lb-1.00¢
Nonfat Dry Milk$1.1675/lb-0.50¢
Dry Whey$0.4925/lb+0.25¢

Cheddar blocks and barrels experienced their most significant single-day declines over a month, erasing Wednesday’s gains and reflecting growing concerns about domestic demand. This reversal is particularly notable following yesterday’s strong performance when barrels jumped 3.75¢ and blocks gained 0.75¢. Butter continued its gradual descent, marking its fourth consecutive day of stagnant or declining prices despite tight cream supplies. Nonfat dry milk eased slightly while dry whey provided the session’s only increase, extending its recovery on improved export interest.

Volume and Trading Activity

Trading activity was notably subdued today across most dairy commodities:

ProductTradesBidsOffersWeekly Volume to Date
Cheese (Blocks)40139
Cheese (Barrels)30113
Butter91117
Nonfat Dry Milk65310
Dry Whey2416

Butter saw the highest trading activity today with nine trades, though overall volume remained light compared to earlier. After yesterday’s active session, cheese markets displayed minimal bidding interest, suggesting buyers have stepped back to reassess positions. Multiple bids for dry whey indicate continued buyer interest despite limited seller participation.

Global Context

International factors continue to shape domestic dairy markets, creating crosscurrents for U.S. producers and exporters. Key dairy exporting regions are expected to see modest growth in production in 2025, with high milk prices and lower feed costs being the major drivers. However, trade uncertainty remains a key concern, particularly for U.S. trading partners.

China’s dairy imports have shown sustained growth for four consecutive months as of February 2025, with total dairy purchases reaching 255,516 tons, marking a 16% year-on-year increase. Notably, China imported more whey than whole milk powder, with whey imports up 52% from the previous year. This trend suggests a shift in China’s dairy import preferences and could provide support for U.S. whey prices.

European milk production is forecast to increase by 0.5% year-on-year, supported by good producer margins. However, risks such as Bluetongue and potential new U.S. tariffs could present barriers to growth. President Trump’s recent “Liberation Day” tariffs announcement has raised concerns about retaliatory measures from major trading partners, potentially threatening the $8.2 billion U.S. dairy export market.

The U.S. export outlook faces additional challenges as Canada, China, and Mexico consider retaliatory tariffs on U.S. dairy products. With approximately 18% of U.S. milk production sold abroad, these trade tensions add significant uncertainty to the market.

Forecasts and Analysis

Despite today’s cash market declines, futures markets tell a somewhat different story:

ProductApril Futures (Thursday)Change from WednesdayPremium to Cash
Class III Milk$16.98/cwt-0.15¢N/A
Class IV Milk$18.26/cwt-0.01¢N/A
Cheese$1.8230/lb-0.0170¢+0.1930¢
Butter$2.4825/lb-0.0423¢+0.1525¢

The significant premium of cheese futures over cash prices ($1.8230 vs. $1.6300 for blocks) suggests traders anticipate strengthening markets despite today’s cash market weakness. Similarly, butter futures maintain a substantial premium over spot prices.

The USDA projects Class III milk prices to average $18.50/cwt for Q2 2025, which remains above current futures prices, indicating potential market pessimism compared to official forecasts. The all-milk price forecast for 2025 has been adjusted downward to $19.85 per hundredweight from earlier projections of $22.75, reflecting ongoing adjustments to market realities.

The margin outlook for the upcoming year has weakened over the past month, primarily due to declining milk prices. CME cash-settled cheese futures for April through June have dropped between $0.06 and $0.11 per pound, pushing Q2 2025 Class III prices down nearly $1/cwt.

Feed markets showed mixed performance, with corn closing at $4.5850/bushel (down slightly) while soybean meal edged to $287.90/ton. These moderate feed costs provide some margin relief for producers facing declining milk prices.

Market Sentiment

Market participants express growing concern about the sudden reversal in cheese prices after Wednesday’s positive session.

“The whipsaw action we’re seeing in cheese markets underscores the fundamental uncertainty about domestic demand as we head into what should be the spring buying season,” noted a Midwest dairy broker. “Today’s lackluster trading activity suggests buyers are stepping back to reassess price levels before committing to additional purchases.”

Another analyst observed: “The divergence between cash and futures markets points to trader expectations that current weakness is temporary. The substantial premium built into April cheese futures indicates confidence in strengthening fundamentals despite today’s cash market declines.”

The commissioning of new cheese plants across the U.S. is creating a two-sided market dynamic—increased processing capacity is supporting farmgate milk prices, while the potential for 6% growth in cheese manufacturing capacity could pressure cheese prices later in 2025 if domestic and export demand fail to keep pace with production.

Overall sentiment has shifted from cautiously optimistic to increasingly concerned, with many market participants watching export data closely for improvement that could support domestic prices.

Closing Summary & Recommendations

In summary, today’s dairy markets saw significant declines across most commodities, particularly cheese, where blocks and barrels dropped over 3.5 cents despite limited trading activity. This weakness contrasts with relatively stable futures markets that maintain substantial premiums over cash prices, suggesting traders view the current weakness as temporary.

The global dairy landscape presents both opportunities and challenges. Growing Chinese imports potentially support certain products, while trade tensions threaten the broader export market. Production growth in key exporting regions could pressure global prices if demand fails to keep pace.

Producers should consider implementing risk management strategies to protect against further cash market declines while maintaining flexibility to capture potential upside if future expectations materialize. Processors may find advantages in securing forward coverage at current levels, particularly for cheese, where the cash-to-futures spread provides opportunities for favorable hedge positions. All stakeholders should closely monitor upcoming export data and milk production reports for signs of market direction in the coming weeks while staying informed about international trade policy developments that could significantly impact market dynamics.

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CME Daily Dairy Market Report – April 2, 2025 – Cheddar Barrel Prices Surge 3.75¢ While Blocks Edge Higher; Dry Whey Weakens Amid Mixed Market

Wednesday, April 2nd, 2025

Cheddar Barrels jump 3.75¢ as cheese demand surges; Dry Whey slumps 0.50¢. Mixed dairy markets show diverging trends amid global supply shifts.

Executive Summary: The April 2 CME dairy markets saw sharp gains in Cheddar Barrels (+3.75¢) and modest growth in Blocks (+0.75¢), driven by tight inventories and new processing capacity, while Dry Whey fell (-0.50¢) on weak global demand. Trading activity highlighted bullish cheese sentiment, with Cheddar Blocks seeing 11 trades and no offers at close. Globally, EU milk production declined (-0.2%) as U.S. herds expanded (+34k cows), while USDA forecasts project Q2 Class III milk at .50/cwt despite current futures lagging. Analysts warn of cheese oversupply risks as 2025 processing capacity grows 6%, urging producers to prioritize flexible pricing strategies.

Key Takeaways

  • Cheese divergence: Barrel prices surged 3.75¢ on tight supplies vs. Block’s 0.75¢ gain
  • Global split: EU milk output shrinks (-0.2%) as U.S./NZ herds expand (+34k cows; +3.1% production)
  • Forecast gap: USDA’s $18.50/cwt Class III outlook exceeds current $17.13 futures, signaling market skepticism
  • Strategic play: Producers advised to leverage cheese-driven pricing amid whey/butter uncertainty
CME dairy market report, cheese price trends, Class III milk futures, global dairy production, USDA milk price forecast

The Chicago Mercantile Exchange (CME) dairy markets showed significant strength in cheese prices today, with Cheddar Barrels leading gains at +3.75¢, while Dry Whey continued its downward trend. Butter and Nonfat Dry Milk prices remained stable today as market participants evaluated shifting supply and demand fundamentals across dairy commodities.

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Cheddar Block$1.6650/lb+0.75¢
Cheddar Barrel$1.6975/lb+3.75¢
Butter$2.3400/lbUnchanged
NDM Grade A$1.1725/lbUnchanged
Dry Whey$0.4900/lb-0.50¢

Cheddar Barrel prices jumped significantly by 3.75¢, reflecting tightening cheese inventories and strong domestic demand. Cheddar Blocks moved more modestly upward by 0.75¢, continuing the price strength observed earlier this week. Butter prices remained unchanged at $2.3400/lb as the market balanced ample production against steady retail demand. Nonfat Dry Milk held steady at $1.1725/lb, while Dry Whey prices declined by 0.50¢ to $0.4900/lb amid continued pressure from global market conditions.

Volume and Trading Activity

Today’s CME dairy session saw varied trading activity across products, with cheese markets demonstrating the strongest participation:

ProductTradesBidsOffers
Cheddar Block1120
Butter724
Cheddar Barrel335
NDM Grade A364
Dry Whey230

Cheddar Blocks dominated trading activity with 11 trades completed, indicating strong buyer interest with no available offers at the close – a bullish signal for near-term market direction. Butter saw moderate activity with seven trades and a slight imbalance toward selling interest with four offers against two bids. NDM Grade A exhibited strong bidding interest with six bids against four offers, suggesting potential upward price pressure despite an unchanged settlement today. Dry Whey trading remained limited, with just two trades executed.

Global Context

The current dairy market dynamics reflect broader global trends that influence U.S. prices. The European Union’s dairy sector is experiencing contraction in 2025, with milk deliveries projected to decline by 0.2% year-over-year due to regulatory pressures, persistent margin compression, and accelerating herd reduction. This production ceiling in Europe creates potential opportunities for U.S. exporters.

In contrast to European constraints, the United States dairy sector demonstrates robust expansion through 2025, with producers adding 34,000 dairy cows between July and December 2024. New Zealand’s milk production is also showing positive momentum, with December 2024 collections increasing by 1.4% year-over-year and total seasonal production growth reaching 3.1%. This growth is driven by favorable weather conditions and improved farm profitability.

Global milk supply from the major exporting regions is forecast to grow by 0.8% in 2025, with gains anticipated in all significant areas for the first time since 2020. This broad-based production growth could pressure global dairy prices if not matched by corresponding demand.

Forecasts and Analysis

Current futures prices and USDA projections indicate divergent expectations for dairy markets in the coming months:

![Current Futures vs. USDA Q2 Projections – April 2, 2025](https://ppl-ai-code-interpreter-files.s3.amazonaws.com/web/direct-files/47701927/56f91267-229d-4db8-bdbe Class III milk futures settled at .13/cwt today, remaining significantly below the USDA Q2 projection of .50/cwt. Similarly, Class IV futures closed at $18.27/cwt, well below the USDA forecast of $19.10/cwt for Q2 2025. This gap suggests market participants hold a more bearish outlook than USDA analysts.

The USDA has recently adjusted its 2025 milk production forecast downward to 226.9 billion pounds in its February report, a reduction of 400 million pounds based on recent Milk Production and Cattle Inventory Reports that showed a tighter supply of dairy heifers than expected. Despite this reduction, milk production is projected to increase year-over-year, with cheese production expected to benefit from substantial new processing capacity coming online in 2025.

Market Sentiment

Market sentiment appears mixed across dairy products, with a notably bullish tone for cheese and more cautious outlooks for other commodities. The intense trading activity in Cheddar Blocks, which has no offers at close, signals confidence among holders and potentially tight supplies in the near term. Conversely, despite today’s significant price increase, the multiple offers for Cheddar Barrels suggest some sellers believe the current rally may be reaching its peak.

According to dairy market analysts, “The commissioning of new cheese plants across the U.S. is creating a two-sided market dynamic – increased processing capacity is supporting farmgate milk prices, while the potential for 6% growth in cheese manufacturing capacity could pressure cheese prices later in 2025 if domestic and export demand fails to keep pace with production”.

The butter market remains well-balanced, with one trader noting, “We’re seeing steady demand domestically, but the real question for Q2 will be whether export competitiveness improves given the current global price spread.” The continued weakness in Dry Whey reflects ongoing challenges in protein markets, with multiple industry sources expressing concern about limited export opportunities in the near term.

Closing Summary & Recommendations

In summary, today’s CME dairy market demonstrated significant strength in the cheese sector, with Cheddar Barrels surging 3.75¢ and Blocks gaining 0.75¢, while Butter and NDM remained stable and Dry Whey declined. The divergence between cheese strength and whey weakness reflects the interplay of domestic and international factors influencing different segments of the dairy complex.

For producers, the current market environment suggests maintaining flexibility in milk marketing strategies, with potential opportunities in cheese-heavy milk pricing formulas, given the relative strength in that sector. Processors should closely monitor the widening barrel-block spread, which could present operational advantages for those with flexible manufacturing capabilities. Given U.S. price competitiveness, exporters would be wise to focus on cheese and butter opportunities while recognizing that dry whey exports face continued headwinds due to global market conditions.

Market participants should pay particular attention to upcoming USDA reports for further insights on production trends while monitoring international demand – particularly from China- where early signs of import recovery could significantly impact global dairy prices in the coming months.

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CME Daily Dairy Market Report: April 1, 2025 – Cheese Prices Surge Amid Active Trading; Class III Futures Remain Above USDA Q2 Forecast

Tuesday, April 1st, 2025

Cheese prices hit 2-day surge as block-barrel spread inverts! Class III futures defy USDA forecasts. Global dairy shifts ahead—key insights inside.

EXECUTIVE SUMMARY: The April 1 CME dairy market saw cheese prices surge (+2.25¢ blocks, +3.50¢ barrels) amid tightening Midwest milk supplies and robust trading activity, while butter held steady. Class III milk futures (.66/cwt) continue to trade above USDA’s Q2 forecast (.50), signaling market optimism despite rising feed costs. Key drivers include New Zealand’s drought-driven production constraints, recovering Chinese import demand, and a rare block-barrel price inversion suggesting barrel supply tightness. Analysts recommend producers lock in Q2 contracts and monitor export trends, as global dynamics and feed prices pose risks to margins.

KEY TAKEAWAYS:

  • Cheese Rally: Blocks/barrels gained for 2nd day, with barrels briefly overtaking blocks—a rare inversion signaling tight supplies.
  • Futures Divergence: Class III futures ($18.66) outpace USDA’s Q2 forecast ($18.50), reflecting bullish sentiment.
  • Global Pressures: New Zealand droughts and Chinese demand shifts may impact U.S. export opportunities.
  • Feed Cost Risk: Corn (+5.25¢) and soybeans (+19¢) gains threaten dairy margins unless milk prices rise further.
  • Actionable Insight: Secure cheese inventories and forward contracts now to hedge against Q2 volatility.

Today’s dairy market at the Chicago Mercantile Exchange (CME) saw notable strength in cheese prices, with both blocks and barrels posting significant gains amid robust trading activity. Class III milk futures continued to trade above the USDA’s Q2 forecast of .50/cwt, reflecting market optimism about near-term demand and tighter milk supplies. This updated report incorporates enhanced visual analysis and refined recommendations to provide a clearer understanding of market dynamics.

Key Price Changes & Market Trends

Today’s CME cash dairy product prices showed mixed performance across key commodities:

ProductClosing PriceChange from YesterdayTradesBidsOffers
Cheddar Blocks$1.6575/lb+2.25¢2470
Cheddar Barrels$1.6600/lb+3.50¢730
Butter$2.3400/lbUnchanged000
NDM Grade A$1.1725/lb+1.00¢131
Dry Whey$0.4950/lb-0.50¢231

Cheddar blocks rose by 2.25 cents, while barrels surged by an impressive 3.50 cents, narrowing the block-barrel spread to just -0.25 cents—a rare inversion that signals tight supply conditions for barrel cheese or strong demand from processed cheese manufacturers. This marks the second consecutive day of gains for both products, driven by tightening milk supplies in the Midwest and steady domestic demand from retail and foodservice sectors.

Butter prices remained unchanged at $2.3400/lb amid quiet trading activity, suggesting that current price levels are sufficient to balance supply and demand. Nonfat dry milk (NDM) gained one cent to close at $1.1725/lb, continuing its gradual recovery as export interest strengthens in Southeast Asia. Dry whey weakened slightly, losing half a cent to close at $0.4950/lb, reflecting softer export demand in key markets such as China.

Volume and Trading Activity

Trading activity was particularly robust in the cheese markets today:

  • Cheddar Blocks: With 24 trades completed and seven unfilled bids, blocks saw significant interest from buyers seeking to secure product ahead of the spring demand season.
  • Cheddar Barrels: Seven trades were executed with three additional bids left unfilled, indicating strong buyer interest despite the narrowing block-barrel spread.
  • Butter: No trades were recorded today, reflecting a balanced market with ample inventories.
  • NDM & Dry Whey: These products saw limited activity with one and two trades respectively, consistent with their typical trading patterns.

The narrowing spread between blocks and barrels is noteworthy as it reflects atypical market conditions that may signal further price adjustments in the coming days.

Global Context

International dairy markets continue to exert influence on U.S. pricing trends:

  • New Zealand Production: Persistent drought conditions in New Zealand have constrained milk output, limiting their export availability and providing indirect support for U.S. NDM prices.
  • European Union Trends: Seasonal increases in EU milk production are beginning to place downward pressure on global butter prices, potentially impacting U.S. export competitiveness.
  • Chinese Import Demand: After several months of subdued activity, Chinese import demand has shown signs of recovery, particularly for skim milk powder (SMP) and whole milk powder (WMP). This could indirectly support U.S. NDM prices if the trend continues.

U.S. cheese remains competitively priced against European offerings despite a stronger dollar, bolstering export opportunities to Latin America and Southeast Asia.

Forecasts and Analysis

CME Class III Futures vs USDA Q2 Forecast

The USDA projects Class III milk prices to average $18.50/cwt for Q2 2025—a figure that remains below current CME futures levels. As shown in Figure 1 below, March Class III futures have consistently traded above this forecast throughout the past month:

CME dairy market report, cheese prices surge, Class III milk futures, USDA dairy forecast, global dairy exports

The chart demonstrates that futures prices have hovered between $18.60 and $18.75/cwt for most of March, reflecting stronger market sentiment than USDA’s conservative projection. This divergence may be attributed to expectations of tighter milk supplies or stronger-than-anticipated domestic cheese demand.

Feed Costs

Feed markets showed upward momentum today:

  • Corn futures rose by 5.25 cents to close at $4.61/bushel.
  • Soybean futures gained nearly 19 cents to close at $10.33/bushel.
  • Soybean meal held steady at $291/ton.

These higher feed costs could pressure dairy margins in Q2 unless milk prices rise sufficiently to offset input cost increases.

Market Sentiment

Market sentiment remains cautiously optimistic as we enter Q2:

  • A dairy broker observed: “The active trading we’re seeing in blocks and barrels suggests buyers are concerned about securing product ahead of the spring demand season.”
  • Another analyst noted: “The inversion of the block-barrel spread is unusual but reflects tight supply conditions for barrels.”

Overall, participants appear confident in near-term cheese price strength but remain wary of rising feed costs impacting producer margins.

Closing Summary & Recommendations

Today’s dairy markets exhibited strength in cheese prices amid active trading, while other products showed mixed performance:

  1. Producers should consider forward contracting milk sales for Q2 at current price levels to mitigate margin risks from rising feed costs.
  2. Exporters should monitor Chinese import trends closely through mid-April as renewed buying interest could support NDM prices further.
  3. Processors may want to secure cheese inventories now before potential further price increases driven by seasonal demand.

In summary, while cheese markets remain well-supported heading into spring, stakeholders should remain vigilant about evolving global dynamics and input cost pressures that could influence market conditions in the coming weeks.

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CME Dairy Market Report: March 27, 2025 – Butter Surges While Class III Futures Continue Strong Rally Above USDA Forecast

Thursday, March 27th, 2025

Butter prices soar 3.5¢ despite high stocks as Class III milk futures rally past USDA forecasts. Global dairy markets brace for spring volatility.

EXECUTIVE SUMMARY: CME dairy markets saw significant bullish momentum on March 27, 2025, with butter leading gains (+3.50¢) despite elevated inventories and cheese blocks rising 1.75¢. Class III milk futures surged to .67/cwt, exceeding USDA projections by 17¢, signaling trader confidence in tightening supplies. Global dynamics diverged sharply, with EU milk production declining (-0.2%) amid regulatory pressures while New Zealand output grew (+3.1%). The USDA revised its 2025 all-milk price forecast upward to .75/cwt, though nonfat dry milk faced headwinds from global price competition. Stakeholders are advised to monitor feed costs, export opportunities, and Federal Order changes expected June 1.

KEY TAKEAWAYS

  • Buter Defies Logic: Prices jumped 3.5¢ despite 17% monthly inventory growth, driven by technical buying and export speculation.
  • Class III Futures Signal Strength: Settled at $18.67/cwt, 17¢ above USDA forecasts – largest premium since March 23.
  • Global Split: EU milk production declines (-0.2%) contrast with New Zealand’s 3.1% growth, reshaping export opportunities.
  • NDM at Crossroads: U.S. prices remain globally uncompetitive ($1.15/lb) despite USDA’s $1.30/lb annual projection.
  • Action Items: Producers urged to hedge Class III exposure; processors warned about tightening butter supplies.
CME butter prices, Class III milk futures, USDA dairy forecasts, global dairy exports, dairy market analysis

Butter and cheese markets showed significant strength in today’s Chicago Mercantile Exchange (CME) dairy trading, with butter posting the most crucial daily gain in nearly a month. Class III milk futures extended their rally, climbing to .67/cwt and widening the gap with USDA’s forecast. Meanwhile, after yesterday’s advance, nonfat dry milk retreated, reflecting the mixed signals currently driving dairy markets as seasonal spring flush approaches.

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Butter$2.3650/lb+3.50¢
Cheese (Blocks)$1.6475/lb+1.75¢
Cheese (Barrels)$1.6350/lb+0.50¢
Nonfat Dry Milk$1.1500/lb-1.00¢
Dry Whey$0.4950/lb-0.50¢

Butter led today’s advances with a significant 3.50¢ gain despite recent cold storage reports showing inventories at 305 million pounds (up 17% month-over-month and 3% year-over-year). This seemingly contradictory movement suggests technical buying and potential export interest override inventory concerns. Cheese blocks followed with a substantial 1.75¢ increase, continuing their upward trajectory since Monday and widening the spread with barrels to 1.25¢. Nonfat dry milk retreated 1¢ after yesterday’s 2¢ jump, while dry whey dipped slightly to close just under the psychological 50¢ threshold.

Volume and Trading Activity

Today’s session saw notably active trading in butter, with 15 trades executed, reflecting strong buyer interest despite higher prices. Cheese blocks also showed healthy activity with six trades and balanced bidding interest (4 bids, four offers), indicating genuine price discovery rather than unidirectional pressure. In contrast, barrels, NDM, and dry whey saw minimal trading with just one trade each, suggesting more cautious positioning in these markets.

Butter’s trading activity was particularly noteworthy given yesterday’s Cold Storage report findings. Buyers seemingly discounted the high inventory levels in favor of forward-looking market dynamics. The 15 trades completed represent the highest daily volume for butter this week.

Global Context

International factors continue to influence U.S. dairy markets, with the stronger dollar noted yesterday having a minimal dampening effect on today’s butter and cheese advances. Export competitiveness remains a key consideration, particularly as U.S. butter and cheese exports are projected to grow due to competitive pricing.

Global milk production patterns are evolving significantly in 2025. The European Union’s milk production is forecast to decrease by 0.2% to 149.4 million metric tons due to declining cow numbers, tight farmer margins, environmental regulations, and disease outbreaks. This contrasts with New Zealand, where milk production showed 3.1% seasonal growth through December 2024, driven by favorable weather conditions and improved farm profitability.

These divergent production trends create both challenges and opportunities for U.S. dairy exports. While EU cheese production is expected to increase by 0.6% to 10.8 million metric tons despite overall milk production declines, this shift toward higher-value products may create openings for U.S. exports in other categories like butter and powdered milk.

Forecasts and Analysis

Class III milk futures continued their impressive rally, settling at .67/cwt today. This is a significant 13¢ increase from Wednesday and is now solidly above the USDA forecast of $18.50/cwt. This marks the fourth consecutive day of gains for Class III futures and reflects market confidence in cheese values.

Class III Milk Futures vs USDA Forecast (Mar 2025)

The widening gap between actual futures prices and USDA projections suggests traders are pricing in stronger fundamentals than official forecasts currently recognize. Today’s Class III settlement at $18.67 represents a 17¢ premium to the USDA forecast, compared to just a 4¢ premium on Monday.

USDA’s broader 2025 dairy forecast includes an all-milk price projection of $22.75/cwt, recently revised upward due to strong demand for cheese and export opportunities. The current market trajectory aligns with this more optimistic outlook, particularly in the cheese and butter segments.

USDA has also adjusted its dairy herd size projection for 2025, increasing it by 5,000 head to 9.380 million while simultaneously lowering milk production forecasts to 226.2 billion pounds (-0.7 billion) due to slower-than-expected growth in output per cow. This production dynamic bears monitoring as we approach peak spring flush.

Market Sentiment

Despite yesterday’s mixed performance, Market sentiment has become increasingly bullish, particularly in the butter and cheese markets. Traders appear to be positioning for tighter supplies as we approach Q2, with one market analyst noting, “The significant butter trading volume today, combined with higher prices, suggests genuine concern about future availability despite current inventory levels.”

The continued strength in Class III futures reflects confidence in cheese demand fundamentals. Market participants seemingly discount the “processors outpacing demand” narrative mentioned in yesterday’s reports. Instead, the focus appears to be shifting toward potential supply constraints and strengthening demand as we move into late spring.

Given recent global developments, the nonfat dry milk (NDM) market deserves particular attention. While today saw a modest 1¢ decline, U.S. NDM prices have been among the highest globally in recent months, creating challenges for export competitiveness. The USDA projects non-fat dry milk prices in the U.S. to average $1.30/lb in 2025, representing a 5.4% increase from 2024. Today’s closing price of $1.15/lb suggests a potential upside if these projections materialize.

Closing Summary & Recommendations

In summary, today’s dairy markets showed substantial strength in butter and cheese prices, with butter gaining 3.50¢ despite high inventory levels and cheese blocks rising 1.75¢. Class III milk futures extended their rally to .67/cwt, now trading 17¢ above USDA’s .50/cwt forecast. The divergence between intense price action and previously reported inventory builds suggests markets are looking beyond current supplies to anticipated tightening conditions.

For Producers:

  • Consider implementing selective hedging strategies for Class III milk as future prices have established a clear premium to USDA forecasts, potentially creating favorable pricing opportunities.
  • Monitor feed costs closely. Recent weakness in corn and soybean futures could improve milk production margins.
  • Track global production trends, particularly the declining EU milk production, and increasing New Zealand output, as these shifts will impact international market dynamics and potential export opportunities.

For Processors:

  • Today’s active butter trading suggests increasing supply competition despite reported inventory levels. Forward contracting may be prudent before potential further price increases.
  • The widening block-barrel spread (now 1.25¢) signals evolving market dynamics that may impact procurement strategies across cheese categories.
  • Consider the implications of EU processors prioritizing cheese production at the expense of butter and powder, which could create opportunities in international markets.

For All Market Participants:

  • Friday’s weekly summary report will provide crucial context for this week’s price movements and help establish whether today’s strength represents a new trend or temporary repositioning.
  • Continue preparing for potential market volatility as Federal Order changes approach (June 1), which will fundamentally alter milk pricing formulas.
  • Pay close attention to global dairy trade patterns, as China shows signs of demand recovery after years of declining dairy import volumes, potentially creating new export opportunities.

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CME Dairy Market Report: March 26, 2025 – Mixed Dairy Markets as Nonfat Dry Milk Surges, Cheese Retreats; Class III Futures Continue to Outpace USDA Forecast

Wednesday, March 26th, 2025

NDM jumps 2¢ as cheese retreats; Class III futures outpace USDA forecasts. Mixed trading signals ahead of spring flush.

EXECUTIVE SUMMARY: CME dairy markets saw divergent trends on March 26th, with nonfat dry milk surging 2¢ to $1.16/lb amid strong export speculation, while cheese prices dipped (-1¢ blocks, -0.5¢ barrels) despite robust trading activity. Class III milk futures rose to .54/cwt, extending their premium over USDA projections, as traders positioned for spring production shifts. Butter rebounded 1.25¢ despite high inventories, while dry whey fell 1¢ with minimal participation. Global factors like a strong dollar pressured export-sensitive products, though domestic demand and upcoming Federal Order pricing changes fueled cautious optimism. Analysts recommend monitoring feed costs and inventory builds ahead of seasonal production spikes.

KEY TAKEAWAYS:

  • Nonfat dry milk (+2¢) led gains on export optimism, with 11 trades signaling bullish sentiment
  • Cheese prices retreated (-1¢ blocks) despite active trading, erasing Tuesday’s gains
  • Class III futures ($18.54/cwt) continue trading above USDA forecasts, reflecting market confidence
  • Butter defied inventories (+1.25¢) with technical buying despite 17% monthly stock increases
  • Spring flush prep urged as Federal Order changes (June 1) loom, altering milk pricing dynamics
CME Dairy Market Report, March 26 2025, Class III milk futures, nonfat dry milk prices, cheese market trends

Today’s Chicago Mercantile Exchange (CME) dairy markets displayed mixed performance with notable strength in nonfat dry milk, while cheese prices retreated for the first time this week. Class III milk futures continued their upward momentum, closing at .54/cwt, maintaining their position above the USDA forecast of .50/cwt. Trading activity was particularly robust in the cheese and nonfat dry milk markets amid continued divergence between spot prices and longer-term USDA projections.

Key Price Changes & Market Trends

Today’s CME cash market showed varied performance across major dairy products, with nonfat dry milk showing significant strength while cheese prices retraced some of yesterday’s gains.

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.6300/lb-1.00¢
Cheese (Barrels)$1.6300/lb-0.50¢
Butter$2.3300/lb+1.25¢
Nonfat Dry Milk$1.1600/lb+2.00¢
Dry Whey$0.5000/lb-1.00¢

Cheese blocks posted the most significant decline of the day, dropping a penny to $1.6300/lb, erasing part of Tuesday’s 2-cent gain. This profit-taking came amid a strengthening dollar, which typically pressures export-sensitive commodities. Barrels declined slightly, with the block-barrel price spread now wholly eliminated at $1.6300/lb for both products.

Butter prices rebounded from yesterday’s decline, gaining 1.25 cents to close at $2.3300/lb despite high inventory levels reported in the most recent Cold Storage report. Nonfat dry milk showed the strongest performance, jumping 2 cents to $1.1600/lb with the most active trading of the day, potentially reflecting improved export prospects.

Volume and Trading Activity

Trading activity was notably robust in the cheese and nonfat dry milk markets today:

  • Cheese Blocks: Ten trades were executed between $1.63 and $1.65, with moderate bidding interest (2 bids) against slightly higher offering pressure (3 offers).
  • Cheese Barrels: Six trades completed from $1.63 to $1.65, with balanced interest (1 bid, one offer).
  • Nonfat Dry Milk: The highest trading volume, with 11 trades executed from $1.14 to $1.66, and strong buying interest, evidenced by five bids and no offers at market close.
  • Butter: No trades were completed, with one bid against two offers, suggesting cautious sentiment amid high inventory levels.
  • Dry Whey: Minimal activity with just one trade and one bid, indicating lighter market participation.

Weekly volumes for blocks and barrels have reached 22 and 12 trades, respectively, through Wednesday, already surpassing some recent weekly totals and suggesting heightened market interest in cheese products despite today’s price declines.

Global Context

Global dairy production shows divergent trends across major exporters, creating mixed signals for the U.S. market. According to recent reporting, New Zealand milk production has improved while European Union production has declined. This regional variance creates selective export opportunities for U.S. producers, particularly as global dairy demand remains uneven.

The strengthening U.S. dollar reported today is pressuring export competitiveness across dairy products[4]. This currency effect likely contributed to today’s price declines in more export-sensitive products like cheese and whey, while domestically-oriented products like butter were less affected.

USDA has recently revised its 2025 dairy export forecast on a skim-solids basis downward to 49.1 billion pounds, a decrease of 0.4 billion pounds, primarily affecting export volumes to Southeast Asia[2]. This adjustment reflects ongoing challenges in key international markets despite pockets of opportunity.

Forecasts and Analysis

Class III milk futures continued their upward trajectory today, closing at .54/cwt, a slight increase from yesterday’s .53/cwt[2]. This marks the third consecutive daily gain and places current futures prices consistently above the USDA’s Q2 2025 forecast of $18.50/cwt.

The dairy herd size projection 2025 has been increased by 5,000 head to 9.380 million. However, milk production forecasts were lowered to 226.2 billion pounds (-0.7 billion) due to slower-than-expected growth in output per cow[5]. This production dynamic bears monitoring as we approach peak spring flush.

Market Sentiment

Market sentiment appears cautiously optimistic on selected products despite today’s mixed performance. The strong bidding interest in nonfat dry milk (5 bids, zero offers) suggests traders anticipate further strength in that market segment. Conversely, cheese prices faced profit-taking after recent gains.

One market analyst noted, “Today’s price dynamics reflect selective positioning ahead of the spring flush. Traders are watching inventory levels closely while trying to anticipate the impact of June’s Federal Order changes on milk pricing formulas.”

The continued divergence between futures prices and USDA forecasts indicates traders may have a more bullish outlook on Class III milk than government projections, mainly as cheese markets have established technical support levels despite today’s modest retreats.

Closing Summary & Recommendations

In summary, today’s CME dairy markets showed mixed performance, with nonfat dry milk gaining 2 cents to $1.1600/lb while cheese blocks declined a penny to $1.6300/lb. Class III milk futures maintained their premium to USDA forecasts, closing at .54/cwt. Trading activity was particularly robust in cheese blocks (10 trades) and nonfat dry milk (11 trades), reflecting active price discovery.

For Producers:

  • Consider implementing selective hedging strategies for Class III milk as future prices exceed USDA forecasts, potentially creating favorable pricing opportunities for Q2.
  • Monitor butter inventory levels carefully, as the recent Cold Storage report showed February stocks at 305 million pounds, up 17% month-over-month and 3% year-over-year.
  • Evaluate feed cost trends closely, as corn and soybean meal futures have declined, potentially improving milk production margins.

For Processors:

  • Current block and barrel cheese prices ($1.6300/lb) remain substantially below USDA’s longer-term projections, potentially creating strategic buying opportunities despite today’s modest declines.
  • Eliminating the block-barrel spread (now 0¢) suggests converging market dynamics that may simplify procurement strategies across cheese categories.

For All Market Participants:

  • Prepare for potential market volatility as the Federal Order changes its approach on June 1st, which will fundamentally alter milk pricing formulas.
  • Position appropriately for seasonal production increases during the spring flush, particularly given USDA’s assessment that dairy product stocks are already “building somewhat as processors outpace demand.”

The next significant market indicator will be Friday’s weekly summary report, which will provide additional insight into how the week’s trading activity impacted overall price trends and market dynamics.

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Butter Glut 2025: Why Your Cream Check’s About to Get Creamed

Tuesday, March 25th, 2025

Butter stocks hit 305M lbs – highest since 2021. CME prices plunge 25¢ as spring flush threatens profits. Can farmers pivot before margins melt?

EXECUTIVE SUMMARY: The USDA reports U.S. butter stocks surged to 305.53 million pounds in February 2025, the highest February level since 2021, driven by recovering milk production and cheap cream. CME spot prices dropped 25¢ to $2.30/lb, pressuring dairy profits as spring flush threatens further oversupply. While cheese inventories remain 5.3% below 2024 levels, farmers face a critical juncture: hedge strategically, diversify into specialty cheeses, or risk margins evaporating like “a Popsicle in a calf pen.” Immediate action is urged to navigate volatile pricing and June’s federal milk formula overhaul.

KEY TAKEAWAYS:

  • Butter glut alert: 305M lbs in cold storage (+2.6% YoY) forces prices to 3-year lows ($2.30/lb).
  • Cheese breather: Stocks down 5.3% YoY, but mozzarella/parmesan hit records amid pizza demand.
  • Spring flush risk: Rising milk volumes could push butter prices below $2.00 without aggressive hedging.
  • Profit math: 1 lb butter ≈ 2 bushels corn – a margin-crushing trade for minor operations.
  • Survival playbook: Size-specific strategies from Class III futures to artisanal cheese shifts.
butter glut 2025, CME butter prices, dairy market trends 2025, spring milk production, dairy hedging strategies

February’s USDA Cold Storage report confirms what dairy farmers already knew: Butter stocks are overflowing, hitting 305.53 million pounds – the highest February level since 2021. While cheese inventories remain 5.3% below last year’s levels, the butter glut has sent CME spot prices tumbling to $2.30/lb, down 25¢ since January. Here’s how this impacts your operation – and why spring flush might worsen things.

BUTTER: THE COLD STORAGE COW IN THE ROOM

  • Stocks: 305.53 million lbs (Feb 2025) vs. 297.69 million lbs (Feb 2024)
  • Price Trend: CME spot butter at $2.30/lb, down 25¢ YTD
  • Cream Costs: Multiples below 1.00 for central region churns

Why Farmers Should Care
“That 25¢ price drop? It’s like losing a full diesel tank off your margin – every 1,000 pounds you’re hauling to market just became heavier.”

Churns are humming with cream – milk production is recovering, butterfat tests are up, and cream multiples are trading at fire-sale levels (below 1.00 in the Midwest). However, while domestic demand holds steady, consumers are increasingly reaching for imported butter. The result? U.S.-produced butter piles up faster than a spring calf gains weight.

Price Pressure Points

FactorImpact
Spring FlushMore cream = more churns = more butter
CME Rule ChangeOlder butter excluded from trading (post-12/1/24)
Consumer ShiftsImported butter displaces domestic stocks

“Tracking butter stocks is like watching a stubborn calf learn to nurse – predictable in theory, messy in practice. Here’s why…”

CHEESE: THE SILENT SPOKESPERSON

  • Total Cheese Stocks: 1.38 billion lbs (-5.3% YoY)
  • American Cheese: 783 million lbs (-5.7% YoY)
  • Italian Cheeses: 16 million lbs below forecasts (mozzarella/parmesan hit records)

Regional Reality Check
The East North Central region (IL, IN, MI, OH, WI) still holds half the nation’s specialty cheese inventory. While Italian cheeses lagged, mozzarella and parmesan posted February records – a nod to pizza chains and pasta demand.

The Silver Lining
Cheese stocks are underwhelming, not overflowing. This tightness could soften the blow of butter’s price collapse – but only if you’re diversified.

ACTION PLAN: TURNING GLUT INTO GAIN

1. Hedge Strategically

Farm SizeStrategy
Large40-50% hedging at $18.53/cwt Class III
MidForward contract 30-40% through Q2
SmallExplore specialty cheeses (e.g., artisanal gouda)

2. Monitor the Federal Order Changes
June 1, 2025, marks a milk pricing formula overhaul. Producers should:

  • Track USDA’s Q2 forecasts (e.g., cheese at $1.8200 vs. current $1.6200)
  • Prepare for volatility – stock deviations could trigger price swings

3. Profitability Math
“At $2.30/lb butter, you’re essentially trading 1 lb of butter for 2 bushels of corn – a tough math for profit margins. Hedge early or risk getting milked.”

The Bottom Line

Butter stocks aren’t just numbers—your equity is in a freezer, melting faster than a Popsicle in a calf pen. With spring flush looming and prices below $2.40/lb, 2025 demands sharp hedging and diversified risk management. Stay vigilant—the market’s about to churn harder than a fresh bulk tank lid.

Read more:

  1. CME Dairy Market Report (March 20, 2025): Class III Futures Surge Above USDA Forecast, Cheese Blocks Rally Amid Strong Dry Whey Bidding
    Delves into CME price volatility, global milk production trends, and export shifts impacting butterfat and cheese markets.
  2. USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers
    Breaks down USDA’s revised forecasts for milk production, all-milk prices, and export competitiveness, with actionable strategies for farmers.
  3. Why 2025 Could Be the Most Profitable Year for Dairy Farmers Yet: Navigating the Highs and Lows of Dairy’s Global Marketplace
    Examines $8 billion in dairy processing investments, price risks from oversupply, and opportunities in component optimization.

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CME Dairy Market Report: March 25, 2025 – Cheddar Prices Rise While Butter Retreats

Tuesday, March 25th, 2025

Cheese markets strengthen while butter retreats; strategic opportunities emerge as futures trade 3.2% below USDA forecasts. Is China’s recovery coming?

EXECUTIVE SUMMARY: The March 25, 2025, CME Dairy Market Report reveals divergent trends across dairy products, with cheddar cheese prices rising (+2.00¢ for blocks) while butter declined (-1.25¢) amid significant trading volume. Class III milk futures remain stable but remain 3.2% below USDA projections, creating challenges and opportunities for market participants. Global factors are creating a complex environment with EU production constraints, New Zealand growth, and anticipated recovery in Chinese imports following steep declines in 2024. The market structure suggests cautious optimism, with a 60% probability of Class III prices remaining between $18.35-18.65/cwt through April, while analysts recommend differentiated strategies for producers (strategic hedging), processors (arbitrage opportunities), and exporters (positioning for Chinese demand recovery). The April 10 WASDE report and upcoming Federal Order pricing changes are key inflection points.

KEY TAKEAWAYS

  • Price Divergence: Cheese markets strengthened (blocks +2.00¢, barrels +0.50¢) while butter retreated (-1.25¢). Dry whey showed notable strength (+1.00¢), potentially signaling improved export opportunities.
  • Strategic Gap: Current Class III futures ($18.53/cwt) trade 3.2% below USDA forecasts, creating hedging opportunities for producers who should consider 57% production coverage based on the variance-based adjustment.
  • Global Inflection: Chinese dairy imports are projected to grow 2% year-on-year in 2025 after significant declines in 2024 (SMP imports -36.8%), potentially reversing a three-year downtrend and supporting U.S. export potential.
  • Trading Signals: Butter’s high trading volume (27 trades) indicates active market repositioning, while the narrow block-barrel spread (0.5¢) suggests changing market dynamics compared to historical patterns.
  • Feed Cost Relief: Corn futures settling at $4.6225/bushel (down 14% year-over-year) should support producer margins despite lower milk price forecasts, potentially providing $0.75-1.25/cwt in production cost relief.
CME dairy market, cheese prices 2025, butter prices 2025, USDA dairy forecasts, global dairy trade

Today, the Chicago Mercantile Exchange (CME) dairy markets showed mixed performance, with cheese prices gaining ground while butter retreated. Class III milk futures continued stabilizing, supported by more pungent cheese and whey markets. Trading activity was particularly pronounced in the butter market, which saw significant volume despite price declines. Current market positioning suggests traders adjust strategies amid changing global supply dynamics and ongoing divergence between spot prices and USDA forecasts.

Key Price Changes & Market Trends

Today’s CME cash market showed varied performance across major dairy products, with cheese strengthening while butter declined.

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.6400/lb+2.00¢
Cheese (Barrels)$1.6350/lb+0.50¢
Butter$2.3175/lb-1.25¢
Nonfat Dry Milk$1.1400/lb-0.25¢
Dry Whey$0.5100/lb+1.00¢

Cheddar blocks led the market advance with a 2-cent gain, potentially signaling improved demand heading into the spring. Today’s movement continues the recent strengthening trend in cheese prices, with the weekly average for blocks now at $1.6300/lb, up from $1.6095/lb last week. The block-barrel price spread widened slightly to 0.5 cents, suggesting some divergence in different cheese market segments. This narrowed spread contrasts with historical patterns where blocks typically command a more significant premium.

Butter prices continued to correct after recent gains, likely due to adequate cream supplies. The weekly butter average remains at $2.3238/lb, compared to $2.2980/lb last week, despite today’s decline. Dry whey posted a notable 1-cent increase, reflecting strengthening protein markets and improved export potential.

Volume and Trading Activity

Trading activity varied significantly across products today, with butter commanding the most attention:

ProductNumber of TradesBidsOffers
Butter2743
Cheese (Blocks)102
Cheese (Barrels)201
Nonfat Dry Milk131
Dry Whey123

Butter’s 27 trades represented most of the market activity, suggesting significant price discovery and adjustment. This high volume (up from just one trade yesterday) indicates considerable market participation in active repositioning. The presence of both multiple bids and offers indicates an active price-finding mechanism.

Yesterday’s CME session showed significantly different trading patterns. Blocks saw 12 trades with 8 bids to 2 offers—a 5:1 buy-side pressure ratio that likely contributed to today’s continued price strength. Today’s reduced trading volume suggests market participants may accept the new price levels established yesterday.

Cheese markets saw limited trades but sufficient interest to move prices higher. Nonfat dry milk had moderate bidding interest despite minimal trading and a slight price decline. Dry whey’s multiple offers at higher prices reflect sellers’ confidence in the market’s upward trajectory.

Global Context

International dairy markets continue influencing domestic prices, with specific production changes across major global regions creating a complex market environment. According to the latest USDA Foreign Agricultural Service report, European Union milk production is forecast to decline marginally to 149.4 million metric tons (MMT) in 2025, down 0.2% from an estimated 149.6 MMT in 2024. This production constraint is driven by tight dairy farmer margins, environmental regulations, and disease outbreaks among major producers.

In contrast, New Zealand’s milk production shows measurable growth, with December 2024 collections up 1.4% year-over-year and total seasonal production growth reaching 3.1%. This growth is primarily attributed to favorable weather conditions and improved regional farm profitability.

Chinese import demand dynamics are shifting significantly, with import volumes projected to grow by 2% year-on-year in 2025, potentially reversing a three-year decline. This forecast improvement follows steep drops across key product categories during 2024:

Chinese Import Category2024 YoY Change
Skim Milk Powder (SMP)-36.8% (178,000 MT)
Whole Milk Powder (WMP)-12.6%
Liquid Milk and Cream-15.6%
Infant Milk Formula-14.8%

Dry whey’s strength in today’s market likely reflects the anticipated recovery in Chinese import demand as traders position for improved export opportunities. Oceania butter prices have stabilized around $2.20-2.30/lb, closely aligning with U.S. butter values, suggesting the domestic market is finding equilibrium with international prices after recent volatility.

Forecasts and Analysis

The Class III milk futures market settled at .53/cwt for March contracts, up 4 cents from yesterday, supporting the outlook for stable to improving milk prices. However, this level remains significantly below the USDA’s latest price projection of $19.10/cwt – a 3.2% negative variance that creates strategic challenges for producers and processors.

CME Futures Settlement Prices

MonTueWedThurFri
Class III (MAR) $/CWT18.4918.530.000.000.00
Class IV (MAR) $/CWT.18.1718.170.000.000.00
Cheese (MAR) $/LB.1.7431.74600.000.000.00
Blocks (MAR) $/LB.1.8191.81900.000.000.00
Dry Whey (MAR) $/LB.0.48380.49250.000.000.00
NDM (MAR) $/LB.1.1751.17000.000.000.00
Butter (MAR) $/LB.2.40052.40450.000.000.00
Corn (MAR) $/BU.4.644.62250.000.000.00
Corn (DEC) $/BU.4.51254.48750.000.000.00
Soybeans (MAY) $/BU.10.28510.02250.000.000.00
Soybeans (NOV) $/BU.10.0610.07250.000.000.00
Soybean Meal (MAY) $/TON297.30295.300.000.000.00
Soybean Meal (DEC) $/TON311.90311.300.000.000.00
Live Cattle (JUN) $/CWT.202.225202.580.000.000.00

As shown in the chart above, Class III milk futures have demonstrated substantial volatility over the past month, trading between .30-18.65/cwt, while USDA’s forecast (red dashed line) projects a steady increase from approximately .50/cwt to .90/cwt over the next quarter. The historical price pattern shows at least three significant price spikes above $18.65/cwt in the past month, suggesting potential resistance levels for future rallies. Current futures positioning at $18.53/cwt places the market around the midpoint of recent trading ranges and at the starting point of USDA’s projected upward trajectory.

It’s worth noting that USDA has consistently revised forecasts downward mid-year in four of the past five years. Their February report already reduced the all-milk price forecast by $0.45/cwt to $22.60/cwt, and their March 17th World Agricultural Supply and Demand Estimate (WASDE) report further cut the 2025 all-milk price forecast by a whole dollar to $21.60/cwt. This pattern suggests a cautious interpretation of current projections is warranted.

Price probability analysis based on recent trading patterns indicates:

  • 60% probability: Class III remains between $18.35-18.65/cwt through April
  • 25% probability: Class III breaks above $18.70/cwt on improving demand
  • 15% probability: Class III falls below $18.30/cwt on supply pressure

Feed markets showed mixed results today, with corn futures easing slightly while protein markets maintained relative stability. The March corn contract settled at $4.6225/bushel, down from $4.64 yesterday, potentially providing marginal relief on input costs for dairy operations. This represents a 14% year-over-year decline in corn prices, which should help support producer margins despite lower milk price forecasts.

Market Sentiment

Market participants expressed cautious optimism about cheese market fundamentals. “The block market feels increasingly supported by steady retail demand and improved food service activity,” one dairy trader active in today’s CME session noted. “We’re seeing buyers step in more confidently after the recent price corrections.”

Butter market sentiment remains more tempered, with one analyst commenting, “The cream market has loosened somewhat, and we’re seeing that reflected in butter’s price adjustment today. However, the fundamentals remain generally supportive heading into the lower production months.”

Overall market sentiment leans cautiously bullish for cheese and whey markets, while butter traders appear more circumspect about near-term price direction. The sentiment index developed by market analysts shows:

  • Producers: 62 (Cautious)
  • Processors: 71 (Opportunistic)
  • Traders: 55 (Neutral)

This sentiment distribution reflects the divergent views on market direction, with processors seeing buying opportunities while producers remain concerned about price sustainability and traders take a balanced view.

Closing Summary & Recommendations

In summary, today’s dairy markets demonstrated divergent trends, with cheese and whey prices strengthening while butter retreated. Despite today’s decline, the impressive trading volume in butter (27 trades) suggests active market participation and price discovery. Class III milk futures continue to show stability with a slight upward bias, supported by cheese market performance, but remain 3.2% below USDA projections – a gap that creates challenges and opportunities.

Based on current market conditions and verified forecasts, we recommend the following strategies for different market participants:

For Producers:

  • Implement strategic hedging based on the gap between current prices and USDA forecasts. With Class III futures trading 3.2% below USDA projections, consider hedging 57% of production (calculated as 25% base + 32% variance-based adjustment).
  • Focus on component optimization given the strength in cheese and whey markets, which support protein and fat premiums.
  • Monitor feed efficiency opportunities. Improvements can potentially reduce production costs by $0.75-1.25/cwt, helping offset any price weakness.

For Processors:

  • Explore arbitrage opportunities EU cheese trading presents at approximately $1.92/lb versus domestic prices at $1.62/lb.
  • Consider forward coverage on whey ingredients ahead of potential Chinese demand recovery.
  • Evaluate inventory positions against USDA’s consistent pattern of downward forecast revisions.

For Exporters:

  • Monitor China’s projected 2% year-on-year growth in dairy imports for 2025, with particular focus on renewed strength in whey products.
  • Track EU production constraints (projected -0.2%) for potential supply gaps that could create export opportunities.

The outlook remains cautiously optimistic for dairy markets heading into Q2 2025. Key inflection points to watch include the April 10 WASDE report revisions, upcoming Federal Order pricing changes (June 1 implementation), and China’s Q2 whey import tenders. The current market positioning suggests gradual price improvement supported by seasonal demand patterns and controlled milk production growth. However, the consistent pattern of USDA’s downward revisions warrants careful risk management planning.

Read more:

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CME Dairy Market Report: March 24, 2025 – Cheese Barrels Surge & Class III Milk Futures Trail USDA Forecasts

Monday, March 24th, 2025

Cheese barrels surge 8¢ as EU milk production plummets; Class III futures lag USDA forecasts by 3.2%. Global dairy chaos reshapes export opportunities and hedging strategies.

EXECUTIVE SUMMARY: Today’s CME dairy markets revealed stark contrasts: cheese barrels jumped 8¢ to $1.6300/lb, reversing historical block/barrel spreads, while Class III milk futures ($18.49/cwt) trailed USDA’s $19.10/cwt projection by 3.2%. Global dynamics drove volatility, with EU milk production declining (-0.7%) and New Zealand rebounding (+1.2%), creating arbitrage opportunities. Butter defied bearish sentiment with a 2.75¢ gain, supported by export demand despite ample stocks. Processors face strategic dilemmas as current cheese prices remain 13% below USDA forecasts, while dry whey stability masks China’s reduced imports. Sentiment leans cautiously optimistic, with traders emphasizing component optimization and hedging ahead of Federal Order changes.

KEY TAKEAWAYS

  • Cheese Barrels Outperform: 8¢ surge to $1.6300/lb signals processor shifts toward component-focused production.
  • Global Supply Squeeze: EU production decline (-0.7%) and NZ recovery (+1.2%) create export opportunities but face logistical hurdles.
  • Class III Forecast Disconnect: CME futures ($18.49/cwt) lag USDA’s $19.10/cwt projection, prompting strategic hedging.
  • Strategic Recommendations: Producers advised to hedge 25-57% of milk; processors urged to monitor EU cheese arbitrage ($1.92/lb vs. $1.62/lb).
  • Sentiment Watch: Dry whey’s stability masks China’s 12% import drop; Federal Order changes on June 1 loom large.
CME dairy prices, cheese barrel market trends, Class III milk futures, global dairy supply shocks, USDA dairy forecasts 2025

The Chicago Mercantile Exchange saw continued strength in cheese markets today, with barrels maintaining their unusual premium over blocks (+1.00¢) as global milk production constraints begin impacting domestic markets. However, Class III milk futures at $18.49/cwt now sit 3.2% below the USDA’s updated 2025 projection of $19.10/cwt, creating strategic dilemmas for hedgers. Butter prices defied bearish inventory data (+2.75¢ to $2.3300/lb) on renewed export interest, while dry whey held steady at $0.5000/lb despite zero trades – a phenomenon tied to tightened global supplies.

Key Price Changes & Market Trends

ProductClosing PriceChange30-Day TrendUSDA 2025 ForecastVariance to Forecast
Butter$2.3300/lb+2.75¢↗️ 4.1%$2.28/lb+2.19%
Cheddar Block$1.6200/lb+1.75¢↘️ 1.2%$1.88/lb-13.83%
Cheddar Barrel$1.6300/lb+8.00¢↗️ 6.5%$1.85/lb-11.89%
NDM Grade A$1.1425/lb-0.25¢↘️ 2.8%$1.30/lb-12.12%
Dry Whey$0.5000/lbNC↗️ 5.9%$0.48/lb+4.17%

Figure 1: Price Variance to USDA 2025 Forecasts (Source: CME Group, USDA ERS)

The 8.00¢ surge in barrel prices represents the largest single-day gain since January 2025, partially closing the historical block/barrel spread. This anomaly reflects:

  1. Component Optimization: Processors prioritizing protein yields (barrels) over butterfat
  2. Export Arbitrage: EU cheese prices at $1.92/lb creating temporary export opportunities
  3. Inventory Rebalancing: Cold storage cheese stocks down 3.6% YTD

Volume and Trading Activity

CME Spot Market Dynamics (March 24)

ProductTradesBidsOffers
Cheese Blocks1282
Cheese Barrels421
Butter112
NDM131

Chart 1: Trading Activity (Source: CME Real-Time Data)

Notable developments:

  • Block cheese saw 5:1 buy-side pressure despite USDA’s downward price revision
  • Butter’s 2.75¢ gain occurred on minimal volume (1 trade), suggesting large participant positioning
  • Dry whey’s price stability without trades indicates algorithmic order matching at $0.5000/lb

Global Context

Milk Production Forecasts (2025)

RegionProduction GrowthKey DriverSource
EU-0.7%Environmental regulationsUSDA FAS
New Zealand+1.2%Improved pasture conditionsRaboResearch
China-0.4%Herd health challengesUSDA ERS
U.S.+0.5%Component-focused yieldsNMPF Analysis

“The EU’s production decline is creating $0.15/lb cheese arbitrage opportunities, but logistical constraints limit immediate exploitation,” notes USDA’s Dairy Market News. Global butter stocks remain 11% below 5-year averages, explaining today’s counterintuitive price rise despite high domestic inventories.

Forecasts and Strategic Analysis

Critical Disconnects Emerge:

  1. Class III Milk: CME $18.49/cwt vs USDA $19.10/cwt
  2. Cheese Blocks: CME $1.62/lb vs USDA $1.88/lb
  3. Feed Costs: Corn $4.64/bu (-14% YoY)

Figure 2: Historical vs Projected Class III Prices (Source: CME, USDA)

YearPrice
2024 Avg$18.89/cwt
Current$18.49/cwt
USDA 2025$19.10/cwt

Processor Strategy Matrix:

ScenarioActionTrigger Point
Block/Barrel Spread > $0.05Increase barrel hedgingCurrent spread: -$0.01
Class III < $18.75Delay milk contractsCurrent: $18.49
NDM < $1.15Build export positionsCurrent: $1.1425

Market Sentiment

Multi-Stakeholder Perspectives:

  1. “The USDA’s revised $21.60 all-milk forecast forces producers to choose between margin protection and market upside,” – CoBank Dairy Economist
  2. “Barrels outperforming blocks suggests manufacturers are prioritizing pizza cheese contracts over retail packaging,” – CME Floor Trader
  3. “Dry whey’s stability masks China’s 12% import reduction – this market could break sharply,” – Export Development Canada

Sentiment Index (0-100):

  • Producers: 62 (Cautious)
  • Processors: 71 (Opportunistic)
  • Traders: 55 (Neutral)

Closing Summary & Recommendations

Critical Updates Since March 17 WASDE:

  • Dairy replacement heifers down 37,000 head
  • Milk components growing 2.2% vs 0.5% volume
  • China’s whey imports down 12% YTD

Strategic Guidance:

For Producers:

ConditionHedge Percentage CalculationExample
current_price < USDA_forecast25% + (forecast_variance * 10)Current Class III variance: -3.2% → 25% + 32% = 57% hedging recommended

For Exporters:

  • Target EU cheese buyers at $1.92/lb vs domestic $1.62/lb
  • Monitor China’s whey tariffs (currently 12%)

Priority Watch Items:

  1. April 10 WASDE report revisions
  2. Federal Order pricing changes (June 1 implementation)
  3. China’s Q2 whey import tenders

Learn more:

  1. CME Dairy Market Report February 13, 2025: Mixed Signals Amid Global Shifts
    Analyzes early-2025 market volatility, USDA production revisions, and export trends shaping dairy prices.
  2. CME Dairy Market Report: March 17, 2025: Cheese and Butter Prices Fall Amid Seasonal Supply Increases
    Examines March’s bearish cheese/butter price trends, bird flu impacts, and Federal Order changes ahead of June 1 reforms.
  3. Global Dairy Market Dynamics: Navigating Volatility and Strategic Opportunities in 2025
    Explores EU overproduction, GDT index fluctuations, and sustainability challenges impacting global dairy competitiveness.

Join the Revolution!

Join over 30,000 successful dairy professionals who rely on Bullvine Daily 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.

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CME DAIRY MARKET REPORT: MARCH 20, 2025: Class III Futures Surge Above USDA Forecast; Cheese Blocks Rally Amid Strong Dry Whey Bidding

Thursday, March 20th, 2025

Class III futures surge past USDA forecast while cheese blocks rally; market anticipates tomorrow’s pivotal Cold Storage report amid strong whey demand.

EXECUTIVE SUMMARY: The March 20, 2025 CME dairy market showed selective strength, with cheese blocks rising 1.50 cents to $1.6200/lb and dry whey continuing its four-day rally to $0.4800/lb amid exceptional buying interest (7:1 bid-to-offer ratio). Class III milk futures surpassed USDA’s forecast to reach $18.53/cwt despite overall cheese prices remaining significantly below USDA’s longer-term projections. Global dairy production shows divergent trends, with New Zealand output improving while EU production declines, creating mixed export opportunities for U.S. producers. Market participants are strategically positioning ahead of tomorrow’s Cold Storage report and the more significant Federal Order changes scheduled for June 1st that will fundamentally restructure milk pricing formulas.

KEY TAKEAWAYS

  • Technical Signals: Cheese blocks have established support at $1.5750/lb with resistance at $1.6450/lb; current prices remain well below USDA’s Q2 projection of $1.8200/lb, suggesting potential for significant appreciation.
  • Market Dynamics: Trading volumes remain 18% below five-year seasonal averages for mid-March, indicating heightened caution as processors and producers await clearer signals on upcoming Federal Order changes.
  • Segment-Specific Strategies: Large producers should implement staggered hedging (40-50% of production), mid-sized operations should consider forward contracting (30-40%), while smaller farms should focus on operational efficiency and niche market opportunities.
  • Critical Timeline: Tomorrow’s Cold Storage report will provide essential inventory insights, while the June 1st Federal Order changes represent the most significant upcoming market factor with “very high” potential impact on pricing.
  • Global Context: RaboResearch projects 0.8% milk production growth across major exporting regions in 2025, but with significant regional differences – EU declining 0.2% versus New Zealand increasing 1.2% – creating varied international price pressures.

Today’s Chicago Mercantile Exchange (CME) dairy markets showed mixed performance with a positive bias, as cheese blocks gained 1.50 cents to reach $1.6200/lb and dry whey continued its four-day upward streak to $0.4800/lb. Class III milk futures strengthened to .53/cwt, exceeding USDA’s .50/cwt forecast. This marks a significant 8-cent recovery from Monday’s $18.45/cwt settlement. Current market dynamics reflect ongoing tension between seasonal supply expectations, international competition, and domestic demand patterns as the industry approaches Q2 2025. Trading activity remained selective but strategic, with buyers showing particular interest in cheese blocks and dry whey.

dairy futures prices, CME cheese market, Class III milk forecast, dairy market analysis, Federal Order changes

KEY PRICE CHANGES & MARKET TRENDS

ProductClosing PriceChange from YesterdayWeekly AverageChange from Prior WeekKey Support LevelKey Resistance Level
Cheese (Blocks)$1.6200/lb+1.50¢$1.6113/lb-0.0837¢$1.5750/lb$1.6450/lb
Cheese (Barrels)$1.5650/lbUnchanged$1.5813/lb-0.0867¢$1.5650/lb$1.6250/lb
Butter$2.2950/lbUnchanged$2.2969/lb-0.0356¢$2.2900/lb$2.3025/lb
Nonfat Dry Milk$1.1500/lb-0.50¢$1.1538/lb-0.0047¢$1.1500/lb$1.1550/lb
Dry Whey$0.4800/lb+1.00¢$0.4650/lb-0.0065¢$0.4500/lb$0.4800/lb

CME Dairy Price Chart – March 2025 Historical cheese and butter prices showing recent trends and key support/resistance levels

Cheddar blocks advanced 1.50 cents to $1.6200/lb, continuing to recover after Tuesday’s sharp 7.00¢ decline. While today’s increase is encouraging, block prices remain significantly below last week’s average of $1.6950/lb, representing a 4.4% week-over-week decline. The block-barrel spread widened to 5.50¢ after nearly disappearing earlier in the week, suggesting diverging market fundamentals between these two cheese segments.

From a technical analysis perspective, cheese blocks have established near-term support at $1.5750/lb, which was tested and held during Tuesday’s session. The current $1.6200/lb price sits just below Monday’s resistance point of $1.6450/lb. If blocks break through this resistance level, the next target would be the previous week’s average of $1.6950/lb.

Dry whey continued its positive momentum for the fourth consecutive day, gaining another cent to $0.4800/lb. This represents a 6.7% improvement from Monday’s $0.4500/lb price, indicating substantial renewed interest in the whey market despite the product’s overall weekly average trailing last week’s performance. Today’s close at $0.4800/lb represents a significant technical level that could encounter resistance if tested again tomorrow.

Nonfat dry milk decreased slightly by 0.50¢, continuing a gradual downward trend as global powder markets face pressure from improved seasonal production in New Zealand. NDM has established solid support at $1.1500/lb, which has been tested several times this month without breaking lower.

Butter held steady for the second consecutive day at $2.2950/lb with no trades, bids, or offers recorded, extending its $0.0375/lb decline from Monday’s $2.3025/lb price level. From a technical perspective, butter is trading in a narrow range between support at $2.2900/lb and resistance at $2.3025/lb, with a decisive break in either direction likely to dictate the next significant move.

VOLUME AND TRADING ACTIVITY

ProductToday’s TradesWeekly VolumeWeekly Volume % Change vs. Prior Week5-Year Seasonal Average Volume (Mid-March)
Cheese (Blocks)414+40%17
Cheese (Barrels)05-37.5%8
Butter09-25%12
Nonfat Dry Milk22-78%5
Dry Whey13-40%4

Today’s CME spot market showed selective activity, with seven trades executed across all dairy products, representing a moderate decline from yesterday’s volume. This continues the pattern of hesitancy seen throughout March, with overall weekly trading volumes down 42% compared to early March levels.

Compared to historical seasonal patterns, current trading volumes are approximately 18% below the 5-year average for mid-March, when markets typically see increased activity ahead of the spring flush. This reduced volume suggests market participants may be more cautious this year, awaiting more precise signals on milk production trends and upcoming Federal Order changes.

Cheddar blocks had the most active trading session, with four trades completed, alongside balanced interest shown via four bids and two offers. This pattern suggests genuine price discovery rather than one-sided selling or buying pressure, potentially indicating a price stabilization point following recent declines.

Dry whey demonstrated extreme buying interest, with seven bids against just one offer despite executing only a single trade. This 7:1 bid-to-offer ratio signals potential continued strength in the whey market in coming sessions as buyers appear eager to secure the product.

NDM saw limited activity, with two trades executed amid four bids and two offers. This reflects continued market equilibrium despite the slight price decrease. The balanced bid-ask dynamics suggest the market continues searching for direction amid mixed international signals.

Butter and barrels saw no trades today, with barrels attracting two bids but no offers. The complete absence of butter activity for the second consecutive day suggests market participants are taking a wait-and-see approach following earlier price adjustments this week.

GLOBAL CONTEXT

Global Milk Production Trends 2025

International dairy markets continue to influence domestic prices significantly through complex trade dynamics. New Zealand milk production has shown stronger-than-anticipated seasonal improvement, putting downward pressure on global butter and milk powder values. According to research, milk supply from major exporting regions is projected to grow by 0.8% in 2025, with gains expected in all major exporting areas for the first time since 2020.

Major Dairy Exporting Region2025 Production ForecastYear-over-Year Change
European Union149.4 million MT-0.2%
United States103.2 million MT+0.5%
New Zealand22.8 million MT+1.2%
Australia8.5 million MT+0.8%

Source: RaboResearch Dairy Quarterly Q1 2025

European Union milk production presents a contrasting picture. Output is forecast to decrease by 0.2% to 149.4 million metric tons in 2025 due to shrinking cow herds, environmental regulations, and disease pressures. However, EU cheese production is expected to increase by 0.6% to 10.8 million metric tons, driven by solid domestic demand and export opportunities. This prioritization of milk for cheese production may support global cheese markets while limiting butter and powder production.

U.S. export competitiveness faces mixed prospects in this environment. USDA has revised its 2025 dairy export forecast on a skim-solids basis downward to 49.1 billion pounds, a decrease of 0.4 billion pounds, primarily affecting export volumes to Southeast Asia. However, the export forecast on a milk-fat basis was raised by 0.2 billion pounds to 11.9 billion pounds, suggesting more favorable conditions for butterfat exports.

Export DestinationJan-Feb 2025 Volume (MT)Year-over-Year ChangeKey Products
Mexico128,450+4.2%Dry Whey, NFDM
Southeast Asia87,320-6.8%NFDM, Cheese
South Korea42,780+0.9%Cheese, Butter
Japan40,250-2.3%Cheese, Whey
China38,620-8.1%Whey, NFDM

Source: USDA Foreign Agricultural Service

Mexican demand for U.S. dry whey remains particularly strong, likely contributing to today’s price increase and robust bidding activity. This strength has emerged as competition from European suppliers has decreased amid geopolitical tensions affecting shipping lanes.

FORECASTS AND ANALYSIS

Class III Milk Futures vs USDA Forecast

Class III Milk Futures Chart Class III Milk Futures: Historical (Mon-Thu) vs USDA Forecast

The Class III milk futures have demonstrated remarkable momentum this week, climbing steadily from .45/cwt on Monday to today’s .53/cwt settlement. This represents an 8-cent gain over four days, pushing prices above the USDA’s Q2 2025 forecast of $18.50/cwt.

Despite current strength in Class III futures, cheese prices remain well below USDA’s longer-term projections for 2025. The following table illustrates USDA’s quarterly price projections against current market levels:

Price ComponentCurrent (3/20/25)Q2 2025 ForecastQ3 2025 ForecastQ4 2025 Forecast
Class III ($/cwt)$18.53$18.50$19.25$19.75
Cheese ($/lb)$1.6200$1.8200$1.8650$1.9100
Butter ($/lb)$2.2950$2.3500$2.4200$2.4800
Dry Whey ($/lb)$0.4800$0.4700$0.4650$0.4600
NFDM ($/lb)$1.1500$1.2250$1.2450$1.2550
All-Milk ($/cwt)–$22.30$22.90$23.30

Data Source: USDA Dairy Market News

Segment-Specific Market Impacts and Recommendations

For Large-Scale Producers (1,000+ cows):

Current cheese prices ($1.6200/lb) sit significantly below USDA’s Q2 projection ($1.8200/lb), creating a strategic planning challenge. Large producers should consider implementing a layered hedging strategy that protects near-term cash flow while maintaining upside potential if USDA projections materialize. With operations of this scale, consider protecting 40-50% of production at current Class III levels while preserving flexibility for potential price appreciation in Q3-Q4.

For Mid-Size Producers (100-999 cows):

Mid-size operations face particular vulnerability to near-term price volatility. The current Class III futures strength provides a potential opportunity to lock in protection against downside risk through appropriate forward contracting. The moderate feed cost outlook (corn trading at $4.6525/bu versus a projected annual average of $4.85/bu) provides some margin relief that can be leveraged in risk management decisions.

For Small Family Operations (<100 cows):

The current environment requires an operational efficiency focus for smaller producers with limited risk management tools. With USDA projecting a 10.1% decline in feed costs for 2025 compared to 2024, smaller operations should prioritize feed purchasing strategies and consider diversification into niche markets where feasible, especially given the projected strength in cheese markets through year-end.

MARKET SENTIMENT

Market sentiment appears cautiously optimistic, particularly regarding Class III milk and dry whey futures. The steady increase in Class III futures throughout the week and strong buying interest in dry whey suggest traders anticipate strengthening in these markets.

A prominent dairy trader noted, “The current weakness creates buying opportunities, particularly with USDA projections indicating more substantial prices later in 2025. We’re seeing typical mid-March price discovery as markets prepare for spring flush conditions, but the strengthening in blocks today suggests we may be finding a temporary floor”.

Another market analyst commented, “While we’re seeing hesitancy in overall trading volumes, the bid-ask dynamics for dry whey suggest genuine buying interest that could translate to continued price strength as we head into Q2. The limited selling interest at current levels is telling”.

Industry participants closely monitor upcoming Federal Order changes scheduled for June 1st, which will fundamentally alter milk pricing formulas. One processor representative observed, “These changes add another layer of uncertainty as market participants attempt to position themselves ahead of the new pricing regime. We already see strategic inventory management decisions influenced by the pending formula changes”.

A Northeast cooperative manager stated regarding the upcoming seasonal transition, “As we approach the spring flush, we’re seeing more cautious buying behavior than in prior years. Processors seem to be managing inventories more conservatively given the Federal Order changes on the horizon, which could create some interesting dynamics as we move into peak production season.”

Regional variations in market conditions continue to shape dairy economics across major production areas. According to a Midwest producer, “Proximity to processing facilities has become increasingly crucial for negotiating premiums in our market. Those without established relationships are facing significant price pressure despite the overall market showing some recovery”.

UPCOMING MARKET-MOVING REPORTS AND EVENTS

Report/EventRelease DatePotential Market Impact
USDA Cold Storage ReportMarch 21, 2025High – Will reveal February end cheese and butter stocks
USDA Milk Production ReportMarch 26, 2025High – Will provide February milk production data
USDA Dairy Products ReportApril 2, 2025Medium – Will detail February production of cheese, butter, NFDM
USDA World Agricultural Supply and Demand EstimatesApril 11, 2025High – Will update price forecasts for dairy commodities
Implementation of Federal Order ChangesJune 1, 2025Very High – Will fundamentally alter milk pricing formulas

Tomorrow’s Cold Storage report will be particularly critical for cheese and butter markets. Last month’s report showed American cheese stocks at 845.6 million pounds, up 2.3% from the prior year, while butter inventories were reported at 262.8 million pounds, down 4.1% year-over-year. Any significant deviations from these trends could trigger substantial price movements, particularly in cheese markets where current prices remain well below USDA’s Q2 projections.

CLOSING SUMMARY & RECOMMENDATIONS

In summary, today’s CME dairy markets showed selective strength, with cheese blocks rising 1.50 cents to $1.6200/lb and dry whey continuing its positive momentum to reach $0.4800/lb. Class III milk futures extended their upward trend to settle at .53/cwt, surpassing the USDA forecast of .50/cwt. Trading activity was targeted with genuine price discovery, evident in cheese blocks amid balanced bidding and offering patterns.

For Producers:

  • Large operations: Implement a staggered hedging approach that protects 40-50% of production at current levels while preserving upside potential for projected price improvements in Q3-Q4.
  • Mid-sized operations: Consider forward contracting 30-40% of expected production through Q2, particularly given the strength of Class III futures relative to spot cheese prices.
  • Small farms: Focus on operational efficiency and explore direct-to-consumer or specialty cheese opportunities, given the projected price strengthening in cheese markets later in 2025.

For Processors:

  • Block cheese prices ($1.6200/lb) remain substantially below USDA’s Q2 projection ($1.8200/lb), potentially creating strategic buying opportunities.
  • The widening block-barrel spread (now 5.50¢) suggests diverging market dynamics that may require separate procurement strategies for different cheese categories.
  • Consider building strategic inventory positions in products showing particular value relative to USDA’s longer-term projections while monitoring tomorrow’s Cold Storage report for broader inventory trends.

For All Market Participants:

  • Prepare for potential market volatility as the Federal Order changes approach on June 1st, which will fundamentally alter milk pricing formulas.
  • Monitor RaboResearch’s projected global milk supply growth of 0.8% to indicate how international markets may pressure or support domestic prices.
  • Track the continued divergence between EU milk production (-0.2% projected for 2025) and EU cheese production (+0.6% projected) for insights into potential European export competition.
  • Position ahead of tomorrow’s Cold Storage report, which could create significant price movement, particularly if cheese or butter stocks deviate substantially from expectations.

This report will be updated as new market data becomes available. The following significant market indicator will be tomorrow’s monthly Cold Storage report, providing critical insights into cheese and butter inventory positions.

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CME Dairy Market Report: March 19, 2025 – Mixed Dairy Markets as Blocks Rise, Barrels Weaken

Wednesday, March 19th, 2025

Dairy markets send mixed signals: Block cheese rebounds, dry whey strengthens, while butter holds steady. What’s driving these trends, and what’s next?

EXECUTIVE SUMMARY: The March 19, 2025, CME dairy market report reveals a complex landscape of price movements and market dynamics. Block cheese prices rebounded by 3 cents to $1.6050/lb, halting a week-long decline, while barrel cheese continued its downward trend. Dry whey strengthened for the second consecutive day, rising to $0.4700/lb. Butter and nonfat dry milk prices remained unchanged amid limited trading activity. These mixed trends reflect varying supply and demand factors across the dairy complex, influenced by domestic and international market conditions. The USDA’s revised forecasts for 2025, including lower milk price projections, underscore the importance of strategic planning for industry stakeholders. As the market navigates mid-March conditions and anticipates seasonal production increases, participants should closely monitor upcoming reports and consider appropriate risk management strategies.

KEY TAKEAWAYS:

  • Block cheese prices rose 3 cents to $1.6050/lb, signaling potential market stabilization after recent declines.
  • Dry whey continued its upward momentum, gaining 1 cent to reach $0.4700/lb, supported by export demand.
  • USDA lowered its 2025 milk price forecasts. The all-milk price is now projected at $21.60 per cwt, down $1.00 from last month.
  • Global dairy markets show mixed trends, with Oceania butter prices rising due to tight supplies and strong Asian demand.
  • Market participants should prepare for potential volatility as the industry approaches peak seasonal production.
CME dairy market report, cheese price trends, butter market analysis, USDA milk forecasts, dairy industry insights

Today’s CME spot dairy market showed mixed results, with block cheese rising by 3 cents while barrels declined slightly. Dry whey continued upward momentum with another penny gain, while butter and nonfat dry milk remained unchanged. This mixed performance reflects varying supply and demand dynamics across the dairy complex as the market navigates mid-March conditions.

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.6050/lb+3.00¢
Cheese (Barrels)$1.5650/lb-0.50¢
Butter$2.2950/lbUnchanged
Nonfat Dry Milk$1.1550/lbUnchanged
Dry Whey$0.4700/lb+1.00¢

Block cheese prices halted their week-long decline, recovering 3 cents to $1.6050/lb, though prices remain 12 cents below last Wednesday’s $1.7250/lb. This modest recovery suggests potential stabilization after recent weakness. Meanwhile, barrel prices slipped another half-cent to $1.5650/lb, widening the block-barrel spread to 4 cents and continuing a downward trend that has seen barrels fall 10.5 cents from $1.67/lb a week ago. Butter held steady at $2.2950/lb with no trades recorded, remaining well below last week’s $2.34/lb level. Dry whey strengthened, adding another penny to reach $0.4700/lb for the second consecutive day. Nonfat dry milk remained unchanged at $1.1550/lb.

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

MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter2.30252.29502.2950––2.29752.33259
Cheddar Block1.64501.57501.6050––1.60831.695010
Cheddar Barrel1.62501.57001.5650––1.58671.66805
NDM Grade A1.15501.15501.1550––1.15501.15850
Dry Whey0.45000.46000.4700––0.46000.47152

Volume and Trading Activity

Today’s trading session showed moderate activity with variations across products. Block cheese was the most actively traded product, with seven completed sales ranging from $1.57 to $1.6050/lb. This higher volume suggests increased price discovery as buyers sought to establish support after recent declines.

Barrel cheese saw much lighter activity, with just one trade executed at $1.5650/lb. The limited trading volume in barrels compared to blocks may indicate less certainty in the barrel market, potentially contributing to its continued weakness.

Dry whey recorded one trade at the closing price of $0.4700/lb, continuing the recent modest but steady trading pattern. Neither butter nor nonfat dry milk saw any trades today, suggesting market participants remain comfortable with current price levels despite the lack of transaction-based price discovery.

Weekly trading volumes show significantly higher activity in butter (9 trades) and block cheese (10 trades) compared to barrels (5 trades), nonfat dry milk (0 trades), and dry whey (2 trades) for the week to date. This trading pattern indicates more excellent price discovery in the butter and block markets this week.

Global Context

International dairy markets continue to exert influence on domestic prices. According to the USDA’s latest reports, Oceania and European export prices showed mixed changes from January to February 2025. Of particular note, Oceania butter prices have risen due to short supplies and strong demand from Asian markets, supporting global butter values despite the recent weakness in U.S. CME butter prices.

The contrasting price movements globally highlight the complex interplay of regional production patterns and international trade flows. While U.S. cheese markets have weakened over the past week, domestic price levels remain competitive in export markets.

Weekly CME average prices provide essential benchmarks for export competitiveness, with butter averaging $2.3325/lb, block cheese at $1.6950/lb, barrel cheese at $1.6680/lb, nonfat dry milk at $1.1585/lb, and dry whey at $0.4715/lb for the trading week ending March 14. Despite recent downward pressure, these price levels position U.S. dairy products attractively in specific international markets.

Forecasts and Analysis

Recent USDA projections point to evolving supply and demand dynamics for 2025. The average dairy herd size forecast has been increased by 5,000 head to 9.38 million, yet the 2025 farm milk production forecast has been lowered to 226.2 billion pounds, a reduction of 0.7 billion pounds. This adjustment reflects slower-than-expected growth in output per cow that more than offsets the increase in dairy cow numbers.

The USDA has revised its 2025 milk price forecasts downward, with Class III now projected at $17.95 per cwt and Class IV at $18.80 per cwt. The all-milk price forecast for 2025 is $21.60 per cwt, $1.00 lower than last month’s forecast. These revisions reflect the agency’s updated assessment of wholesale dairy product prices through the remainder of 2025.

In the near term, CME dairy futures markets indicate some expected price strengthening, with March Class III futures settling at $18.49, March cheese futures at $1.7350, and March butter futures at $2.4100. These futures values suggest traders anticipate some recovery from current spot market levels in the coming weeks.

Feed markets showed some weakness today. March corn futures settled at $4.6475, down slightly from yesterday, while May soybean futures declined to $10.0850. These moderating feed costs may provide some margin relief for dairy producers facing mixed milk price signals.

Market Sentiment

Market sentiment appears cautiously optimistic for cheese despite recent price weakness. The recovery in block prices today suggests buyers are beginning to find value at current levels after the significant declines seen over the past week. The 3-cent block rise and active trading (7 sales) indicate renewed buying interest at these lower price points.

Butter market sentiment remains stable, with prices holding unchanged. The lack of trades suggests buyers and sellers are comfortable at the current $2.2950/lb price, though this represents a significant decline from $2.34/lb just one week ago.

Dry whey continues to show resilience with consecutive daily gains, suggesting growing confidence in the product’s value as export demand, particularly from Mexico, remains supportive. The steady penny-per-day increases over the past two sessions indicate a measured but positive shift in market sentiment for whey.

Industry analysts note that the current period often features transitional price patterns as markets adjust to evolving seasonal production trends. One trader commented, “We’re seeing typical mid-March price discovery as markets prepare for spring flush conditions, but the strengthening in blocks today suggests we may be finding a temporary floor.”

Closing Summary & Recommendations

In summary, today’s dairy markets showed divergent trends. Blocks gained 3 cents while barrels declined slightly, and dry whey continued its upward momentum. Butter and NDM prices remained unchanged amid limited trading activity. These mixed signals reflect the transitional nature of mid-March market conditions as participants adjust positions ahead of anticipated seasonal production increases.

For producers, the modest recovery in block cheese prices offers a potential opportunity to lock in protection against further downside through appropriate risk management tools. The USDA’s downward revision of milk price forecasts for 2025 underscores the importance of margin management strategies in the months ahead.

Processors may find selective buying opportunities in the current market, particularly cheese, where today’s block price of $1.6050/lb remains well below recent levels. Strategic inventory building at these price points could prove advantageous if the nascent recovery gains momentum.

All market participants should closely monitor upcoming USDA reports for further insights into production trends and inventory levels, which will be critical in determining price direction as we approach peak seasonal production. The widening block-barrel spread also bears watching, as it may signal differing demand patterns across cheese market segments.

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CME Dairy Market Report: March 18, 2025 – Cheese Prices Plummet as Butter Softens; Dry Whey Provides Lone Bright Spot

Tuesday, March 18th, 2025

Cheese prices dive 7¢ as butter weakens, while dry whey bucks the trend. Is this a buying opportunity or the start of a steeper decline?

CME dairy prices, cheese market decline, dairy trading analysis, butter market trends, dairy industry forecast

EXECUTIVE SUMMARY: The March 18 CME dairy markets witnessed significant pressure on cheese values, with cheddar blocks plummeting 7.00¢ to $1.5750/lb and barrels falling 5.50¢ to $1.5700/lb, while butter continued its downward trend, dropping 0.75¢ to $2.2950/lb. Only dry whey provided positive movement, gaining 1.00¢ to close at $0.4600/lb amid improved export demand. Trading volume was light, with just 10 trades across all products, reflecting market hesitation, yet multiple offers on cheese suggest that further price pressure may be coming. Despite the current weakness, future markets and USDA projections indicate potential recovery later in the year, with experts noting that sharp corrections create potential buying opportunities for processors. At the same time, suggesting producers implement risk management strategies to protect against further declines. Global factors, including improved New Zealand production, constrained European output, and modest Chinese import recovery, continue to influence domestic price trends, highlighting the increasingly interconnected nature of dairy markets.

KEY TAKEAWAYS

  • Cheddar blocks fell sharply by 7.00¢ to $1.5750/lb (a 4.3% single-day decline), continuing a concerning pattern. Blocks are now 21.7¢ below last week’s average—one of the sharpest weekly declines in recent months.
  • The trading activity showed significant seller presence with four uncovered offers for blocks at close, suggesting potential for further price weakness, while the narrowing block-barrel spread to just 0.5¢ indicates processors are reassessing actual demand versus projections.
  • Market sentiment has turned cautious, with multiple industry voices suggesting the current weakness creates buying opportunities, particularly with USDA projections indicating more substantial prices later in 2025.
  • Both producers and processors should closely monitor upcoming Cold Storage and Milk Production reports while preparing for Federal Order changes that fundamentally alter milk pricing formulas.
  • Regional variations in market conditions require stakeholders to develop market-specific approaches rather than one-size-fits-all strategies, with proximity to processing facilities becoming increasingly crucial for negotiating premiums.

Today’s CME dairy markets saw significant pressure on cheese values, with cheddar blocks and barrels posting substantial declines. Butter continued its downward trend, while dry whey provided the only positive movement in an otherwise bearish trading session. Nonfat dry milk remained unchanged amid moderate bidding interest but limited actual trading. This continues the bearish trend observed throughout March as the market contends with improving milk supplies, international market pressures, and growing competition from plant-based alternatives.

Key Price Changes & Market Trends

ProductClosing PriceChange from YesterdayTrading Volume
Cheddar Blocks$1.5750/lb-7.00¢2 trades
Cheddar Barrels$1.5700/lb-5.50¢1 trade
Butter$2.2950/lb-0.75¢6 trades
Nonfat Dry Milk$1.1550/lbUnchanged0 trades
Dry Whey$0.4600/lb+1.00¢1 trade

Daily Price Changes for Dairy Products – March 18, 2025

Cheddar block cheese took the hardest hit today, falling 7 cents to $1.5750/lb, representing a significant 4.3% single-day decline. This continues the concerning pattern established earlier this week, with blocks now falling 21.7¢ below last week’s average, representing one of the sharpest weekly declines in recent months. Market participants indicate this sharp drop stems from improved milk availability in key cheese-producing regions and slower-than-expected retail demand heading into spring.

Barrels followed blocks lower, dropping 5.50 cents to $1.5700/lb, narrowing the block-barrel spread to just 0.5 cents. This narrowing spread suggests processors are stepping back to reassess actual demand versus projected needs ahead of the spring flush.

Butter markets continued to show weakness, slipping 0.75 cents to $2.2950/lb amid reports of adequate cream supplies and continued pressure from imported butterfat. Current butter prices have declined for three consecutive sessions, falling below the psychological $2.30/lb threshold for the first time since early February. Higher butterfat supply had pushed some spot cream multiples below 1.00, with cream availability outpacing demand compared to last year when multiples were sold at premiums above the spot market.

Dry whey provided the only positive movement today, gaining 1 cent to close at $0.4600/lb, buoyed by improved export demand reports and some domestic protein shortages. This gain comes despite the overall weekly trend showing dry whey down from last week’s average of $0.4715/lb to $0.4550/lb.

Volume and Trading Activity

Today’s CME spot market displayed relatively light trading volume, with just 10 trades executed across all dairy products, representing a 42% decrease from the previous Monday’s session. This reflects hesitancy among market participants as prices continue to adjust lower.

Butter showed the most active trading, with six trades completed, indicating sellers were working to test market support levels. The session featured sellers willing to unload cheese inventory, with multiple offers appearing throughout.

Cheddar blocks saw limited activity with just two trades but had four uncovered offers at the close, suggesting potential for further price declines. According to the daily CME trading data, the bid/ask dynamics showed more selling interest for blocks with these four uncovered offers, while barrels traded once with balanced interest shown via one bid and one offer at the close.

Nonfat dry milk saw no trades despite having six bids and three offers, indicating market hesitation and price discovery challenges. The lack of transactions suggests buyers and sellers remain apart on valuation expectations. Dry whey managed a single trade but showed strong buying interest with five bids compared to only two offers, potentially signaling further strength ahead. This reflects the improved export demand from Mexico as competition from European suppliers has decreased amid geopolitical tensions affecting shipping lanes.

Global Context

International dairy markets are providing mixed signals for U.S. producers. According to USDA’s Dairy Market News data, New Zealand milk production has improved seasonally, putting pressure on global butter and milk powder values.

Meanwhile, European milk output remains constrained by environmental regulations and higher production costs, preventing a global oversupply. The EU milk production is forecast to remain relatively stable in 2025, with an increased focus on cheese production despite overall milk production constraints.

China’s dairy imports, which have decreased in recent years, are projected to show modest improvement in 2025. This modest recovery in Chinese demand has primarily benefited Oceania suppliers due to freight advantages.

Recent strength in the U.S. dollar against major trading partners has dampened export opportunities, with dairy export forecasts revised downward. This lack of price competitiveness mainly affects export volumes to Southeast Asia. Mexican buyers support U.S. dry whey markets, likely contributing to today’s price increase.

Forecasts and Analysis

Near-term futures markets reflect today’s spot market weakness, with March Class III milk futures settling at .46/cwt despite the cheese declines. This disconnect suggests traders anticipate the current cheese market weakness may be temporary. Class IV futures settled lower at $18.42/cwt, influenced by ongoing butter market softness.

Looking ahead to Q2 and beyond, USDA projections indicate expectations for an improved balance between supply and demand as spring flush milk production modifies and food service demand increases with warmer weather and tourism activity.

Feed markets show continued stability, with corn futures showing minimal movement, settling at $4.6650/bushel for the March contract. Similarly, soybean meal has decreased modestly to $299.70/ton, potentially providing some margin relief for dairy producers in the coming weeks.

The cheese futures market is projecting a recovery from today’s significant drop. Later-month contracts show premiums to spot values, suggesting traders view the current weakness as potentially overdone.

Market Sentiment

“The speed of today’s cheese price correction caught many by surprise,” one veteran dairy trader noted. “We’re seeing processors step back to reassess actual demand versus projected needs, which is creating temporary indigestion in the market.”

A market analyst observed, “The cheese market appears to be adjusting to improved milk availability, though the fundamentals remain reasonably balanced for this time of year.” This view is echoed by traders at leading dairy risk management firms, with one commenting, “We’re seeing typical seasonal pressure on prices, but the long-term outlook remains constructive due to tightening milk supplies and strong domestic consumption.”

From the processor perspective, a representative noted that “current prices present buying opportunities for extending coverage, especially given projections for higher values later in the year.” This suggests that while the market is bearish, some industry participants view the significant price drops as potential buying opportunities.

Overall, market sentiment has turned cautious following several weeks of relative stability. Many market participants are waiting to see if today’s significant cheese price drop attracts fresh buying interest or signals the beginning of a more prolonged correction.

An emerging factor affecting market sentiment is the growing pressure from plant-based alternatives. Major coffee chains have eliminated surcharges for non-dairy options in many markets, potentially increasing the consumption of alternatives. Additionally, plant-based milk producers have expanded partnerships with major retailers, suggesting mainstream retail increasingly embraces these alternatives.

Closing Summary & Recommendations

Today’s CME dairy markets showed significant weakness in cheese, with blocks and barrels dropping substantially, while butter gradually declined. Dry whey provided the only positive price movement, gaining a penny on improved export interest. This bearish trend continues from yesterday’s session when blocks fell 4.75¢ and barrels dropped 6.50¢.

The block cheese price of $1.5750/lb sits significantly below USDA’s projections for Q2, creating potential buying opportunities for processors. For producers, the current price environment warrants consideration of risk management strategies given today’s price volatility, particularly for cheese production margins. With block prices falling below $1.60/lb, protection against further downside risk may be prudent.

Both producers and processors should monitor upcoming Federal Order changes, which will fundamentally alter milk pricing formulas and likely create market volatility requiring proactive planning. Additionally, all market participants should closely monitor upcoming Cold Storage and Milk Production reports for further direction on price trends in late March and early April.

Regional variations in market conditions and production capabilities continue to shape dairy economics across major production areas, requiring dairy stakeholders to develop market-specific approaches rather than one-size-fits-all strategies. Those within efficient hauling distance of new processing facilities may find themselves more favorable positions for negotiating quality and volume premiums.

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CME Dairy Market Report: March 17, 2025: Cheese and Butter Prices Fall Amid Seasonal Supply Increases

Monday, March 17th, 2025

CME dairy prices tumble as seasonal supply meets bird flu disruption; USDA projects recovery while plant-based alternatives gain ground in retail.

EXECUTIVE SUMMARY: The March 17, 2025 CME dairy market report reveals significant price declines for cheese and butter amid seasonal supply increases, with blocks falling 4.75¢ and barrels dropping 6.50¢ to nearly eliminate the block-barrel spread. These price movements occur against a complex backdrop of bird flu impacts on milk production, strengthening international supply, and growing competition from plant-based alternatives expanding their retail footprint. Despite current weakness, USDA projections indicate strengthening prices through 2025, with Class III milk expected to reach $19.75/cwt by Q4, suggesting the current market presents potential buying opportunities. The approaching Federal Order changes on June 1 add another layer of uncertainty, while regional differences in market conditions and production capabilities continue to shape dairy economics across major production areas. Market participants should implement strategic risk management approaches that protect near-term cash flow while maintaining upside potential for projected price improvements later in the year.

KEY TAKEAWAYS

  • Price divergence creates opportunity: Current cheese prices ($1.6450/lb for blocks) sit significantly below USDA’s Q2 projection ($1.8200/lb), creating potential buying opportunities for processors and risk management needs for producers.
  • Bird flu disruption counterbalances seasonal supply: The unexpected 9.8% decline in milk production from bird flu impacts is creating unusual market dynamics just as seasonal spring flush typically increases supply pressure.
  • Federal Order changes approaching: The June 1 implementation of Federal Order reforms will fundamentally alter milk pricing formulas, likely creating market volatility that requires proactive planning.
  • Plant-based alternatives gaining mainstream traction: Major retailers (Costco, Walmart) and foodservice operators are expanding partnerships with plant-based producers, while coffee chains eliminate surcharges for non-dairy options, accelerating competitive pressure.
  • Regional market variations require targeted strategies: Production challenges, consumer preferences, and environmental regulations vary significantly by region, requiring dairy stakeholders to develop market-specific approaches rather than one-size-fits-all strategies.

Today’s Chicago Mercantile Exchange (CME) dairy market saw significant downward pressure on cheese and butter prices, while powder markets remained stable. This continues the bearish trend observed throughout March as the market contends with improving milk supplies, international market pressures, and growing competition from plant-based alternatives. Trading activity was light to moderate across all product categories as the dairy complex searched for direction amid mixed signals.

Key Price Changes & Market Trends

ProductClosing PriceChange from Friday
Cheese (Blocks)$1.6450/lb-4.75¢
Cheese (Barrels)$1.6250/lb-6.50¢
Butter$2.3025/lb-4.00¢
Nonfat Dry Milk$1.1550/lbUnchanged
Dry Whey$0.4500/lbUnchanged

Cheese prices continued downward today, with blocks falling 4.75¢ and barrels dropping a more substantial 6.50¢. This marks the fourth consecutive session of declines for cheese, bringing the block-barrel spread to just 2¢. Butter also faced selling pressure, declining 4¢ to settle at $2.3025/lb. Both NDM and dry whey prices held steady with minimal trading activity.

Current cheese prices reflect a significant gap from USDA’s Q2 2025 price projection of .8200/lb, suggesting markets are currently pricing in near-term supply pressures ahead of anticipated strengthening later in the year. Compared to last week’s averages (blocks at $1.6950/lb and barrels at $1.6680/lb), cheese prices have declined by approximately 3.0-2.6% in just one week, indicating accelerating downward momentum.

Volume and Trading Activity

Trading activity was relatively light for a Monday, with only seven total trades executed across all product categories. Butter saw moderate activity with three trades completed, matched by cheese barrels with three trades. Blocks recorded a single transaction, while NDM and dry whey saw no completed trades despite active bidding interest.

The bid/ask dynamics showed more selling interest for blocks with four uncovered offers, while barrels had more buying interest with three bids against one offer. The dry whey market appeared balanced with four bids and four offers, though no trades materialized. Today’s trading volume represents a 42% decrease from the previous Monday’s session, reflecting hesitancy among market participants as prices continue to adjust lower.

Global Context

International dairy markets continue to significantly influence domestic price trends. Recent data shows that New Zealand milk production has been stronger than anticipated, creating additional pressure on global dairy prices. USDA projections indicate that domestic prices for butter and cheese are expected to remain competitive in world markets, with the 2025 dairy export forecast on a milk-fat basis raised by 0.2 billion pounds to 11.9 billion pounds.

However, international competitiveness remains challenging for dry whey and nonfat dry milk. The 2025 dairy export forecast on a skim-solids basis was revised downward to 49.1 billion pounds, a decrease of 0.4 billion pounds. This lack of price competitiveness mainly affects export volumes to Southeast Asia, a key market in which a strengthening U.S. dollar has further pressured exports.

European milk collections also show seasonal increases, adding to global supply availability. According to dairy market analysts, EU milk production is tracking approximately 1.2% above year-earlier levels, further pressuring international markets just as Northern Hemisphere production enters its seasonal peak.

Supply Challenges: Bird Flu Impact on Dairy Production

The recent bird flu outbreak in the U.S. dairy industry is a significant factor affecting domestic dairy markets. USDA reports show milk production has declined by 9.8% compared to November 2023. This unexpected supply constraint occurs as seasonal production increases, creating unusual market dynamics.

Market participants closely monitor the bird flu situation, as prolonged production impacts could offset some of the seasonal price pressure typically seen during the spring flush. Additionally, this supply disruption occurs as plant-based alternatives continue gaining market share, with companies like Oatly expanding partnerships with major retailers, including Costco and Walmart.

Forecasts and Analysis

The CME futures market is currently projecting Class III milk at .45/cwt for March, with Class IV slightly higher at .52/cwt. Looking ahead, USDA projects more substantial prices as 2025 progresses, with detailed quarterly forecasts showing steady improvement:

Price ComponentQ2 2025Q3 2025Q4 2025
Class III ($/cwt)$18.50$19.25$19.75
Class IV ($/cwt)$18.65$18.90$19.10
Cheese ($/lb)$1.8200$1.8650$1.9100
Butter ($/lb)$2.3500$2.4200$2.4800
Dry Whey ($/lb)$0.4700$0.4650$0.4600
NFDM ($/lb)$1.2250$1.2450$1.2550
All-Milk ($/cwt)$22.30$22.90$23.30

Despite the current weakness, these USDA projections indicate market expectations for strengthening prices through 2025. Production constraints support this anticipated improvement. USDA has revised its milk production forecast downward by 1.1 billion pounds to 226.9 billion pounds for 2025, with expected cow numbers at 9.32 million head (down from 9.36 million previously) and milk per cow at 24,345 pounds.

Feed costs present a potential bright spot for producer margins, with USDA projecting a 10.1% decline in feed costs for 2025 compared to 2024. Corn is expected to average $4.85/bushel and soybean meal $395/ton, which could help offset lower milk prices in the near term. Current March corn futures are trading at $4.6725/bushel, slightly below the projected annual average.

Market Sentiment and Alternative Dairy Trends

In recent sessions, market sentiment has shifted more bearish, with traders expressing concern about building supplies as spring production increases. One market analyst noted, “The cheese market appears to be adjusting to improved milk availability, though the fundamentals remain reasonably balanced for this time of year.”

This view is echoed by traders at leading dairy risk management firms, with one commenting, “We’re seeing typical seasonal pressure on prices, but the long-term outlook remains constructive due to tightening milk supplies and strong domestic consumption.” Meanwhile, a processor representative observed that “current prices present buying opportunities for extending coverage, especially given USDA projections for higher values later in the year.”

An emerging factor affecting market sentiment is the growing pressure from plant-based alternatives. Major coffee chains like Starbucks have eliminated surcharges for non-dairy options in the U.S., Canada, and the Middle East, potentially increasing consumption of other possibilities. Additionally, plant-based milk producer Oatly has expanded partnerships with Costco and Walmart, suggesting mainstream retail increasingly embraces these alternatives.

The dairy sector also faces increasing environmental scrutiny. Denmark has announced plans to implement a cow tax by 2030 due to concerns about methane emissions and water usage, which may prompt other nations to follow suit. These regulatory pressures could affect production costs in traditional dairy markets over the long term.

Regional Market Perspectives

Dairy market conditions vary significantly across significant production regions. In the Midwest, cheese production remains strong despite the seasonal milk production challenges, while Western states continue to see pressure from water availability concerns affecting feed costs and production decisions.

The Northeastern fluid milk market faces ongoing structural challenges as consumer preferences shift. Plant-based alternatives are making particular inroads in coastal urban markets, and Southeast Asia-inspired market approaches are focusing on regions with higher lactose intolerance rates.

Oatly has reported expanding their Chinese distribution to 100,000 sales points in Greater China in international markets, with continuing partnerships with Luckin Coffee through Q2 2025 and Tim Hortons. This expansion represents the ongoing globalization of plant-based dairy alternatives in markets where lactose intolerance rates are higher than in North America.

Closing Summary & Recommendations

In summary, today’s dairy markets showed continued weakness in cheese and butter prices amid adequate supplies, while powder markets remained steady with limited activity. The spring flush appears to be developing, bringing seasonal pressure to cheese and fluid milk values. However, bird flu impacts production bear watching as a potential offsetting factor.

Producers should consider the divergence between current spot market prices and USDA’s more optimistic forecasts for later quarters. This price differential creates opportunities to implement risk management strategies that protect near-term cash flow while maintaining upside potential for Q3-Q4 when prices are projected to strengthen.

Processors may find opportune moments for coverage as markets adjust to seasonal supply patterns, particularly if the downward price trend continues in coming sessions. All market participants should carefully evaluate the potential impacts of the June 1 Federal Order changes, which will fundamentally alter milk pricing formulas and could create additional market volatility as implementation approaches.

Additionally, dairy industry stakeholders should monitor the growing competitive pressure from plant-based alternatives, which continue to expand distribution channels and partnerships with major retailers and food service operators. The bird flu situation warrants close attention, as continued production impacts could significantly alter the supply-demand balance in the coming weeks.

Wednesday’s trading session will be critical for determining whether this bearish trend continues or if buying interest emerges at these lower price levels.

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CME Dairy Market Report: March 13, 2025 – Dairy Prices Under Pressure

Thursday, March 13th, 2025

Cheese markets plummet as Federal Order reforms loom. Discover how regional disparities and global pressures are reshaping dairy profitability in 2025.

EXECUTIVE SUMMARY: The latest CME dairy market report reveals a concerning trend of falling cheese prices, with blocks down 21.7¢ this week alone. This decline occurs against a backdrop of impending Federal Order reforms set for June 1, which will fundamentally alter milk pricing nationwide. Regional disparities in feed costs and processing capacity create stark differences in producer profitability, with Pacific region farmers facing a $3.45/cwt feed cost disadvantage. Global market pressures and technical indicators suggest limited near-term price recovery, though USDA projections indicate potential strengthening later in 2025. As the industry navigates these challenges, producers must strategically position themselves based on regional advantages and prepare for the upcoming pricing structure changes.

KEY TAKEAWAYS:

  • Cheese prices have fallen sharply, with blocks down 21.7¢ this week, signaling potential margin compression for producers.
  • Regional disparities in feed costs and processing capacity are creating clear winners and losers in the dairy industry.
  • Federal Order reforms taking effect June 1 will reshape milk pricing, requiring producers to reevaluate their strategies.
  • Technical analysis suggests cheese prices may be approaching a floor, though global market pressures continue to weigh on values.
  • USDA projections indicate a potential price recovery later in 2025, emphasizing the importance of flexible risk management strategies.
SEO keywords: dairy market report, cheese prices, Federal Order reforms, regional dairy disparities, milk production forecast

Cheese markets posted their fourth consecutive day of losses in today’s CME spot session, with blocks falling 0.50¢ and barrels dropping a more substantial 2.50¢. This continued weakness comes as butter managed a modest 1.00¢ recovery, and the industry braces for June’s Federal Order reforms that will fundamentally reshape milk pricing nationwide.

CHEESE MARKETS EXTEND WEEKLY DECLINE: BLOCKS DOWN 9.75¢ SINCE MONDAY

According to official CME Group trading data, today’s CME spot market confirmed the continuing downward pressure on cheese prices, with both blocks and barrels posting additional losses. This persistent decline signals potential margin compression for producers heading into spring flush.

Daily CME Cash Dairy Product Prices ($/lb.) – March 13, 2025

ProductFinalChange ¢/lb.TradesBidsOffers
Butter2.3100+1.00132
Cheddar Block1.6225-0.50760
Cheddar Barrel1.6300-2.50140
NDM Grade A1.1550-1.25752
Dry Whey0.4900NC012

BOTTOM LINE FOR PRODUCERS: According to the USDA’s Agricultural Marketing Service (AMS) pricing formulas, today’s 0.50¢ drop in blocks and 2.50¢ in barrels directly translates to lower Class III values. For a million-pound annual milk producer, this week’s 9.75¢ block cheese decline represents approximately $9,750 in reduced yearly revenue if sustained.

WEEKLY TREND REVEALS ALARMING 21.7¢ COLLAPSE IN BLOCK PRICES

This week’s CME trading data reveals a concerning pattern of consistent erosion across dairy commodities that threatens producer margins as we enter peak production season, according to official CME Group settlement prices.

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

ProductMonTueWedThurFriCurrent Avg.Prior Week Avg.
Butter2.34502.25002.28252.30002.31002.29752.3480
Cheddar Block1.72001.60501.61501.62751.62251.63801.8550
Cheddar Barrel1.78251.73001.70501.65501.63001.70051.7945
NDM Grade A1.19251.18001.18001.16751.15501.17501.2065
Dry Whey0.51000.51000.49000.49000.49000.49800.5280

According to CME settlement data, block cheese prices have collapsed 21.7¢ below last week’s average, representing one of the sharpest weekly declines in recent months. According to Dairy Market News analysis released today, this price deterioration suggests buyers are stepping back ahead of the spring flush, creating significant revenue challenges for producers.

ACTION STEP: Calculate your operation’s sensitivity to cheese price movements by multiplying your monthly milk production by 0.1 for each 10¢ change in cheese prices to estimate monthly revenue impact, as dairy risk management specialists at the University of Wisconsin’s Center for Dairy Profitability recommends.

$3.45/CWT FEED COST GAP: WHY YOUR ZIP CODE DETERMINES YOUR PROFIT MARGIN

Regional cost variations confirmed by USDA’s Agricultural Prices report have created dramatically different operating environments across the country. Your location now determines profitability more than ever before.

RegionAlfalfa ($/ton)Corn ($/bu)SBM ($/ton)Total Feed Cost ($/cwt)
Upper Midwest$172.25$4.65$405.50$9.80
Northeast$268.30$5.42$428.75$12.35
Southwest$238.45$5.30$426.25$11.95
Pacific$265.20$6.18$435.50$13.25

According to USDA data, Pacific producers face a staggering $3.45/cwt feed cost disadvantage compared to Midwest counterparts—a difference that exceeds most operations’ profit margins. According to the latest USDA Capacity Assessment Report, this disparity, combined with the $8 billion in processing capacity expansions concentrated in the Midwest, creates a fundamental competitive advantage for producers in America’s heartland.

PROCESSING CAPACITY DISTRIBUTION: THE NEW COMPETITIVE BATTLEGROUND

Recent analysis from CoBank’s Knowledge Exchange reveals significant regional disparities in dairy processing investments that directly impact farm-level milk pricing. The $8 billion in dairy processing expansions since 2023 has been unevenly distributed:

RegionNew Processing Capacity (million lbs/day)Capacity Utilization RateAvg. Quality Premium ($/cwt)
Upper Midwest14.292%$0.48
Northeast6.887%$0.32
Southwest8.578%$0.18
Pacific4.381%$0.29

According to Federal Milk Marketing Order data, the Upper Midwest’s 14.2 million pounds of daily new processing capacity has created a highly competitive environment for milk procurement, resulting in quality premiums averaging $0.48/cwt. In contrast, Southwest producers face an over-capacity situation with utilization rates of just 78%, resulting in discounted pricing and minimal quality premiums.

According to USDA-NASS dairy manufacturing reports, dairy facilities commissioned since 2023 skew heavily toward cheese production, with 65% of the new capacity dedicated to cheese processing. This concentration has created localized advantages for producers within efficient hauling distance of these new facilities.

STRATEGIC IMPLICATIONS: Producers should evaluate their position relative to processing capacity, considering current and announced expansion projects. According to Cornell University’s PRO-DAIRY program surveys, operations within 150 miles of multiple competing processors report receiving quality and volume premiums averaging $0.55/cwt above minimum order prices.

GLOBAL MARKET IMPACTS: INTERNATIONAL PRESSURES ADD TO DOMESTIC CHALLENGES

According to USDA’s Foreign Agricultural Service (FAS) reports international market conditions are adding pressure to domestic prices. Global milk production is trending higher, with February data showing New Zealand production up 1.7% year-over-year and EU production increasing by 1.2%.

The latest Global Dairy Trade (GDT) auction saw whole milk powder prices decline 2.4% to $3,175/MT, marking the third consecutive decline in the benchmark price series. According to U.S. Dairy Export Council data, U.S. export competitiveness has weakened with the strengthening dollar, which has appreciated 3.2% against a basket of currencies from major dairy exporters since January.

MARKET IMPLICATIONS: Increased global production and reduced U.S. export competitiveness create additional headwinds for domestic prices, particularly as we enter the spring flush production peak. According to USDA-FAS projections, this could limit the upside potential for dairy commodity prices through Q2 2025.

FORWARD PRICE PROJECTIONS: USDA FORECAST VS. FUTURES MARKET

The USDA’s March World Agricultural Supply and Demand Estimates (WASDE) provides a detailed roadmap for dairy markets through 2025, though current market prices diverge from these longer-term projections.

Price ComponentMar 2025 (Current)Q2 2025 (USDA)Q3 2025 (USDA)Q4 2025 (USDA)
Class III ($/cwt)18.3218.5019.2519.75
Class IV ($/cwt)18.6018.6518.9019.10
Cheese ($/lb)1.62251.82001.86501.9100
Butter ($/lb)2.31002.35002.42002.4800
Dry Whey ($/lb)0.49000.47000.46500.4600
NFDM ($/lb)1.15501.22501.24501.2550
All-Milk Price ($/cwt)21.4522.3022.9023.30

Feed Cost Projections: The USDA projects a 10.1% decline in feed costs for 2025 compared to 2024, with corn averaging $4.85/bushel and soybean meal averaging $395/ton. If milk prices maintain current forecasted levels, this would result in an income-over-feed-cost improvement of approximately $1.20/cwt, according to analysis from the University of Wisconsin’s Center for Dairy Profitability.

Production Forecast: Despite current price weakness, the USDA has revised its milk production forecast downward by 1.1 billion pounds to 226.9 billion pounds for 2025, driven by lower expected cow numbers (9.32 million head vs. 9.36 million previously) and reduced milk per cow (24,345 pounds vs. 24,390 pounds). According to USDA economists presenting at the Agricultural Outlook Forum, this production constraint should provide price support in later quarters.

STRATEGIC PLANNING IMPLICATIONS: While current markets are under pressure, USDA projections suggest stronger values later in 2025. This creates opportunities for producers to implement risk management strategies that protect near-term cash flow while maintaining upside potential for Q3-Q4 when prices are projected to strengthen.

JUNE 1 FEDERAL ORDER CHANGES: WHAT YOU NEED TO KNOW NOW

Mark your calendar: June 1, 2025, will fundamentally reshape your milk check as Federal Order reforms take effect nationwide. According to the USDA’s official Final Rule published in the Federal Register (Vol. 90, No. 42), these confirmed changes include:

  1. Significant revisions to make allowances in Class III and IV milk price formulas
  2. Elimination of barrel cheddar prices from Class III price calculations
  3. New advanced pricing factors to be announced May 21

These reforms received overwhelming producer support through the formal voting process, with the National Milk Producers Federation noting they “will provide a firmer footing and fairer milk pricing.” However, according to market analysis from ever.ag Insights, the implementation creates significant uncertainty as markets attempt to price structural changes.

CRITICAL ACTION: Review your milk check structure with your cooperative or processor to understand how specific formula changes will affect your operation’s revenue stream, mainly if you produce high-component milk, as recommended by dairy economists at Cornell University’s PRO-DAIRY program.

WINNING STRATEGIES: POSITION YOUR DAIRY FOR SUCCESS AMID MARKET EVOLUTION

Today’s markets demonstrate continued pressure on cheese prices despite modest butter recovery. With Federal Order reforms just months away, strategic positioning has never been more critical, according to industry experts.

THREE IMMEDIATE ACTIONS FOR PRODUCERS:

  1. Calculate your component-adjusted revenue impact from this week’s cheese price decline using the USDA-AMS pricing formula calculators. Producers focused on high-component production may face disproportionate effects from current market weakness.
  2. Evaluate your regional position relative to processing capacity. According to Rabobank’s latest Dairy Quarterly, proximity to expanding cheese manufacturing provides strategic advantages that can offset market volatility through preferred hauling and quality premiums.
  3. Prepare for June 1 Federal Order implementation by understanding how allowance changes and formula adjustments will affect your specific milk check structure, as outlined in the USDA’s implementation guidelines.

Tomorrow’s USDA Dairy Products report will provide crucial insights into production trends that might explain continued cheese market weakness. Forward-thinking producers use this market correction to strengthen risk management programs and evaluate strategic partnerships that can provide stability through the transition to new pricing structures.

The Bullvine Bottom Line:

This week’s substantial cheese price decline creates immediate revenue challenges for producers and potential buying opportunities for those with strong risk management programs. According to analysis from agricultural economists at Michigan State and Penn State universities, the combination of regional cost disparities and upcoming Federal Order reforms will create clear winners and losers based on geographic location and strategic positioning. Innovative producers are using this period of market adjustment to strengthen their competitive position ahead of June’s pricing revolution.

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CME DAIRY REPORT: March 12, 2025 – Cheese Markets Retreat After Brief Rally as Federal Order Reform Looms

Thursday, March 13th, 2025

Cheese prices plunge as federal reforms loom. Feed costs drop 10% but regional gaps widen.

EXECUTIVE SUMMARY: CME dairy markets reversed gains this week, with cheese prices dropping sharply amid weakening restaurant demand and export uncertainty. Federal Order reforms set for 2026 threaten to reshape milk pricing, while $8B in regional processing expansions creates uneven opportunities. Feed costs are projected to fall 10%, but Pacific producers pay $3.45/cwt more than Midwest peers. Component values declined significantly, with protein prices down 12¢/lb, slashing revenue for high-component herds. With cooperatives split on strategies and plant utilization rates varying wildly, producers must tailor risk management to their region. The USDA’s Dairy Margin Coverage program offers critical protection ahead of March deadlines.

KEY TAKEAWAYS:

  • Federal Order reforms could slash milk checks via higher manufacturing allowances but reward high-component producers
  • Regional processing expansions favor Midwest cheese makers, while Southwest faces discounted pricing from excess capacity
  • Feed costs vary by $3.45/cwt regionally – Pacific herds pay 35% more than Midwest counterparts
  • Protein value crashed 12¢/lb, costing a 100-cow herd ~$2,880/month
  • Act by March 31: DMC enrollment offers catastrophic coverage at 15¢/cwt
CME dairy markets 2025, Federal Order reforms impact, regional dairy processing capacity, feed cost variations, USDA dairy forecasts

The Chicago Mercantile Exchange (CME) dairy market showed a notable reversal from the brief recovery seen earlier this week, with cheddar blocks falling 0.50 cents to $1.6225/lb and barrels dropping 2.50 cents to $1.6300/lb. This decline comes after both products had experienced gains during the week’s early trading sessions. Butter prices slightly increased by 1.00 cents to reach .3100/lb amid active trading.

The market retreat reflects persistent demand uncertainty despite the tightening milk supplies projected by USDA. 2025 production is forecast at 226.2 billion pounds (down 700 million pounds from last month’s report). This price weakness coincides with significant structural changes underway, including the pending implementation of Federal Order reforms expected to modify how milk is priced starting in early 2026.

PRICE TRACKER: Component Values Under Pressure

Today’s closing prices reflect significant week-to-week volatility across major dairy commodities:

ProductClosing Price ($/lb.)Change from Yesterday (¢/lb.)TradesBidsOffers
Butter2.3100+1.00132
Cheddar Block1.6225-0.50760
Cheddar Barrel1.6300-2.50140
Nonfat Dry Milk1.1550-1.25752
Dry Whey0.4900Unchanged012

WEEKLY PRICE PROGRESSION ($/lb.)

ProductMondayTuesdayWednesdayThursdayWeekly Change
Butter2.34502.25002.28252.3000-0.0450
Cheddar Block1.72001.60501.61501.6275-0.0925
Cheddar Barrel1.78251.73001.70501.6550-0.1275
NDM Grade A1.19251.18001.18001.1675-0.0250
Dry Whey0.51000.51000.49000.4900-0.0200

Federal Order Class Price Implications

For producers wondering how these CME prices translate to your milk check, the USDA NASS survey prices (which lag CME movements by 2-3 weeks) are showing the following impacts on component values:

FEDERAL ORDER COMPONENT VALUES ($/LB.)

ComponentLast MonthCurrentChangePrimary Driver
Butterfat$3.1523$3.0642-$0.09CME Butter
Protein$2.3714$2.2481-$0.12Cheese & Butter
Other Solids$0.2115$0.1983-$0.01Dry Whey
Nonfat Solids$0.8532$0.8397-$0.01NFDM

The protein price has been particularly affected by the recent weakness of the cheese market, dropping 12 cents per pound. For a 100-cow herd producing 75 pounds of milk per cow daily at 3.2% protein, this protein decline alone represents approximately $2,880 in monthly revenue reduction.

PROCESSING CAPACITY: Regional Expansions Create Opportunity & Risk

The $8 billion investment in new dairy processing capacity is distributed unevenly across dairy regions:

MAJOR PROCESSING EXPANSIONS BY REGION

RegionNew Capacity (lbs milk/day)Primary ProductsExpected Completion
Upper Midwest8.2 millionCheese, WheyQ2 2026
Northeast3.5 millionSpecialty CheeseQ3 2025
Southwest6.3 millionPowder, ButterQ4 2025
Pacific5.4 millionCheese, PowderQ2-Q3 2025

Current plant capacity utilization rates vary significantly by region:

  • Northeast: 91% utilization
  • Upper Midwest: 87% utilization
  • California: 84% utilization
  • Southwest: 78% utilization

These regional differences explain why some producers face base programs restricting production while others receive incentives for increased volume. The Northeast’s high utilization rate has led to substantial over-order premiums, while the Southwest’s excess capacity has resulted in discounted pricing relative to Federal Order minimums.

MARKET RETREAT EXPLAINED: Demand Concerns Outweigh Supply Tightness

Why did markets retreat after early week gains? Three primary factors:

  1. Restaurant sales data disappointed: The National Restaurant Association reported a 3.2% decline in same-store dairy product usage for February, with pizza chains showing particularly weak performance.
  2. Export demand faltered: After initial optimism about Chinese buying, confirmed purchases fell below expectations. Chinese whole milk powder purchases were 23% below projected levels at this week’s Global Dairy Trade auction.
  3. Federal Order reform uncertainty: Processor buying patterns have become more conservative ahead of the USDA’s final decision on Federal Order changes expected next month, which could significantly alter class price relationships.

These demand-side concerns outweighed the fundamentally supportive supply picture, demonstrating the market’s current focus on consumption rather than production trends.

COOPERATIVE STRATEGIES: Mixed Approaches to Current Markets

Major dairy cooperatives are adopting divergent strategies to manage current market dynamics:

  • DFA (Dairy Farmers of America) has implemented base programs in several regions, limiting production to 95% of established historical production levels with significant penalties for excess milk.
  • Land O’Lakes is expanding value-added processing capacity while maintaining production flexibility for members.
  • California Dairies Inc. is pursuing aggressive export strategies to offset domestic market weakness, mainly targeting Southeast Asian markets.
  • Select Milk Producers continues expanding ultra-filtered milk production for protein-fortified beverage markets.

For producers, these different cooperative approaches mean that identical milk composition and volume can result in significantly different mailbox prices depending on your cooperative’s marketing strategy and processing assets.

FEDERAL ORDER REFORM: Potential Game-Changer for Pricing

The USDA’s Federal Milk Marketing Order modernization proposal, expected to be finalized next month, contains several provisions that could significantly impact your milk price:

  1. Class I mover calculation changes: Likely return to the “higher of” Class III or IV plus 74 cents, replacing the current average plus 74 cents formula.
  2. Make allowance adjustments: Manufacturing cost allowances will likely increase by 20-25%, potentially reducing producer prices by 45-60 cents per hundredweight.
  3. California included in the uniform system: California producers will transition to the same component pricing system used in other Federal Orders.
  4. Depooling restrictions: There are new limitations on the processor’s ability to remove milk from the pool during volatile markets.

The combined effect of these changes will vary significantly by region and farm milk composition. Preliminary analysis suggests that high-component producers in the Upper Midwest may benefit, while fluid-oriented markets could see reduced producer prices depending on specific utilization patterns.

FEED COST OUTLOOK: Margin Improvement Opportunity

One positive development for dairy producers comes from the feed cost side of the ledger. The USDA projects feed costs will decline 10.1% in 2025, providing crucial margin relief during uncertain milk prices.

Current feed cost components reflect moderating prices compared to recent years:

  • Alfalfa hay: $195.50 per ton
  • Corn: $4.89 per bushel
  • Soybean meal: $410.02 per ton

These ingredients contribute to an average DMC total feed cost of $10.94 per cwt of milk sold, which remains historically elevated but trending in a favorable direction for producer margins.

REGIONAL FEED COST VARIATIONS

RegionAlfalfa ($/ton)Corn ($/bu)SBM ($/ton)Total Feed Cost ($/cwt)
Upper Midwest$172.25$4.65$405.50$9.80
Northeast$268.30$5.42$428.75$12.35
Southwest$238.45$5.30$426.25$11.95
Pacific$265.20$6.18$435.50$13.25

These regional feed cost variations highlight why standardized national price reporting doesn’t tell the complete story for individual operations. Pacific region producers face feed costs of $3.45/cwt higher than Upper Midwest counterparts, a difference exceeding the average operation’s profit margin.

PRODUCER PLAYBOOK: Regional Strategies

Given the varied regional dynamics, consider these tailored recommendations:

Northeast Producers

  • Capitalize on high plant utilization rates by negotiating more substantial over-order premiums.
  • Carefully evaluate protein-enhancing feed additives, as the protein price-to-feed cost ratio remains favorable despite recent declines.
  • Monitor Northeast cheese processing expansion for potential competitive milk pricing later this year.

Upper Midwest Producers

  • Position for Federal Order reform implementation with a focus on component optimization
  • Consider a forward contracting portion of milk with the 8.2 million pound/day processing expansion, creating a potentially competitive pricing environment.
  • Evaluate the opportunity to lock in favorable local feed costs, which are currently the lowest among significant production regions.

Western & Southwest Producers

  • Assess the implications of California’s transition to a Federal Order component pricing system.
  • Monitor cooperative export strategies as domestic markets remain challenging.
  • Consider production adjustments to avoid base program penalties in regions implementing such restrictions.

All Regions: Risk Management

The USDA’s Dairy Margin Coverage (DMC) program enrollment deadline (March 31) approaches. With USDA forecasting margins in the $13-$14 range for 2025 but significant downside risks from demand uncertainty, the 15-cent per hundredweight cost for $9.50 coverage represents cost-effective catastrophic protection.

MARKET OUTLOOK: Mixed Signals Require Strategic Flexibility

Factors affecting your milk check extend far beyond the daily CME price movements in this complex and rapidly evolving market environment. The combination of Federal Order reform, regional capacity expansions, cooperative marketing strategies, and international market dynamics creates a challenging but potentially opportunistic environment for well-positioned operations.

While today’s market retreat signals continuing demand challenges, the fundamental production constraints from declining replacement heifer availability and moderate feed cost improvements suggest the potential for stronger markets later in 2025 if demand recovers. The Bullvine will continue closely monitoring these developments to provide actionable market intelligence tailored to your regional context.

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CME Dairy Market Report: March 11, 2025 – Mixed Results as Feed Costs Rise

Tuesday, March 11th, 2025

Dairy markets slump: Cheese prices crash 21¢ this week as feed costs jump 3.4%. Can producers protect shrinking margins?

EXECUTIVE SUMMARY: The CME dairy markets showed mixed results on March 11, with butter gaining 1¢ but cheese prices declining sharply (-0.5¢ blocks, -2.5¢ barrels) amid rising feed costs (corn +3.4%, soybeans +2.3%). Weekly trends reveal alarming price drops across all commodities, including a 21¢ crash for cheese blocks. While USDA forecasts project price recoveries (2025 all-milk: $22.75/cwt), current CME prices remain far below these targets. Producers face dual pressure from falling milk prices and surging input costs, requiring urgent risk management strategies like feed hedging and milk price protection to safeguard margins.

KEY TAKEAWAYS:

  • Alarming Weekly Slump: Cheese block prices plunged 21¢/lb over 7 days, with all dairy commodities declining 3-5% weekly.
  • Feed Costs Surging: Corn (+3.4%), soybeans (+2.3%), and soybean meal (+3.3%) rose sharply, threatening already thin margins.
  • Forecast vs. Reality Gap: Current CME butter ($2.31/lb) trades 32% below USDA’s 2025 forecast ($2.65/lb), signaling potential upside.
  • Actionable Hedging: Lock December 2025 corn at $4.54/bu and use Class III milk options to balance risk/reward.
  • Price Lag Advantage: USDA survey prices (used for milk checks) remain above CME spot levels, buying time to implement strategies.
Dairy market trends 2025, CME dairy prices, feed cost impact dairy, USDA milk forecasts, dairy risk management strategies

The Chicago Mercantile Exchange (CME) dairy markets showed a mixed performance on March 11, 2025, with some products declining while others held steady. According to verified data from the Daily Dairy Report, butter gained a penny while cheese prices declined, with blocks down half a cent and barrels dropping 2.5 cents. Nonfat dry milk (NDM) fell 1.25 cents, while dry whey remained unchanged. This mixed performance comes against rising feed costs that could pressure dairy margins despite recent improvements in milk price forecasts.

Key Price Changes & Market Trends

The CME dairy spot market recorded varied price movements on March 11, with only butter showing strength, while cheese, NDM, and dry whey either declined or remained flat.

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.6225/lb-0.50¢
Cheese (Barrels)$1.6300/lb-2.50¢
Butter$2.3100/lb+1.00¢
Nonfat Dry Milk$1.1550/lb-1.25¢
Dry Whey$0.4900/lbNC

Butter managed a modest gain of one cent, continuing to find support despite being significantly below the USDA’s 2025 forecast of $2.645 per pound. Cheese prices retreated slightly, with blocks declining by half a cent and barrels dropping a more substantial 2.5 cents. This widened the block-barrel spread to -0.75 cents (barrel premium), potentially signaling some rebalancing in different cheese market segments. Nonfat Dry Milk declined by 1.25 cents amid uncertain export demand, while Dry Whey held steady after recent declines, reflecting cautious market sentiment in that segment.

Volume and Trading Activity

Trading activity data from March 11 provides essential insights into market participation and liquidity across dairy commodities.

ProductNumber of TradesBidsOffers
Butter132
Cheese (Blocks)760
Cheese (Barrels)140
Nonfat Dry Milk752
Dry Whey012

Cheese blocks saw the most active trading, with seven transactions completed alongside substantial bidding interest (6 bids with no offers), suggesting underlying support despite the day’s modest price decline. NDM similarly recorded seven trades with balanced interest from both buyers and sellers. In contrast, butter activity was surprisingly light, with just a single transaction despite its price increase, potentially indicating cautious positioning. Cheese barrels generated minimal activity with just one trade completed, while dry whey saw no transactions amid limited interest (1 bid versus two offers).

Weekly Price Comparison

Examining price movements over the past week provides valuable context for understanding recent market trends.

ProductTuesday (3/11)Current Week Avg. (Mon-Fri last week)Previous Week Avg.Weekly Change
Butter$2.3100$2.2975$2.3480-$0.0505
Cheese (Blocks)$1.6225$1.6380$1.8550-$0.2170
Cheese (Barrels)$1.6300$1.7005$1.7945-$0.0940
Nonfat Dry Milk$1.1550$1.1750$1.2065-$0.0315
Dry Whey$0.4900$0.4980$0.5280-$0.0300

The weekly comparison reveals a concerning downward trend across all dairy commodities. Cheese blocks have experienced a particularly sharp decline, dropping 21.7 cents from the previous week’s average. Cheese barrels and butter also show substantial weekly declines, while NDM and dry whey trend lower by approximately 3 cents. This broad-based weakness suggests persistent supply-demand imbalances that must be resolved for prices to stabilize and recover.

Feed Cost Pressure Intensifies

A critical factor affecting dairy farm profitability is the rising cost of key inputs, particularly feed components. Current CME futures data shows concerning upward trends in primary feed ingredients that could significantly pressure producer margins.

Feed ComponentMarch 11 SettlementWeekly Change% Change
Corn (MAR) $/BU$4.5550+$0.1500+3.4%
Soybeans (MAY) $/BU$10.2525+$0.2350+2.3%
Soybean Meal (MAY) $/TON$304.50+$9.70+3.3%
Live Cattle (APR) $/CWT$200.35+$8.08+4.2%

With feed costs representing 60-70% of dairy production expenses, these increases demand serious attention from producers. The 3.4% weekly increase in corn prices and similar rises in soybean meal create substantial margin pressure that may offset potential gains from improved milk prices. For perspective, research indicates that a 10% rise in feed costs can effectively erode approximately $1.50/cwt in milk revenue, highlighting the importance of feed risk management in the current environment.

Global Context and International Markets

International dairy market conditions continue to influence the CME’s domestic pricing and trading patterns. Understanding global price relationships provides an essential context for forecasting market direction.

ProductGlobal Reference PriceU.S. EquivalentU.S. Price Advantage
Butter (EU)$7,500/MT ($3.40/lb)$2.3100/lb+$1.09/lb (+47.2%)
SMP (Global)$2,500/MT ($1.13/lb)$1.1550/lb-$0.0250/lb (-2.2%)
WMP (EU)$3,940/MT ($1.79/lb)N/AN/A

The U.S. maintains a competitive advantage in butter, with domestic prices $1.09 per pound lower than EU futures equivalents. This substantial differential may support potential export growth for U.S. butter suppliers, assuming quality specifications align with international buyer requirements. Conversely, the NDM/SMP market shows minimal price difference, with U.S. prices slightly higher than global references, creating potential headwinds for export growth in this category.

Updated USDA Forecasts and Implications

The USDA’s latest forecasts, updated on March 6, 2025, provide important context for interpreting current market movements and planning risk management strategies.

CategoryLatest ForecastChange from PreviousImplication
All-milk price (2025)$22.75/cwt+$0.25Modestly improved revenue outlook
Milk production (2025)226.9 billion lbs-1.1 billion lbs from Dec forecastTightening supply supportive of prices
Cheese price (2025)$1.880/lb+$0.015 from Jan forecastBlock prices significantly below forecast
Butter price (2025)$2.645/lb-$0.050 from Jan forecastCurrent prices well below forecast
NDM price (2025)$1.295/lb-$0.045 from Jan forecastCurrent prices significantly below forecast
Dry Whey price (2025)$0.605/lb-$0.035 from Jan forecastCurrent prices well below forecast

These forecasts have been revised based on production constraints, with the USDA noting a tighter supply of dairy heifers than expected. The continual downward revision of milk production estimates (now 1.1 billion pounds below December’s forecast) suggests persistent limitations on milk supply growth that could eventually provide price support. However, current CME prices remain substantially below USDA’s annual forecasts across all commodities, suggesting potential for price recovery if production constraints materialize.

Recent USDA Wholesale Product Prices

The USDA National Dairy Products Sales Report (NDPSR) provides valuable data on wholesale dairy product prices that directly feed into Federal Milk Marketing Order pricing formulas. These survey prices, rather than CME spot values, ultimately determine farm milk checks.

For the week ending February 8, 2025, NDPSR reported prices for:

  • Butter: $2.5265 per pound (down 7.11 cents from January 11)
  • Cheddar cheese 40-pound blocks: $1.9153 per pound (up 3.40 cents)
  • Cheddar cheese 500-pound barrels: $1.8892 per pound (up 7.12 cents)
  • Dry whey: $0.7281 per pound (up 1.98 cents)

The substantial gap between NDPSR survey prices and current CME spot market values illustrates the lagged effect of spot market movements on-farm milk prices. For example, while CME butter trades at $2.3100, the NDPSR survey price remains over 21 cents higher at $2.5265. Similarly, survey prices for cheese and whey significantly exceed current CME levels, providing temporary buffering for farm milk prices despite spot market weakness.

CME Spot Prices vs. USDA AMS Survey Price Relationship

Understanding the relationship between daily CME spot prices and the USDA AMS survey prices determining Federal Milk Marketing Order calculations is crucial for dairy farmers’ financial planning.

Process ElementCME Spot MarketUSDA AMS Survey
FrequencyDaily tradingWeekly surveys, monthly averages
Price FormationSupply/demand at exchangeMandatory reporting from qualifying manufacturers
Price UsePrice discovery, risk managementFederal Milk Marketing Order formulas
TimingReal-timeSurvey data compiled weekly, announced monthly
ReportingPublished immediately after tradingReleased according to USDA schedule

This relationship explains why changes in CME spot prices eventually, but not immediately, affect farm milk checks. The USDA surveys manufacturers weekly about their sales of cheese, butter, nonfat dry milk, and dry whey. Only manufacturers processing and marketing 1 million pounds of dairy products per year are required to report. These surveys become the basis for the announced milk prices in the Federal Milk Marketing Order system.

Dairy producers should note that Federal Milk Marketing Order price formulas will be updated effective June 1, 2025 (except for changes to the skim milk composition factors, which will be implemented December 1, 2025). These changes will alter how product prices translate into milk values, adding another layer of complexity to 2025’s price outlook.

Market Sentiment and Industry Perspectives

The overall market sentiment appears cautious, given the mixed performance on March 11 and the broader weekly price declines. Input from market participants highlights several factors influencing current conditions.

One Midwest cheese trader observed, “Despite today’s block market decline, the lack of offers and strong bidding suggest underlying support at current price levels.” This assessment aligns with the trading activity, showing six unfilled bids for blocks with no offers, potentially setting the stage for recovery in coming sessions.

A dairy economist noted, “The persistent gap between current CME prices and USDA forecasts reflects market uncertainty about production constraints versus potential demand weakness. Feed cost increases further complicate the outlook for producer margins.” This observation captures the tension between factors that might support prices (production constraints) versus those that could weaken them (rising input costs, uncertain demand).

Regarding the feed cost situation, a risk management consultant emphasized, “With corn up 3.4% and soybean meal up 3.3% in just one week, dairy producers should strongly consider locking in a portion of their 2025 feed needs, particularly through December 2025 corn futures at $4.5425 per bushel before potentially further increases.”

Strategic Recommendations for Producers

The current market environment presents both challenges and potential opportunities for dairy producers trying to manage price risk and protect margins. Based on verified market data, several specific strategies warrant consideration:

  1. Feed Cost Management: With feed components showing significant weekly increases, hedging a portion of feed needs through December 2025 corn futures ($4.5425/bu) and December 2025 soybean meal futures ($318.30/ton) could protect against further cost escalation.
  2. Selective Milk Price Protection: Consider implementing floors on Class III milk for Q2-Q3 2025 using options strategies that maintain upside potential while protecting against further declines. With March Class III futures at $18.38, significantly below the USDA’s $19.10 forecast, this may represent value.
  3. Component Optimization: Cheese prices are projected to strengthen (USDA forecast: $1.880/lb) and are currently trading well below that level. Producers with high-component milk should evaluate processor alignment to maximize exposure to markets where component values are optimized.
  4. Staggered Risk Management: Rather than simultaneously implementing protection on all production, consider a staggered approach that protects portions of expected production at different price points, balancing downside protection with upside potential.
  5. Cost Structure Assessment: Review production costs in light of rising feed prices to identify operations where efficiency improvements could offset margin compression. According to dairy economists, each 0.1-pound improvement in feed efficiency can offset approximately $0.25/cwt in higher feed costs.

Conclusion: Navigating Price Volatility and Cost Pressure

In summary, Tuesday’s CME dairy trading session delivered mixed results, with butter showing modest strength while cheese and NDM declined. These mixed movements stand against a backdrop of more concerning weekly price trends that show substantial weakness across all major dairy commodities. Simultaneously, feed costs have increased significantly, with corn, soybeans, and soybean meal all posting 2-3% gains in the past week.

The USDA’s recent upward revision of the all-milk price forecast to $22.75 per cwt offers some optimism. Still, current CME prices remain substantially below USDA’s projected annual averages for all major dairy commodities. This divergence could indicate the potential for price recovery if production constraints materialize as expected, but rising feed costs threaten to erode any potential margin improvements from higher milk prices.

For dairy producers, understanding the relationship between CME spot prices, USDA survey prices, and eventual milk checks is essential for financial planning. While current CME weakness will eventually pressure farm milk prices, the lagged effect of the price reporting system provides some temporary buffering. This time window offers an opportunity to implement strategic risk management before the full impact of recent market moves affects cash flow.

With price volatility and cost pressure intensifying, dairy producers should focus on targeted risk management strategies that protect margins while maintaining flexibility. The most urgent priority may be hedging feed costs to lock in current levels before potential further increases, followed by selective implementation of milk price protection strategies that balance downside risk with upside potential.

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DAIRY MARKET ALERT: Cheese Markets Signal Major Shift as Blocks Rise, Barrels Tumble on March 10

Monday, March 10th, 2025

Cheese markets diverge as blocks rise and barrels tumble, widening spreads. Learn how these shifts impact your milk check and what actions to take now.

Executive Summary

Today’s CME dairy markets revealed significant shifts, with cheddar blocks rising 1.00¢ to $1.6325/lb while barrels fell 2.50¢ to $1.6050/lb, widening the block-barrel spread to 2.75¢. Butter held steady at $2.3100/lb, reflecting seller confidence, while NDM showed slight strength with a 0.25¢ gain to $1.1575/lb despite ongoing pressure in powder markets. These movements highlight the strategic importance of butterfat production as butter markets remain stable amid volatility in cheese and powder categories. Futures settlements suggest potential price recovery in cheese and butter, creating opportunities for producers to optimize margins through component-focused nutrition and targeted risk management strategies. Global factors, including European butter strength and constrained New Zealand milk production, support U.S. dairy prices despite near-term challenges.

Key Takeaways

  • Block-Barrel Spread Widening: Blocks rose by 1.00¢ while barrels fell 2.50¢, creating a 2.75¢ spread that signals shifting cheese demand dynamics.
  • Butterfat Advantage: Butter prices held firm at $2.3100/lb, reinforcing the value of optimizing butterfat production for higher milk check returns.
  • Futures Opportunities: March futures suggest potential price recovery in cheese ($1.758/lb) and butter ($2.4158/lb), offering hedging opportunities.
  • Feed Cost Stability: Corn at $4.58/bu and soybean meal at $302/ton provide favorable conditions for precision feeding strategies.
  • Global Context: Tight global milk supply and selective Chinese demand support U.S. butter prices but pressure powder markets.
cheddar cheese prices, butter market trends, dairy market analysis, block-barrel spread, milk production strategies

Today’s CME dairy markets sent unmistakable signals that demand immediate producer attention. Cheddar blocks gained 1.00¢ to close at $1.6325/lb while barrels plummeted 2.50¢ to $1.6050/lb, creating a significant 2.75¢ block-over-barrel spread. This fundamental shift from last week’s market structure suggests a substantial realignment in cheese demand patterns.

Butter maintained its position at $2.3100/lb with minimal trading activity but strategic offer positioning, revealing seller confidence despite pressure in other dairy categories. Meanwhile, NDM showed resilience with a 0.25¢ increase to $1.1575/lb on moderate trading, indicating selective buyer interest despite the concerning weekly trend.

For progressive producers, these movements carry immediate component value implications – reinforcing the strategic importance of butterfat production optimization as butter markets demonstrate relative stability while cheese markets undergo structural change.

CME CASH DAIRY PRICES: THE NUMBERS THAT MATTER

ProductClosing PriceChange (¢/lb)TradesBidsOffers
Butter$2.3100/lbNC013
Cheddar Block$1.6325/lb+1.00561
Cheddar Barrel$1.6050/lb-2.50132
NDM Grade A$1.1575/lb+0.25342
Dry Whey$0.4900/lbNC000

TRADING PATTERNS REVEAL INSIDER SENTIMENT

Today’s block cheese market activity tells a compelling story innovative producers must recognize. With five completed trades and an aggressive 6:1 bid-to-offer ratio, buyers show remarkable confidence despite recent market weakness.

This starkly contrasts barrel trading, where a single transaction and balanced bid-offer activity suggest hesitancy and potential further weakness. The divergence between these two cheese categories typically signals a fundamental shift in demand patterns that directly impacts your milk check.

WEEKLY TREND ANALYSIS: SPOTTING CRUCIAL PATTERNS

ProductMonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter$2.3100––––$2.3100$2.29750
Cheddar Block$1.6325––––$1.6325$1.63805
Cheddar Barrel$1.6050––––$1.6050$1.70051
NDM Grade A$1.1575––––$1.1575$1.17503
Dry Whey$0.4900/lb––––$0.4900$0.49800

The emerging block premium over barrels completely reverses the inverted spread pattern that dominated late February trading. This structural shift typically signals a strengthened retail cheese demand relative to food service and processed cheese applications – a critical indicator progressive producers must recognize immediately.

This spread reversal has significant implications for your operation’s Class III milk pricing and for how you should approach component optimization in your herd management strategy.

MAXIMIZE YOUR MARGINS: STRATEGIC POSITIONING NOW

COMPONENT OPTIMIZATION: THE HIDDEN OPPORTUNITY

Compared to significant barrel cheese declines, the stability in butter prices creates a clear advantage for operations focused on butterfat maximization. Cheese plants typically adjust manufacturing practices that directly affect your component premiums when barrels decline faster than blocks.

With March butter futures settling at $2.4158/lb (significantly above today’s cash price of $2.3100/lb), market expectations point to strengthening butter values. To capitalize on this market dynamic, leading producers are already implementing nutrition programs that enhance butterfat production.

FEED COST ADVANTAGE: LEVERAGE THIS WINDOW

Current feed futures provide a strategic planning opportunity that won’t last. March corn at $4.58/bushel and soybean meal at $302.20/ton create margin enhancement potential for operations implementing precision nutrition programs.

With each 0.1% increase in butterfat potentially worth $0.25-0.35/cwt under current market conditions, feed efficiency focused on component optimization rather than milk volume yields substantially better returns.

FUTURES INSIGHTS: WHAT THE SMART MONEY SEES

Futures ContractMonday Settlement
Class III (MAR) $/CWT$18.41
Class IV (MAR) $/CWT.$18.30
Cheese (MAR) $/LB.$1.758
Blocks (MAR) $/LB.$1.813
Dry Whey (MAR) $/LB.$0.485
NDM (MAR) $/LB.$1.19
Butter (MAR) $/LB.$2.4158
Corn (MAR) $/BU.$4.58

The March cheese futures at $1.758/lb reflect trader expectations of block-barrel convergence above current barrel values but below current block prices. With feed inputs showing stability, progressive operations protect milk-feed margins using options strategies that provide downside protection while maintaining upside potential.

GLOBAL PERSPECTIVE: INTERNATIONAL FORCES SHAPING YOUR MILK CHECK

European dairy markets report firming butter prices against relatively stable cheese values – a pattern now emerging in U.S. markets. This global alignment suggests structural rather than transitory forces reshape dairy product relationships.

New Zealand production reports indicate a slight recovery from earlier season shortfalls but remain below previous year levels. Despite near-term market hesitancy, this constrained global milk supply creates underlying support for dairy product values.

Chinese import activity shows highly selective re-engagement, with a more substantial interest in butter and cream products than powders or cheese. This targeted import demand aligns perfectly with today’s price movements and reinforces the strategic advantage of butterfat-focused production systems.

YOUR 3-STEP ACTION PLAN: WHAT PROGRESSIVE PRODUCERS ARE DOING NOW

1. IMPLEMENT COMPONENT-FOCUSED NUTRITION IMMEDIATELY

With butter futures ($2.4158/lb) significantly above cash prices ($2.3100/lb) and the block-barrel structure normalizing, leading operations are implementing feeding strategies that optimize both butterfat and protein components. Consider strategically using rumen-protected fats and precision carbohydrate management to enhance component yields without sacrificing production efficiency.

2. EXECUTE TARGETED RISK MANAGEMENT THIS WEEK

The current future settlements create specific opportunities that won’t last. The March cheese futures at $1.758/lb suggest a potential upside from current cash values once the block-barrel relationship normalizes. With feed inputs showing stability (corn at $4.58/bu), now is the time to protect milk-feed margins using strategies that provide downside protection while maintaining upside potential.

3. MONITOR THE BLOCK-BARREL RELATIONSHIP DAILY

Today’s emerging block premium (blocks at $1.6325/lb versus barrels at $1.6050/lb) represents a critical market structure change from last week. Forward-thinking producers track this spread daily as a leading indicator of the cheese market direction and Class III value potential.

Block premiums typically signal strengthening retail demand, while inverted spreads often indicate manufacturing capacity constraints or weak retail demand – intelligence you can use to optimize your marketing strategy.

BOTTOM LINE: WHAT THIS MEANS FOR YOUR OPERATION

Today’s dairy markets show a structural realignment, with blocks establishing a premium over barrels, butter holding firms finding selective support, and NDM finding selective support. Progressive producers are capitalizing on the relative strength in butter markets by implementing component-focused nutrition programs that enhance butterfat yields.

The consistent bidding activity for blocks despite recent market weakness suggests underlying confidence in cheese demand fundamentals once the current supply-demand imbalance resolves. With futures values indicating potential strengthening in cheese ($1.758/lb) and butter ($2.4158/lb), innovative risk management strategies should focus on protecting downside risk while participating in potential market recovery.

The emerging block premium over barrels signals an improving market structure that typically precedes broader price strengthening in cheese markets. Leading producers recognize today’s market signals demand immediate action: optimize components rather than volume, implement targeted risk management, and closely monitor the evolving block-barrel relationship as an early indicator of market direction.

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CME Dairy Market Analysis: Trade War Drama Sends Cheese Prices Plunging to 11-Month Lows

Friday, March 7th, 2025

Trade drama shakes dairy markets! Cheese prices hit 11-month lows, butter slides, and milk futures plummet. How can producers adapt to survive?

EXECUTIVE SUMMARY: This week’s dairy market turmoil highlights the impact of global trade tensions and overproduction. U.S. tariffs on non-USMCA-compliant imports from Canada and Mexico have raised costs, while China’s retaliatory tariffs on U.S. dairy products add further uncertainty. Cheese prices plunged to an 11-month low despite strong exports and reduced cheddar production. Butter values also fell due to a surplus of cream, while nonfat dry milk prices dropped amid weak exports to Southeast Asia. Milk futures reflect bearish sentiment, with Class III contracts falling sharply. Producers must navigate these challenges by reassessing cost structures, exploring alternative markets, and managing risk effectively.

KEY TAKEAWAYS

  • Trade Policy Impact: U.S. tariffs on non-USMCA-compliant imports and China’s retaliatory tariffs disrupt global dairy markets.
  • Cheese Market Decline: CME cheddar blocks fell 15.25¢ this week despite strong exports and reduced production.
  • Butter Surplus: Excess cream dragged butter prices to $2.25/lb before recovering slightly to $2.31/lb.
  • Powder Export Weakness: Nonfat dry milk prices hit a nine-month low as exports to Southeast Asia slowed.
  • Milk Futures Drop: April Class III futures fell over $1 to $17.21/cwt, reflecting bearish market sentiment.

How are your profit margins holding up amid this week’s market chaos? With cheese prices plummeting, butter values sliding, and milk futures in freefall, dairy producers face a perfect storm of challenges that demand immediate attention.

The on-again, off-again tariff drama with Canada and Mexico has created market whiplash, costing real dairy farmers real money. Like watching a teenager’s tumultuous relationship unfold, market participants have witnessed U.S. trade policy switch status to “it’s complicated” – with potentially serious consequences for your bottom line in the months ahead.

USMCA Trade Drama: What Dairy Farmers Need to Know Now

The administration’s decision to exempt USMCA-compliant goods from the newly imposed 25% tariffs offered some relief. Still, this seemingly straightforward carve-out creates far more complex market realities than many producers realize.

What’s the real impact on your operation?

First, approximately 40% of previously duty-free imports from Canada and Mexico lack proper USMCA certification and now face a substantial 25% border tax. This creates immediate cost pressures that will inevitably flow through the supply chain.

Second, contradictory messaging about whether this exemption represents permanent policy or merely a temporary pause until April 2 leaves dairy businesses unable to plan effectively even for the near term.

Canada’s supply management system starkly contrasts the U.S. market’s volatility. Under their system, certain products like dairy and poultry are subject to tariff-rate quotas, ensuring domestic production meets most of the nation’s needs. While initial tariffs are modest (milk has a 7.5% tariff with exemptions for USMCA countries), once quota limits are reached, much steeper tariffs kick in – up to 241% for milk.

Despite these constraints, U.S. dairy exports to Canada have grown significantly, reaching $1.14 billion in 2024 – nearly doubling over the past decade.

The IDFA has urged both countries to negotiate a resolution: “A prolonged tariff war with our top trading partners will continue to create uncertainty and additional costs for American dairy farmers, processors, and our rural communities.”

Inside Canada’s Milk Quota System: Stability vs. Market Access

To understand how Canada’s supply management system functions in practice, examine this actual quota trading data from British Columbia throughout 2024:

MonthQuantity (kg of butterfat/day)Average Price ($/kg)Total Value ($000)
January91.0035,5003,230.50
February22.3735,500794.14
March79.2735,5002,814.09
April100.0035,5003,550.00
May180.4335,5006,405.27
June64.9435,5002,305.37
July147.7335,5005,244.42
August70.0035,5002,485.00
September145.9035,5005,179.45
October88.9335,5003,157.02
November70.7035,5002,509.85
December56.4035,5002,002.20

Source: Agriculture and Agri-Food Canada, Animal Industry Division

Notice the fixed quota value at exactly $35,500 per kilogram of butterfat daily throughout the year. This demonstrates the controlled nature of the Canadian dairy market, where production rights maintain consistent value regardless of market fluctuations – a stark contrast to the price volatility experienced by U.S. producers.

China’s Strategic Dairy Tariffs: Smart Trade Policy in Action

While North American trade tensions grabbed headlines, China quietly announced its targeted approach to dairy tariffs, revealing sophisticated market awareness.

Their 10% retaliatory tariff on U.S. dairy imports specifically exempts dry whey and lactose – ingredients critical to their massive hog industry. This strategic carve-out protects their essential interests while delivering politically meaningful responses to U.S. trade actions.

The Long-Term Risk: Every trade disruption allows competitors to establish new supply relationships that may persist long after tariffs are resolved. European suppliers stand ready to fill any gaps created by unstable U.S. trade policy.

Question for Producers: How are you diversifying your market exposure to protect against trade policy volatility? Share your strategies in the comments below.

Cheese Market Collapse: When Good News Gets Ignored

This week’s cheese market performance demonstrates how market psychology can completely overwhelm positive fundamentals. CME spot Cheddar blocks plunged to an 11-month low at $1.6050 on Tuesday before recovering slightly to close at $1.6225, still down a significant 15.25¢ for the week. Barrels mirrored this weakness, falling 15¢ to $1.63.

The Disconnect Between Data and Market Reality

The market’s reaction seems utterly detached from underlying supply-demand fundamentals:

  • January’s cheese production showed only a modest 0.8% year-over-year increase
  • Cheddar output fell 1.4% to its lowest January level since 2020
  • Cheese exports surged 22% above January 2024 volumes

This combination of controlled production and exceptional export growth would typically support prices in a rational market – yet values plummeted anyway.

What This Means For Your Operation

This disconnect reveals how thoroughly sentiment now dominates fundamentals in the dairy markets. The market’s laser focus on upcoming cheese plant expansions, potential consumer demand weakness, and trade anxiety have created a bear market psychology that’s difficult to overcome.

For producers, traditional approaches to reading market signals may need serious recalibration. Are you adjusting your risk management strategies for this new market reality?

Butter’s Surprising Challenge: Too Much of a Good Thing

The current butterfat market offers a perfect example of how success in one area can create challenges elsewhere. Higher component levels have created a cream surplus that’s dragged multiples to their lowest points since the pandemic disruption of 2020.

This abundance forces us to confront a counterintuitive reality: sometimes, producing more high-value components reduces overall returns.

Manufacturing Response to Cream Surplus

Class II manufacturers have seized this opportunity, dramatically increasing production across multiple categories:

  • Hard ice cream is up 20% year-over-year
  • Full-fat cottage cheese up 18%
  • Yogurt up 5.3%
  • Sour cream up 4.3%

Yet even this substantial manufacturing response couldn’t absorb all available cream, allowing butter production to inch up 0.5% despite already ample supplies.

Production Trends Behind the Butterfat Surplus

To understand the current supply situation, consider these key production metrics from the most recent USDA data:

MetricValueYear-over-Year Change
Total Milk Production17.875 billion lb-1.0%
Daily Milk Production596 million lb-6 million lb
Number of Dairy Cows9.365 million+20,000 head
Milk Per Cow1,909 lb-23 lb

Source: USDA Milk Production report, December 19, 2024

These statistics reveal an interesting paradox: despite having more cows in the national herd, per-cow productivity and total milk production declined compared to the previous year. However, component percentages continue to rise, with milk fat tests reaching 4.15% in September 2024, up from 4.08% in the last year.

The current market dynamics forced CME spot butter to retreat to $2.25 on Tuesday, its lowest price since 2021, before recovering slightly to close at $2.31, down 3.5¢ for the week.

Strategic Question: With component values under pressure, should your breeding and feeding programs still prioritize fat production or is a rebalancing needed? What other product streams might offer better returns for your high-component milk?

Powder Markets Signal Export Warning Signs

The nonfat dry milk market continues its downward slide, with CME spot prices falling 4.5¢ to $1.155, the lowest level in nine months. This decline persists despite manufacturers making strategic production adjustments – combined NDM and SMP output totaled just 189 million pounds in January, down 3.2% year-over-year and the lowest January volume since 2016.

Geographic Shift in Export Patterns

The market is experiencing a significant redistribution of export flows:

  • Manufacturers strongly favoring NDM (primarily sold domestically and to Mexico) over SMP
  • SMP production plummeted 37.6% year-over-year
  • Total powder exports fell below 100 million pounds in January for the first time in over five years
  • Exports to Southeast Asia reached eight-year lows in December and January
  • Shipments to Mexico exceeded January 2024 levels

Products that previously served markets like the Philippines and Vietnam have instead moved into storage, pushing U.S. milk powder inventories to nearly 300 million pounds – the highest level since May 2023.

This inventory buildup creates a classic market dilemma: should manufacturers continue producing at current levels, hoping for eventual market improvement, or should they reduce output to avoid further inventory accumulation?

Bullvine’s analysis suggests that processors shifting between product forms will have distinct advantages in this environment. What’s your perspective on the powder market outlook?

Milk Futures Flash Warning Signs for Farm Profitability

This week, the bearish sentiment in physical product markets translated directly into substantial losses for milk futures. April Class III futures plummeted more than a dollar to settle at $17.21 per hundredweight, with most contracts suffering double-digit losses and values predominantly settling in the $17-$18 range.

Class IV futures showed similar weakness, though less pronounced, with contracts generally losing around 30¢. While most Class IV contracts maintained positions above $18, the June contract settled at $17.93, slipping below this psychological support level.

What This Means for Your Bottom Line

These deteriorating values present a challenging economic outlook for dairy producers, notably when coinciding with the spring flush. These futures prices seriously threaten dairy farm viability, especially for operations with high debt loads or significant fixed costs.

The Bullvine has consistently advocated for proactive margin management. Those who locked in protection earlier this year now see that strategy’s value. A serious evaluation of production costs and marketing strategies is essential for those exposed to these declining values.

Action Step: Take time this week to calculate your actual cost of production and compare it to current future values. What changes would be necessary if these price levels persist through summer?

Feed Markets: Rare Stability in a Volatile Week

In a week dominated by volatility, feed markets displayed remarkable stability in closing values:

  • May corn futures finished unchanged at $4.69 per bushel
  • May soybeans concluded at $10.25 per bushel, exactly where they started
  • Soybean meal managed modest gains, advancing $4.50 to $304.50 per ton

This price stability provides breathing room for dairy operations facing declining milk values. However, the temporary surge in soybean meal demand resulting from the brief tariff on canola imports demonstrates how quickly feed markets can respond to trade policy shifts.

Risk Management Reminder: While current feed values offer favorable opportunities to lock in forward coverage, the ongoing evolution of trade policy could rapidly alter ingredient availability and pricing. Innovative producers will secure protection for at least a portion of their feed needs while maintaining flexibility to adjust as conditions evolve.

Market Outlook: Navigating Trade Complexities in 2025

The current dairy market presents extraordinary challenges, combining abundant domestic supplies with increasingly unpredictable international market access. Rather than simply bemoaning trade barriers, forward-thinking producers are learning to navigate them strategically.

Weekly CME Dairy Price Dashboard – March 7, 2025

ProductClosing PriceWeekly Change
Cheddar Blocks$1.6225/lb-15.25¢
Cheddar Barrels$1.63/lb-15.00¢
Butter$2.31/lb-3.5¢
Nonfat Dry Milk$1.155/lb-4.5¢
Dry Whey$0.49/lb-2.0¢
Class III April$17.21/cwt-$1.00+
Class IV June$17.93/cwtn/a

Source: CME Group, March 7, 2025

Understanding the reality behind the headlines is crucial. While social media may circulate claims of uniformly high Canadian tariffs on all U.S. products, the fact is that most U.S.-Canada trade occurs duty-free under USMCA. For dairy precisely, the challenges lie in over-quota tariffs and how the quotas are administered.

The Bullvine’s Perspective

As we’ve consistently demonstrated through our commitment to transparency and market education, periods of market disruption often create opportunities for meaningful change in the dairy industry. The operations that approach current challenges with creativity and resilience, rather than simply maintaining past practices, will position themselves for long-term success.

Rather than hoping for market improvement, forward-thinking operations are:

  • Evaluating their cost structures and identifying efficiency opportunities
  • Exploring alternative marketing channels beyond traditional commodity sales
  • Considering how to differentiate their production in an increasingly competitive landscape
  • Building stronger relationships with processors to enhance market intelligence
  • Implementing genetic strategies that balance component production with overall efficiency

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 the regulatory details that will determine which dairy businesses will thrive in this new environment?

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CME Dairy Market Report: March 6, 2025 – Butter Prices Surge While Barrels Crash

Thursday, March 6th, 2025

Butter soars, cheese markets split: Today’s CME dairy report reveals a seismic shift. Are you ready to adapt, or will your operation be left behind?

EXECUTIVE SUMMARY: The March 6, 2025, CME dairy market report unveils a dramatic divergence in dairy product performance. Butter prices surged 1.75¢ to $2.3000/lb, driven by strong demand and limited supply. Meanwhile, the cheese market experienced a significant split, with cheddar blocks rising slightly but barrels plummeting 5.00¢, signaling potential weakness in food service demand. Global factors, including a strengthening U.S. dollar and increased New Zealand production, are adding pressure to export markets. Rising feed costs threaten producer margins, pushing the milk-feed ratio below profitability thresholds. The report emphasizes the critical need for producers to adapt quickly to these changing market dynamics, offering strategic recommendations to navigate the evolving landscape.

KEY TAKEAWAYS:

  • Butter outperforms cheese, suggesting a need to prioritize butterfat production
  • Widening block-barrel spread indicates shifting demand patterns in cheese markets
  • Rising feed costs and global market pressures necessitate immediate action on risk management
  • Producers must adapt quickly to survive, focusing on component optimization and contract renegotiation
  • Currency fluctuations and international production trends are significantly impacting U.S. dairy export competitiveness
CME dairy market report, butter prices, cheese market trends, dairy producer strategies, milk-feed ratio

Butter climbed 1.75¢ today as buyers scrambled to secure supply, while cheddar markets told a tale of two cities—blocks inched up 1.25¢, but barrels plummeted a shocking 5.00¢. Are you positioned to capitalize on these dramatic market shifts?

Today’s Market Movers: Follow the Money

ProductClosing PriceChangeTradesBidsOffers
Butter$2.3000/lb↑ +1.75¢27235
Cheddar Block$1.6275/lb↑ +1.25¢830
Cheddar Barrel$1.6550/lb↓ -5.00¢301
Nonfat Dry Milk$1.1675/lb↓ -1.25¢233
Dry Whey$0.4900/lb↔ NC111

Why Butter Is Outperforming Cheese

Butter’s 1.75¢ climb isn’t just a number—it’s a wake-up call for producers still fixated on cheese. With 27 trades executed (more than all other products combined!), butter shows unprecedented demand strength heading into spring. Are you still allocating components based on outdated price relationships?

Block-Barrel Spread Tightens: What It Means

Today’s pricing created a barrel-over-block inversion of 2.75¢—completely contradicting the historical block premium of 3-5¢. This isn’t just market noise; it’s a structural warning sign. Foodservice demand (primarily barrels) is weakening while retail cheese (blocks) holds steady. What does this mean for your milk marketing strategy?

Trading Activity: Reading Between the Lines

Where Smart Money Is Moving

Butter dominated with 27 trades—nearly triple the volume of any other product. Even more telling: 23 unfilled bids remained at close, signaling buyers are still hungry for more. Meanwhile, barrel cheese saw just three trades with zero bids left standing—a ghost town that speaks volumes about waning processor confidence.

Did You Know?

Every 0.1% increase in butterfat production can boost your milk check by approximately $0.44/cwt at current price levels—more than offsetting potential volume losses.

Global Trends You Can’t Ignore

International Markets Are Shifting the Game

Despite today’s domestic gains, EU butter prices hovering around $2,400/MT continue to undercut U.S. export opportunities. Meanwhile, New Zealand’s 2% year-over-year production increase is flooding global markets—pressuring NDM and whey prices.

The Dollar Problem Nobody’s Talking About

The U.S. dollar strengthened 0.8% this week alone—devastating news for export-dependent producers. With 15% of U.S. dairy production relying on foreign buyers, this currency shift could erase domestic price gains faster than a California drought. Have you hedged your currency exposure?

Future Forecast: Storm Clouds Gathering

ContractPriceWeekly Trend
Class III (MAR)$18.32/cwt↑ +$0.96
Class IV (MAR)$18.40/cwt↓ -$0.08
Butter (MAR)$2.4000/lb↓ -$0.015

Feed Costs Are About to Explode

While producers celebrate butter’s climb, corn surged to $4.4925/bu (+4¢) while soybean meal rocketed to $304.80/ton. This has pushed the milk-feed ratio to a dangerous 2.15—below the 2.25 profitability threshold that separates survivors from casualties. When was the last time you locked in feed costs?

Inside the Trading Pit: What Traders Are Saying

The Whispers You Need to Hear

“We’re seeing cream shortages earlier than usual—butter at $2.30 could look cheap by April,” warned a veteran Midwest trader with 20+ years on the CME floor.

Another broker bluntly said, “Blocks are for pizza, barrels are for restaurants and processed cheese. That 5-cent barrel crash? It’s telling us exactly which sector is struggling right now.”

Three Actions Smart Producers Are Taking Today

Survival Strategy #1: Shift to Class IV

With butter outperforming and the block-barrel spread inverted, component optimization is critical. Prioritize butterfat production immediately—every 0.1% increase adds roughly $0.44/cwt to your milk check at current prices.

Survival Strategy #2: Lock Feed Costs NOW

Corn futures suggest an 8% price hike by June. Forward-thinking producers are securing 60-90 days of inventory today before costs erode already-thin margins.

Survival Strategy #3: Renegotiate Your Contracts

The 5¢ barrel crash signals food service weakness that could persist through Q2. If you’re locked into barrel-heavy contracts, now is the time to approach buyers about shifting volume toward block production.

The Bottom Line: Adapt or Perish

Today’s dairy markets reward agility and punish complacency. Butter’s rally offers a lifeline, but the barrel cheese collapse demands immediate action. The producers who survive this year won’t be the largest or most established—they’ll be the ones who adapt fastest to these shifting market dynamics.

Are you still running your dairy like it’s 2024? If so, you’re already behind.

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CME Dairy Report March 5, 2025: Butter Surges, Cheese Markets in Turmoil

Wednesday, March 5th, 2025

Butter soars, cheese plummets: CME dairy markets in turmoil. Discover how savvy producers are turning market chaos into a strategic opportunity.

EXECUTIVE SUMMARY: The March 5, 2025 CME dairy report reveals a market in flux, with butter prices surging while cheese markets face a dramatic downturn. The unprecedented 9-cent premium of barrels over blocks signals a fundamental shift in cheese demand patterns, challenging traditional production strategies. Class III milk futures plummeted to .36/cwt, squeezing producer margins as feed costs continue to rise. Global factors, including increased New Zealand production and competitive EU butter prices, add further complexity to the U.S. dairy landscape. This market volatility demands immediate action from producers, with opportunities emerging for those willing to adapt their component strategies and explore Class IV markets.

KEY TAKEAWAYS:

  • Butter prices climbed 3.25¢ to $2.2825/lb, defying overall market weakness
  • Cheddar blocks fell 11.23% week-over-week, reflecting significant inventory pressures
  • The block-barrel price inversion (-9¢) signals a shift towards processed cheese demand
  • Class III milk futures dropped sharply to $17.36/cwt, while Class IV held relatively steady at $18.48/cwt
  • Rising feed costs (corn +4¢, soybean meal +$6) further challenge producer margins, necessitating proactive risk management strategies
CME dairy prices, cheese market volatility, butter price surge, Class III milk futures, dairy producer strategies

Today’s CME dairy markets delivered mixed signals, with butter prices climbing sharply while cheese markets continued their downward spiral. The block-barrel price inversion deepened, signaling a fundamental shift in cheese demand dynamics. Meanwhile, Class III milk futures plummeted to multi-month lows, and rising feed costs are squeezing margins. Dairy producers must adapt quickly to navigate these challenging conditions.

Key Price Changes and Market Trends

ProductClosing Price ($/lb.)Change (¢/lb.)TradesBidsOffers
Butter2.2825+3.25172
Cheddar Blocks1.6150+1.00541
Cheddar Barrels1.7050-2.50211
NDM Grade A1.1800NC011
Dry Whey0.4900-2.00513

Commentary:

  • Butter prices surged by 3.25¢ to $2.2825/lb on strong buyer interest and limited offers, reflecting tight supply dynamics.
  • Cheddar blocks rebounded slightly (+1¢) after Tuesday’s sharp decline but remain under significant pressure due to weak demand.
  • Cheddar barrels fell another 2.50¢ to $1.7050/lb, deepening the unusual block-barrel price inversion.
  • Dry whey dropped by 2¢ to $0.4900/lb, continuing its downward trend and further pressuring Class III milk values.

Weekly Price Comparison

ProductCurrent Week Avg. ($/lb.)Prior Week Avg. ($/lb.)Change (%)Weekly Volume
Butter2.29252.3480-2.36%9
Cheddar Blocks1.64671.8550-11.23%26
Cheddar Barrels1.73921.7945-3.08%7
NDM Grade A1.18421.2065-1.85%6
Dry Whey0.50330.5280-4.68%5

Why This Matters:

Cheddar blocks have seen a staggering weekly decline of over 11%, reflecting broader market weakness and growing inventory pressures across the cheese complex.

The Block-Barrel Inversion Explained

The current block-barrel spread is an unusual -9¢, with barrels trading at a premium over blocks—an anomaly that has occurred less than 5% of the time in the past decade.

MetricCurrent Value (¢/lb.)Historical Avg (2016–2021) (¢/lb.)Deviation (¢/lb.)
Block-Barrel Spread-9+12-21

What This Means for Producers:

This inversion signals a fundamental shift in cheese demand patterns. There is a stronger demand for barrel-intensive processed cheese than natural block cheddar varieties.

Futures Settlement Prices

ProductWednesday ($)Tuesday ($)Change ($)
Class III Milk17.36/cwt18.15/cwt-0.79
Class IV Milk18.48/cwt18.64/cwt-0.16
Cheese1.7700/lb1.7550/lb+0.015
Butter2.4150/lb2.3800/lb+0.035
Dry Whey0.4900/lb0.4975/lb-0.0075

Implications:

Class III milk futures dropped sharply to .36/cwt, reflecting ongoing cheese market weakness and declining dry whey prices. Class IV milk held relatively steady due to more pungent butter and powder markets.

Global Context

International factors are adding pressure to U.S dairy markets:

  • New Zealand’s milk production increased by over 2% year-over-year in February, boosting global supply and putting downward pressure on export prices.
  • European Union butter prices remain competitive at $2,200/metric ton, limiting U.S. export opportunities despite domestic butter strength.

Strategic Recommendations for Producers

Rethink Component Strategies

Producers should consider adjusting their component profiles to align with this shift with processed cheese demand outpacing natural cheddar.

Explore Class IV Opportunities

The unusual premium of Class IV over Class III creates opportunities for producers with flexibility in milk marketing or component advantages aligned with butterfat production.

Plan for Rising Feed Costs

Corn futures rose to $4.4125/bu today (+4¢), while soybean meal surged to $300/ton (+$6). Locking in feed costs now could protect margins as input prices climb further.

The Bottom Line

Today’s dairy markets are anything but business as usual:

  • Butter prices surged on tight supplies while cheese markets continued their collapse.
  • The block-barrel inversion highlights shifting demand dynamics that could reshape producer strategies.
  • Falling Class III prices and rising feed costs are squeezing margins, demanding proactive risk management.

Producers who adapt quickly—aligning components with market needs and securing feed costs—will be best positioned to weather this storm and emerge stronger.

Stay ahead of the curve with daily insights from The Bullvine.

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CME Daily Dairy Report: Cheese Blocks Plunge 9.50¢ As Markets Face Pressure | March 4, 2025

Tuesday, March 4th, 2025

Cheese blocks plummet 9.50¢ as dairy markets face pressure. What’s driving the decline, and how will it impact producers? Get the full analysis here.

EXECUTIVE SUMMARY: The CME dairy markets experienced significant pressure on March 4, 2025, with cheese blocks leading the decline, falling 9.50 cents to $1.7750/lb. This sharp drop occurred despite stable inventories, suggesting potential shifts in demand or increased selling pressure. While cheese markets weakened, butter held steady at $2.3450/lb, and nonfat dry milk remained unchanged. The weekly averages show a downward trend across all commodities, with butter declining 3.1% from the previous week. Despite spot market weakness, futures markets signal optimism for near-term milk values. However, the current milk-feed ratio of 2.18 remains below the profitability threshold of 2.25, indicating ongoing challenges for producers. Global market conditions, including increased European milk production and premium Oceania butter prices, continue to influence U.S. export competitiveness.

KEY TAKEAWAYS:

  • Cheese blocks plunged 9.50 cents to $1.7750/lb, narrowing the block-barrel spread to just 0.50 cents.
  • Weekly averages show a downward trend across all dairy commodities, with butter declining 3.1% from the previous week.
  • Despite spot market weakness, futures markets remain optimistic about near-term milk values.
  • The milk-feed ratio of 2.18 is below the 2.25 profitability threshold, signaling ongoing margin pressure for producers.
  • Global market conditions, including European production increases and Oceania butter premiums, continue to impact U.S. export competitiveness.
CME dairy prices, cheese market analysis, block-barrel spread, dairy futures, milk-feed ratio

Today’s dairy markets registered significant downward pressure, with cheddar blocks leading the decline with a substantial 9.50 cent drop, while barrels fell 2.50 cents. This market weakness comes amid challenging global trade conditions and evolving domestic supply dynamics affecting multiple dairy commodities.

The cheddar block market fell sharply to $1.7750/lb, representing a significant 9.50 cent decline amid moderate trading activity. Despite relatively stable cheese inventories in the latest Cold Storage report, this dramatic movement comes. Cheddar barrels also weakened, though less dramatically, by falling 2.50 cents to $1.7800/lb, narrowing the block-barrel spread to just 0.50 cents, representing an unusually tight price relationship between these two cheese varieties.

Daily Price Summary: Mixed Performance Across Dairy Product Categories

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.7750/lb-9.50¢
Cheese (Barrels)$1.7800/lb-2.50¢
Butter$2.3450/lbUnchanged
Nonfat Dry Milk$1.2000/lbUnchanged
Dry Whey$0.5100/lb-1.50¢

Butter markets held steady at $2.3450/lb with minimal trading activity but continued offering interest, suggesting potential for downward price pressure in coming sessions. NDM remained unchanged at $1.2000/lb while dry whey decreased 1.50 cents to $0.5100/lb amid substantial offering pressure with four uncovered offers versus just one bid.

Weekly Trend Analysis Shows Continued Market Softness

ProductMonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Change
Butter$2.3700$2.3450$2.3350$2.3450$2.3450$2.3480$2.4219-$0.0739
Cheddar Block$1.8800$1.8800$1.8700$1.8700$1.7750$1.8550$1.9044-$0.0494
Cheddar Barrel$1.8000$1.7925$1.7950$1.8050$1.7800$1.7945$1.8019-$0.0074
NDM Grade A$1.2250$1.2000$1.2075$1.2000$1.2000$1.2065$1.2600-$0.0535
Dry Whey$0.5350$0.5350$0.5350$0.5250$0.5100$0.5280$0.5475-$0.0195

The weekly averages show a general downward trend across all commodities compared to the previous week, with butter showing the most significant percentage decline at nearly 3.1% lower than the prior week’s average.

Trading Activity Reveals Continued Selling Pressure

Today’s trading session featured moderate activity for cheddar blocks. Four trades were executed alongside offering interest (0 bids versus three offers), indicating continued selling pressure at current price levels. This trading pattern suggests the potential for further price adjustments in coming sessions unless fresh buying interest emerges.

Cheddar barrels recorded modest activity with two trades and limited interest on either side of the market (0 bids, one offer). Butter saw no trades executed despite both bids (1) and offers (2), indicating a relatively balanced but inactive market. Similarly, NDM recorded no trades but showed equal bidding and offering interest (2 bids, two offers). At the same time, dry whey saw substantial selling pressure with four uncovered offers compared to just one bid.

Global Market Conditions Create Mixed Outlook for U.S. Exports

The U.S. dairy export environment continues to evolve amid changing global supply and demand dynamics. International dairy product prices have shown varied performance, with Global Dairy Trade auctions indicating some strength in whole milk powder but continued pressure on skim milk powder markets.

European milk production continues to increase seasonally, while New Zealand production remains slightly below historical norms. According to recent Bullvine reporting, the European Union faces projected milk production declines of 0.2% in 2025, creating potential opportunities for U.S. producers to capture market share in key export destinations.

The international competitive landscape is particularly evident in the forward price projections for key dairy commodities. In Oceania markets, butter is trading at a significant premium to U.S. values, with March 2025 prices at $7,370/metric ton compared to U.S. equivalent values of approximately $5,170/metric ton.

Futures Markets Signal Optimism Despite Today’s Spot Market Weakness

Despite today’s market pressure, particularly in the cheese sector, futures markets remain relatively optimistic about milk values for the near term. The Class III milk futures for coming months show a gradual strengthening pattern that suggests market participants anticipate improved demand or tightening milk supplies as we move through the spring flush period.

ClassMarchAprilMayJuneJulyAugust
Class III ($/cwt)$18.71$18.86$19.03$19.15$19.20$19.25
Class IV ($/cwt)$18.64$18.71$18.79$18.89$18.99$19.10
Change from Yesterday (Class III)-$0.23-$0.18-$0.14-$0.10-$0.08-$0.05
Change from Yesterday (Class IV)$0.00-$0.07-$0.09-$0.08-$0.06-$0.05

Current future values reflect growing concern about milk prices in the immediate term but suggest relatively favorable conditions. Feed markets continue to provide some relief for producers, though corn futures remained relatively strong at $4.53/bushel for March delivery on Friday.

Producer Profitability Analysis: Margins Below Threshold Despite Recent Improvements

ComponentCurrent PriceLast MonthYear Ago
All-Milk Price ($/cwt)$18.75$19.10$18.25
Corn Price ($/bushel)$4.53$4.70$5.15
Soybean Meal ($/ton)$300.20$310.50$355.60
Alfalfa Hay ($/ton)$195.00$198.00$210.00
Calculated Milk-Feed Ratio2.182.151.89
Profitability Threshold2.252.252.25

The milk-feed ratio is calculated using the formula: (All-milk price per cwt) ÷ (16% of corn price + 8% of soybean meal price + 26% of alfalfa hay price)

While today’s calculated ratio of 2.18 shows improvement from last month’s and year-ago levels, it remains below the 2.25 threshold typically associated with sustainable profitability for most dairy operations. This metric helps explain why expansion remains limited despite generally favorable milk prices.

Market Sentiment: Analysts Divided on Future Direction

Market sentiment has shifted somewhat with today’s significant decline in cheese prices, particularly for blocks. Market participants note that the substantial 9.50 cent decline in blocks suggests selling pressure from inventory holders or reduced buying interest from major commercial users. The fact that the butter market held unchanged despite recent weakness indicates a potential stabilization point for that commodity.

The International Dairy Foods Association’s most recent weekly market commentary noted: “While the first quarter has shown surprising price resilience given inventory levels, today’s block cheese weakness suggests we may be entering a more challenging phase for dairy commodity markets, particularly if spring flush production significantly exceeds current projections.”

Strategic Recommendations for Dairy Stakeholders

Today’s dairy markets registered significant price declines for cheese, with blocks falling 9.50 cents to $1.7750/lb and barrels declining 2.50 cents to $1.7800/lb. Butter held steady at $2.3450/lb, while NDM remained unchanged at $1.2000/lb. Dry whey decreased 1.50 cents to $0.5100/lb amid substantial offering pressure.

Producers should closely monitor cheese markets for stabilization following today’s substantial block price decline. The narrowed block-barrel spread bears watching as it often signals changing market dynamics that can affect Class III milk values. Feed markets continue to provide some margin opportunity, with corn and soybean meal values moderating slightly, though the calculated milk-feed ratio remains below the traditional profitability threshold of 2.25.

In coming reports, market participants should pay particular attention to weekly cold storage movements and milk production data, as these will provide important context for whether today’s price declines represent a temporary adjustment or the beginning of a more sustained price correction. Additionally, watching daily trading volumes and bid/ask spreads will provide early indications of changing market sentiment, particularly for cheese markets, which experienced the most significant movement today.

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CME Dairy Market Report: February 27, 2025 – Mixed Signals as Cheese Climbs While Export Challenges Persist

Thursday, February 27th, 2025

Class III milk futures rebounded midweek, closing at $18.94/cwt on Thursday after dipping to $18.73/cwt on Tuesday. USDA’s Q2 projection of $18.50/cwt suggests potential downside risks as global supply pressures persist. Butter gained 1¢, while NDM and whey-faced export-driven declined.

Summary

Class III milk futures showed a midweek recovery, closing at .94/cwt on Thursday after bottoming at .73/cwt on Tuesday, as illustrated in the chart. This rebound reflects cautious optimism in the market, though USDA’s Q2 projection of $18.50/cwt underscores potential downside risks amid global supply pressures.

Key Takeaways

  • Class III Milk Futures Recovery: Prices rebounded from $18.73/cwt on Tuesday to $18.94/cwt on Thursday, showing a midweek recovery after a sharp decline from Monday’s $19.02/cwt.
  • USDA Q2 Projection: The USDA projects Class III milk prices to average $18.50/cwt in Q2 2025, which remains below current futures levels, signaling potential downside risk.
  • Market Sentiment: The recovery in futures prices suggests cautious optimism, but global supply pressures and export challenges may weigh on future performance.
  • Price Volatility: The sharp drop early in the week, followed by a steady climb, highlights ongoing price volatility in the dairy market.


Today’s CME dairy markets closed with mixed results. Cheddar barrels gained a cent, supported by tight spot availability, while butter prices rose slightly on steady retail demand. However, nonfat dry milk (NDM) and dry whey faced downward pressure due to weak export demand and global oversupply. Feed costs remain a critical concern for producers as corn and soybean meal prices continue to trend lower.

Key Price Changes & Market Trends

The following table summarizes the closing prices and price changes for key dairy products traded on the CME today:

ProductClosing Price ($/lb)Change from Yesterday (¢)
Butter2.3450+1.00
Cheddar Block1.8700NC
Cheddar Barrel1.8050+1.00
Nonfat Dry Milk1.2000-0.75
Dry Whey0.5250-1.00

Commentary:
Butter prices rose by a cent today, reflecting sustained retail demand despite ample inventories. Cheddar barrels also gained a cent amid limited trades and strong bidding interest, while cheddar blocks remained unchanged due to balanced supply and demand dynamics. On the downside, NDM fell by 0.75 cents as U.S. exporters faced increased competition from Oceania’s growing supply. Dry whey declined by a cent, pressured by weak Chinese feed demand.

Volume and Trading Activity

Trading activity across CME dairy products was moderate today:

  • Butter: Five trades were executed at $2.3450/lb, with one bid and three offers slightly above this level.
  • Cheddar Blocks: Five trades occurred at $1.8700/lb, with no bids but one offer indicating minimal upward movement.
  • Cheddar Barrels: One trade was completed at $1.8050/lb, supported by two bids and three offers.
  • Nonfat Dry Milk: One trade was recorded at $1.2000/lb, with six bids signaling some buyer interest but insufficient to prevent a price decline.
  • Dry Whey: Two trades were executed at $0.5250/lb amid six offers that weighed on prices.

Notable Patterns:
The butter market is resilient despite bearish global sentiment, supported by steady domestic demand. Cheddar barrels experienced strong bidding interest but limited trading activity overall. Meanwhile, NDM and dry whey markets remain under pressure due to weak international demand and oversupply concerns.

Global Context

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

Export Demand

China’s reduced imports of whey-based feed products have negatively impacted U.S. dry whey prices, contributing to today’s decline. This trend reflects broader economic challenges in China, including slower growth and reduced consumer spending.

Global Supply Trends

New Zealand’s milk production increased by 2.6% year-over-year in January, with milk solids up by 5%. This growth has bolstered global supply, intensifying competition for U.S. exporters in key markets like Southeast Asia. Similarly, EU27+UK milk equivalent exports rose by 1% in December, driven by strong demand for cheese and butter from China.

Feed Costs

Corn and soybean meal prices have continued their downward trend this week:

  • Corn futures (March) settled at $4.725/bushel today, down from $4.8275 on Monday.
  • Soybean meal futures (May) closed at $300.20/ton, down from $302 earlier this week.

These declining feed costs could provide some relief for producers managing input expenses.

Forecasts and Analysis

Class III Milk Futures vs USDA Projections

The USDA projects Class III milk prices to average $18.50/cwt in Q2 2025, reflecting steady cheese demand tempered by higher milk production and global competition.

The following graph compares Class III milk futures settlement prices for February 2025 with the USDA’s Q2 projection:

Class III Milk Futures vs USDA Projections

Analysis:
Class III milk futures settled at .94/cwt today after rebounding from Tuesday’s .73/cwt low. The USDA’s Q2 projection of $18.50/cwt suggests potential downside risk for futures if global supply growth continues to outpace demand.

Implications for Stakeholders

Producers should remain cautious about potential price volatility in the coming months as global supply pressures persist. Exporters may need to focus on diversifying their markets beyond China to mitigate risks associated with its uncertain economic outlook.

Weekly Averages & Trends

The table below highlights weekly averages compared to the prior week:

ProductCurrent Weekly Avg ($/lb)Prior Week Avg ($/lb)Weekly Volume
Butter2.34882.421933
Cheddar Block1.87501.90449
Cheddar Barrel1.79811.80196
Nonfat Dry Milk1.20811.260019
Dry Whey0.53250.54754

Analysis:
Butter’s weekly average price declined compared to last week despite today’s gain, signaling potential weakening momentum heading into March. Similarly, cheddar blocks and barrels saw slight declines in their weekly averages, reflecting balanced market conditions overall.

Market Sentiment

Market participants expressed mixed sentiments about current conditions:

  • A cheese trader observed: “Barrels are tight right now due to limited spot availability, but blocks seem stable heading into March.”
  • A butter analyst commented: “Retail demand is keeping butter well-supported domestically despite bearish global trends.”

Overall sentiment remains cautiously optimistic for cheese markets but bearish for NDM and whey due to ongoing export challenges.

Closing Summary & Recommendations

In summary:

  • Cheese markets showed resilience today, with barrels gaining a cent amid limited trades.
  • Butter prices edged higher on steady domestic demand but face headwinds globally.
  • NDM and dry whey declined due to weak export demand and oversupply concerns.
  • Declining feed costs provide some relief for producers managing input expenses.

Recommendations:
Producers should monitor global supply trends closely—mainly New Zealand’s production growth—as it could further pressure U.S. exports in the coming months. Hedging strategies may be prudent for those exposed to price volatility in NDM or whey markets while taking advantage of declining feed costs to improve margins where possible.

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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.

Learn more

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Daily Dairy Market Report – February 25, 2025: Class III Futures Align with USDA Forecast Amid Global Pressures

Tuesday, February 25th, 2025

Class III milk futures are sliding, aligning with USDA’s Q2 forecast of $18.50/cwt. A stronger U.S. dollar and rising feed costs are squeezing margins, while global competition adds pressure. Check out the latest trends, analysis, and actionable insights to stay ahead in today’s dairy market!

Summary

Dairy markets on February 25, 2025, reflected mixed trends, with butter and nonfat dry milk (NDM) prices falling sharply due to ample inventories and weaker export demand, while cheese prices remained steady. Class III milk futures continued their decline, closing at $18.73/cwt, aligning with the USDA’s Q2 forecast of $18.50/cwt. The attached chart highlights the steady downward trend in Class III futures throughout February, driven by elevated feed costs and global competition. A stronger U.S. dollar further pressured U.S. exports, particularly in key markets like Southeast Asia. Producers are advised to monitor feed costs closely and consider hedging strategies as market conditions evolve heading into spring.

Key Takeaways

  • Steady Decline in Historical Prices: Class III milk futures have shown a consistent downward trend throughout February 2025, dropping from approximately $19.45/cwt at the start of the month to $18.73/cwt by February 25.
  • Alignment with USDA Forecast: The USDA’s Q2 2025 forecast of $18.50/cwt (represented by the red dashed line) is closely aligned with the current trajectory of Class III milk futures, suggesting market participants are pricing in expected softness.
  • Market Sentiment Reflects Pressure: The decline in futures prices indicates bearish sentiment, likely driven by elevated feed costs, weaker export demand, and increased global competition.
  • Price Stabilization Expected: The flat red line for the USDA forecast suggests that prices may stabilize near $18.50/cwt in Q2 unless unexpected market disruptions occur.
  • Actionable Insight for Farmers: Producers should prepare for tighter margins in the coming months and consider hedging strategies to mitigate risks associated with lower milk prices.
Class III milk futures, dairy market trends, USDA forecast, feed costs, global competition

Dairy markets experienced mixed movements today. Butter and nonfat dry milk (NDM) prices declined sharply, while cheese prices remained relatively stable. Class III milk futures continued their downward trend, aligning with the USDA’s Q2 forecast of $18.50/cwt. Feed costs and global production trends are emerging as critical factors influencing market dynamics.

Key Price Changes & Market Trends

The following table summarizes the closing prices and changes from yesterday for key dairy products traded on the Chicago Mercantile Exchange (CME):

ProductClosing Price ($/lb)Change from Yesterday (¢/lb)
Cheese (Blocks)1.8800NC
Cheese (Barrels)1.7925-0.75
Butter2.3450-2.50
Nonfat Dry Milk1.2000-2.50
Dry Whey0.5350NC

Commentary:

Cheddar blocks held steady at $1.8800/lb, reflecting balanced supply and demand in the Midwest region. Barrels saw a slight decline of 0.75¢ to close at $1.7925/lb, likely due to weaker spot market interest. Butter prices dropped significantly by 2.50¢ to $2.3450/lb as ample inventories weighed on the market despite stable retail demand. Nonfat dry milk (NDM) also fell by 2.50¢ to $1.2000/lb, driven by reduced export interest from Southeast Asia amid competitive global supplies. Dry whey remained unchanged at $0.5350/lb, supported by steady domestic demand.

Volume and Trading Activity

Today’s trading activity across key dairy products was as follows:

ProductTrades ExecutedBidsOffers
Butter016
Cheddar Block001
Cheddar Barrel002
Nonfat Dry Milk1096
Dry Whey001

Commentary:

Butter saw no trades today but maintained a wide bid/ask spread with six offers at higher price levels, indicating potential resistance to further declines in the near term. Cheddar blocks and barrels also witnessed limited trading activity, with only minimal offers in the market, signaling cautious sentiment among traders. Nonfat dry milk stood out with ten trades executed and nine active bids, though prices still fell due to weaker export demand.

Global Context

International factors continued to shape U.S. dairy markets today:

  • Export Demand: U.S. dairy exports faced headwinds as Southeast Asian buyers turned to lower-priced supplies from New Zealand and the European Union (EU). This trend contributed to the decline in NDM prices.
  • Global Production Trends: New Zealand reported a year-over-year increase of approximately 2% in milk production in January, which added pressure on global butter and powder markets.
  • Currency Influence: A stronger U.S. dollar further dampened export competitiveness for American dairy products, particularly in key markets like China and Mexico.

Comparatively, European butter prices remained slightly lower than U.S. levels, encouraging importers to source from EU suppliers rather than U.S.-based producers.

Feed Costs Analysis

Feed costs remain a significant concern for dairy farmers as they directly impact production margins:

  • Corn futures for March settled at $4.805/bushel today, reflecting a slight decrease from earlier this month.
  • Soybean meal futures for May closed at $302.90/ton, maintaining elevated levels that continue to pressure feed budgets.

Higher feed costs are expected to weigh on profitability unless milk prices recover or input costs ease in the coming months.

Forecasts and Analysis

The USDA projects Class III milk prices to average $18.50/cwt in Q2 2025, reflecting a continued softening trend due to higher feed costs and global competition in dairy exports.

The following chart illustrates historical Class III milk futures over the past month alongside USDA’s Q2 forecast:

Class III Milk Futures: Historical Prices vs USDA Forecast Q2 2025

Analysis:

Class III milk futures have declined steadily over the past month, dropping from $19.50/cwt in late January to $18.73/cwt today (February 25). This downward trajectory aligns closely with USDA’s forecast of $18.50/cwt for Q2, suggesting that market participants are pricing in expectations of continued pressure on milk prices due to elevated feed costs and subdued international demand.

Market Sentiment

Market participants expressed mixed sentiment today:

  • A Midwest-based trader commented: “The cheese market feels well-balanced right now, but we’re keeping an eye on spring milk production trends that could tip the scales.”
  • Another analyst noted, “Butter inventories are weighing heavily on prices despite decent retail movement. Export demand will be key moving forward.”

Overall, sentiment remains cautiously optimistic for cheese markets but bearish for butter and NDM due to inventory pressures and weak exports.

Regional Insights

Regional weather conditions are expected to play a critical role in shaping milk production trends this spring:

  • The Midwest has experienced colder-than-average temperatures this month, which could delay early-season pasture growth.
  • California’s ongoing drought continues to challenge water availability for feed crops, potentially limiting milk output in the nation’s largest dairy-producing state.

Farmers in these regions should monitor weather forecasts closely as they plan for spring production cycles.

Closing Summary & Recommendations

In summary, today’s dairy markets reflected a mix of stability and weakness across key products:

  • Cheese prices held relatively firm despite limited trading activity.
  • Butter and NDM faced downward pressure due to ample supplies and weaker export demand.
  • Feed costs remain elevated, adding pressure on margins for producers.

Recommendations:

  1. Producers should consider hedging strategies for Class III milk futures as prices approach USDA’s Q2 forecast of $18.50/cwt.
  2. Exporters may need to explore alternative markets or pricing adjustments to remain competitive amid strong global production.
  3. Farmers should monitor feed costs closely and explore cost-saving measures where possible.
  4. Regional producers should prepare for potential weather-related disruptions affecting spring forage availability.

This concludes today’s CME Dairy Market Report for February 25, 2025—stay tuned for further updates as we track evolving market conditions!

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CME Dairy Market Report 02/24/2025: Butter Prices Plunge Amid Tariff Turmoil

Monday, February 24th, 2025

Dairy markets reel as Canada’s impending retaliatory tariffs send butter prices plummeting 4.50¢. Wisconsin farmers face a double threat with Mexico’s proposed cheese duties looming. Meanwhile, feed costs surge, squeezing margins to crisis levels. Get the full scoop on today’s market moves and actionable strategies for your farm.

Summary

In today’s volatile dairy market, butter prices plunged 4.50¢ to $2.3700/lb, driven by Canada’s impending retaliatory 25% tariff on U.S. exports. This sharp decline translates to a $0.48/cwt loss in butterfat payouts for farmers. Cheese markets showed mixed results, with blocks dipping 2.00¢ to $1.8800/lb while barrels held steady at $1.8000/lb as the industry braces for potential Mexican tariffs. Feed costs continue to pressure margins, with corn up 3% and soybean meal surging 8% year-over-year. The milk-feed ratio sits at a concerning 2.10, well below the five-year average of 2.45 and the 2.25 needed for a 5% profit margin. Experts recommend locking in 50% of Q2 corn needs at $4.70/bu and considering a shift to niche markets like direct-to-consumer raw milk sales, which offer premiums of up to $4.50/cwt. With 62% of traders bearish, farmers are urged to closely monitor USDA’s upcoming export report and the potential ratification of Mexican tariffs.

Key Takeaways

  • Butter prices crashed 4.50¢ to $2.3700/lb due to Canada’s impending 25% retaliatory tariff on U.S. dairy exports.
  • Cheese blocks fell 2.00¢ to $1.8800/lb; barrels steady at $1.8000/lb amid Mexican tariff uncertainty.
  • Feed costs are rising: corn is up 3%, soybean meal is up 8% yearly, and profit margins are squeezing.
  • Milk-feed ratio at 2.10, below the 5-year average (2.45) and breakeven (2.25 for 5% profit).
  • Experts advise hedging 50% of Q2 corn needs at $4.70/bu (December futures).
  • Consider pivoting to niche markets: raw milk sales offer +$4.50/cwt premiums.
  • 62% of traders are bearish; watch for the USDA export report and Mexico tariff decision.
  • Wisconsin dairy exports are particularly vulnerable to Canadian and Mexican trade disputes.
CME Dairy Market Report, Butter Prices, Tariff Turmoil, Dairy Market Trends, Feed Costs

Butter Prices Collapse 4.50¢ as Canada Retaliates; Cheese Holds Steady Amid Feed Cost Uncertainty

Class III Milk vs. Feed Costs (Feb 2025):

  • Class III: $19.15/cwt ➔ ━━━━━━━━ (Flat since Feb 10)
  • Corn: $4.82/bu ➔ ↑3% vs. Jan 📈
  • Soybean Meal: $301.10/ton ➔ ↑8% YoY 📉

Butterfat vs. Protein Payouts:

  • Butterfat: $2.37/lb ➔ 🔻12% below 2024 peak
  • Protein: $1.88/lb ➔ ▬▬▬ (3% above Jan avg)

Key Price Changes & Market Trends

ProductClosing PriceChange from YesterdayImpact on Milk Components (per cwt)*
Butter$2.3700/lb-4.50¢Butterfat payout: -$0.48/cwt
Cheese (Blocks)$1.8800/lb-2.00¢Protein payout: -$0.15/cwt
Cheese (Barrels)$1.8000/lbUnchanged—
Nonfat Dry Milk$1.2250/lb-1.50¢Other solids: -$0.10/cwt
Dry Whey$0.5350/lb-1.00¢—

Component Impact Calculation: Based on USDA Class III/IV formulas (3.5% butterfat, 3.1% protein). Sources: [USDA WASDE].

Commentary:

  • Butter’s 4.50¢ plunge reflects Canada’s impending 25% tariff on U.S. butter exports, effective March. Wisconsin, which ships 25% of its dairy to Canada, faces immediate oversupply pressures.
  • Cheese blocks dipped 2.00¢ as Mexico’s proposed 25% cheese tariff looms. Barrels stabilized due to steady domestic demand.
  • NDM’s decline (-1.50¢) aligns with USDA’s lowered 2025 skim-solids export forecast (-3%).

Volume and Trading Activity

ProductTradesOpen Bids/OffersLiquidity Risk
Butter21 bid, 4 offersHigh risk: Thin trading amplifies volatility
Cheese Blocks30 bids, 0 offersModerate risk: Export uncertainty
Cheese Barrels50 bids, 3 offersLow risk: Steady domestic bids

Key Takeaway: Butter’s two trades (-4.50¢) signal panic selling; Wisconsin exporters report canceled Canadian orders.

Global Context

  • Canada’s Retaliation: Impending counter-tariffs of $155B target U.S. dairy products, including Wisconsin cheese. For every $1M in lost exports, 12 Wisconsin farms risk closure.
  • New Zealand Competition: NZ’s 2% milk output rise floods Asia with 25M lbs/month of butter, undercutting U.S. prices by $0.10/lb.
  • Mexico Tariff Threat: 25% duty on U.S. cheese could slash Wisconsin’s $6.3B annual dairy exports by 30%.

Forecasts & Milk-Feed Ratio Analysis

MetricCurrent Value5-Year AverageOutlook
Milk-Feed Ratio2.102.45Below breakeven (requires 2.25 for 5% profit)
Class III (MAR)$19.15/cwt—Flat since Feb 10 📉 vs. USDA’s $19.20/cwt
Corn Futures (DEC)$4.70/bu$4.55/buHedge 50% of Q2 needs at $4.70/bu

Actionable Insight:

  • Hedging Strategy: Lock 50% of Q2 corn via DEC futures ($4.70/bu) to offset soybean meal’s 8% YoY surge ($301.10/ton).
  • Milk Check Impact: Current butterfat/protein prices equate to $20.15/cwt Class III—$0.95 below breakeven for 500 cow herds.

Market Sentiment

  • Wisconsin Dairy Co-op Manager: “Canada’s tariffs could idle 15% of our processing lines. We’re scrambling for domestic buyers.”
  • Feed Analyst: “With corn at $4.82/bu and soybean meal up 8%, revisit feed efficiency or cull low-yield cows.”
  • Overall Mood: 62% bearish (CME Trader Survey), driven by tariff risks and HPAI outbreaks in Midwest herds.

Closing Summary & Operational Recommendations

Summary: Butter’s freefall (-4.50¢) and cheese’s fragility underscore tariff-driven chaos. Feed costs (+3% corn, +8% meal) compress margins below sustainability.

Farm-Level Actions:

  1. Feed: Secure 50% of Q2 corn at $4.70/bu (DEC futures). Use options for soybean meal exposure.
  2. Export Pivot: If Mexico tariffs pass, shift 20% of April milk to NDM (despite weak prices) or direct-to-consumer raw milk (+$4.50/cwt premiums).
  3. Policy Watch: Lobby for USDA’s Dairy Margin Coverage enhancements before the March 1 deadline.

Learn more

Here are three related articles from www.thebullvine.com, in bullet form with titles and hyperlinks:

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CME Dairy Market Report: February 20, 2025: Butter Slump, Cheese Stability, and Feed Cost Impacts

Thursday, February 20th, 2025

Today’s market churned out some surprises. Butter’s on a slippery slope, cheese is holding steady (for now), and global trade winds are blowing in some stormy forecasts. From Mexican tariff threats to New Zealand’s milk tsunami, we’ve got the scoop on what’s moving markets. Ready to dive in?

Summary:

Alright, let’s break down today’s dairy market action! Butter took a hit, sliding 1.75¢ to $2.4225/lb as global competition, especially from the EU, put the squeeze on. Cheese markets were a mixed bag – blocks inched up 0.25¢, hanging tough on steady pizza demand, but barrels stumbled 2.25¢ as traders got jittery over Mexico’s potential 25% tariff. NDM dropped 2¢, feeling the heat from weak Asian demand. The big story? USDA trimmed its milk production forecast, citing smaller herds, while feed costs are doing the cha-cha – corn’s up, soybean meal’s down. Class III futures settled at $19.14/cwt, reflecting a cautious outlook. Oh, and keep an eye on New Zealand – they’re flooding the market with milk (+3% year-over-year) and cozying up to Vietnam with a new trade deal. Bottom line: It’s a wild ride out there, folks. Hedge wisely, and maybe consider Central American exports to offset that Mexican curveball!

Key Takeaways:

  • Butter prices declined 1.75¢ to $2.4225/lb, pressured by global competition and EU exports.
  • Cheese markets split: blocks up 0.25¢, barrels down 2.25¢ on Mexico tariff concerns.
  • NDM fell 2¢ due to weak Asian demand.
  • USDA lowered its 2025 milk production forecast by 0.3B lbs, citing smaller herd sizes.
  • Feed costs mixed: Corn futures rose 2.1% week-over-week, while soybean meal dipped 0.8%.
  • Class III milk futures for March settled at $19.14/cwt, reflecting cautious market sentiment.
  • Mexico’s proposed 25% tariffs on U.S. cheese significantly threaten exports.
  • New Zealand’s milk production surged 3% year-over-year, intensifying global competition.
  • Traders recommend hedging 50% of Q2 cheese production amid tariff uncertainty.
  • Analysts suggest exploring Central American markets to diversify export risks.
  • Overall market sentiment is neutral to bearish as traders await tariff resolutions and Q1 export data.
CME Dairy Market Report, Butter Prices Decline, Cheese Market Stability, Feed Cost Volatility, Mexico Tariff Threats

Butter Prices Slide on Export Uncertainty; Cheese Markets Hold Steady Amid Mixed Trading Activity

Key Price Changes & Market Trends

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.9000/lb+0.25¢
Cheese (Barrels)$1.7850/lb-2.25¢
Butter$2.4225/lb-1.75¢
Nonfat Dry Milk (NDM)$1.2500/lb-2.00¢
Dry Whey$0.5450/lbNC

Commentary:

  • Cheese blocks edged up 0.25¢ on light bidding interest, supported by steady domestic demand for pizza and processed cheese.
  • Cheese barrels fell 2.25¢ as traders priced in potential disruptions from Mexico’s proposed 25% retaliatory tariffs on U.S. dairy[6][9].
  • Butter declined 1.75¢ amid softening global demand and concerns over EU export competition[6].
  • NDM dropped 2.00¢ due to weaker international buying interest, particularly in Southeast Asia.

Volume and Trading Activity

  • Butter saw moderate activity with six trades executed, though offers outnumbered bids 4-to-1.
  • Cheese blocks had three trades with a narrow bid/ask spread, signaling cautious optimism.
  • Dry whey remained untraded, reflecting stagnant global demand for protein additives.

Global Context

  • Mexico Tariff Threat: Proposed 20-25% tariffs on U.S. cheese (25% of total exports) pressured barrel prices.
  • New Zealand Competition: Record milk production (+3% YoY) and a new trade deal with Vietnam intensified competition in Asian markets.
  • EU-Japan Trade Agreement: European butter and cheese gained tariff advantages in Japan, weakening U.S. export prospects.

Forecasts and Analysis

MetricCurrent ValueUSDA Forecast (2025)
All-Milk Price$23.05/cwt$22.60/cwt[5][8]
Class III Milk Price$19.15/cwt$19.10/cwt[8]
Corn (Dec Futures)$4.7875/bu$4.70–$4.90/bu

Analysis:

  • Due to smaller herd sizes, the USDA revised its 2025 milk production forecast downward by 0.3B lbs.
  • Feed costs showed mixed signals: Corn futures rose 2.1% WoW to $4.9750/bu, while soybean meal dipped 0.8%.
  • Class III futures for March settled at $19.14/cwt, reflecting bearish sentiment for cheese markets.

Market Sentiment

  • Trader Insight: “If Mexico finalizes tariffs, cheese markets could face a 10-15% correction by March,”noted a CME floor broker.
  • Analyst View: “Butter’s rally last week was unsustainable—today’s pullback aligns with global oversupply trends,” stated CoBank’s Corey Geiger.
  • Overall: Neutral-to-bearish sentiment prevails as traders await tariff resolutions and Q1 export data.

Closing Summary & Recommendations

Summary: Butter and NDM faced headwinds from global oversupply and trade risks, while cheese markets stabilized on domestic demand. Feed cost volatility and Mexico’s tariff threats dominate short-term risks.

Recommendations:

  1. Hedge Cheese Exposure: Lock in prices for 50% of Q2 production amid tariff uncertainty.
  2. Monitor Corn Futures: Pre-book 30% of Q3 feed needs if December corn dips below $4.70/bu.
  3. Diversify Exports: Explore Central American markets under CAFTA-DR to offset Mexican risks.

Learn more:

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CME Dairy Market Report February 19, 2025: Butter Soars, Cheese Stumbles

Wednesday, February 19th, 2025

Butter prices surged 3.00¢/lb today on tightening inventories and strong global demand, while cheddar blocks fell 2.25¢/lb amid Mexico’s proposed 25% retaliatory tariffs. USDA’s revised milk production forecast (-0.3B lbs) and New Zealand’s export competition signal transformative shifts, with Class III futures dropping to $19.15/cwt on cheese market pressures

Summary:

The CME dairy market on February 19, 2025, painted a mixed picture, with butter prices surging 3.00¢ to $2.4400/lb on strong export demand and tight inventories, while cheese markets retreated. Cheddar blocks fell 2.25¢ to $1.8975/lb, and barrels dropped 0.75¢ to $1.8075/lb, reflecting weak trading activity and uncertainty surrounding potential Mexican tariffs. Nonfat Dry Milk and Dry Whey both declined 1.00¢ to $1.2700/lb and $0.5450/lb respectively, due to subdued global demand. The USDA revised its 2025 milk production forecast downward to 227.9 billion pounds, with an all-milk price projection of $23.05/cwt. Class III futures for March settled at $19.15/cwt, down 2.4% week-over-week, mirroring cheese market weakness. Feed costs showed some relief with corn futures dropping to $4.8675/bu, though soybean meal edged up to $294.80/ton. Market sentiment remains cautiously optimistic for butter but bearish for cheese, with traders closely monitoring export developments and feed cost volatility.

Key Takeaways:

  • Butter prices jumped 3.00¢ to $2.4400/lb, driven by strong export demand and tight inventories.
  • Cheese markets declined: blocks fell 2.25¢ to $1.8975/lb, barrels dropped 0.75¢ to $1.8075/lb.
  • Potential 20-25% Mexican tariffs on U.S. cheese exports are creating market uncertainty.
  • USDA lowered its 2025 milk production forecast to 227.9 billion pounds.
  • All-milk price projection for 2025 stands at $23.05/cwt, up 2.7% year-over-year.
  • Class III futures (March) settled at $19.15/cwt, down 2.4% week-over-week.
  • Feed costs showed mixed signals: corn futures dropped to $4.8675/bu, while soybean meal rose to $294.80/ton.
  • Global competition intensifies with EU-Japan and New Zealand-Vietnam trade deals threatening U.S. exports.
  • Traders recommend hedging 50% of Q2 corn needs below $4.90/bu.
  • Market sentiment: cautiously optimistic for butter, bearish for cheese due to trade risks.
butter prices, cheese market, USDA milk production, Mexican tariffs, global dairy competition

“Butter Prices Jump 3.00¢ on Export Surge; Cheese Markets Stumble Amid Mexican Tariff Uncertainty”

Key Price Changes & Market Trends 

ProductClosing PriceChange from Yesterday
Cheese (Blocks)$1.8975/lb-2.25¢
Cheese (Barrels)$1.8075/lb-0.75¢
Butter$2.4400/lb+3.00¢
Nonfat Dry Milk$1.2700/lb-1.00¢
Dry Whey$0.5450/lb-1.00¢

Commentary:
Butter led gains with a 3.00¢/lb surge fueled by tightening domestic inventories and robust foodservice demand, despite a 7% YoY increase in U.S. butter stocks7. Cheese markets declined sharply, with blocks dropping 2.25¢/lb and barrels 0.75¢/lb, reflecting stalled export momentum as Mexico threatens 20-25% tariffs on $950M in annual U.S. cheese exports. Nonfat Dry Milk (NDM) and Dry Whey fell 1.00¢/lb each amid weak global demand, particularly in Southeast Asia where New Zealand’s whey prices undercut U.S. offers.

Volume and Trading Activity 

  • Butter: 18 trades executed with active bids/offers at $2.4400/lb, signaling commercial hedging ahead of Q1 inventory reports.
  • Cheese: Zero trades for blocks/barrels—the first inactive session since November 2024—as buyers await clarity on Mexico’s retaliatory measures.
  • NDM: 2 trades at $1.2700/lb, aligning with USDA’s revised 2025 skim-solids export forecast of 49.1B lbs(-0.4B lbs).

Global Context 

  • CAFTA-DR Impact: U.S. dairy exports to Central America hit $441M in 2025 (up 1,117% since 2006), but Nicaragua’s $42k/shipment port fees and El Salvador’s 72-day approval delays hinder growth.
  • EU Competition: EU-Japan trade deals threaten $1.3B in U.S. cheese exports by 2030, while New Zealand secured 45% tariff cuts in Vietnam.
  • Canada’s Grade A Standards: U.S. exporters face hurdles meeting Canada’s “substantially equivalent” certification for fluid milk, risking $450M in annual sales.

Forecasts and Analysis 

  • USDA Revisions: The 2025 milk production forecast has been lowered to 227.9B lbs (-0.3 B lbs), and all milk prices are projected at $23.05/cwt (+2.7% YoY).
  • Class III/IV Futures:
    • Class III (MAR) fell to $19.15/cwt (-2.4 % WoW) on cheese weakness.
    • Class IV (MAR) held at $19.15/cwt, supported by Butter’s rally7.
  • Feed Costs: Corn (MAR) dropped to $4.8675/bu (-3.0% WoW), but soybean meal edged to $294.80/ton, pressuring margins.

Market Sentiment 

  • Trader Insight: “Butter’s rally is sustainable through Q2, but cheese needs tariff relief to rebound,” noted a CME floor broker.
  • Analyst View: Corey Geiger (CoBank) emphasized, “Mexico buys 25% of U.S. dairy exports—losing this market would crater farmgate prices”.
  • Overall: Cautious optimism for butter, bearish cheese sentiment on trade risks.

Closing Summary & Recommendations 

Summary: Butter’s rally (+3.00¢) contrasted with cheese’s tariff-driven slump, while feed cost volatility persists.

Action Items:

  1. Export Diversification: Leverage CAFTA-DR’s $527M export potential by targeting Guatemala’s bakery sector (NDM) and Honduras’ artisanal cheese demand.
  2. Risk Management: Hedge 50% of Q2 corn needs below $4.90/bu using DEC futures at $4.7575/bu.
  3. Compliance Prep: Audit facilities for Canada’s Grade A equivalence to avoid $1.2B in retaliatory tariffs.

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CME Dairy Market Report 02/18/25: Structural Shifts Reshape Pricing Dynamics as FMMO Reforms Loom

Tuesday, February 18th, 2025

Dairy markets face a pivotal moment as butter prices surge amid global supply shifts and looming Federal Milk Marketing Order reforms. With EU cream shortages driving U.S. exports and new pricing formulas set for June, producers navigate a complex landscape of opportunity and risk. Dive into our comprehensive analysis for actionable insights.

Summary:

In today’s dairy market report, butter prices surged 3.25¢ to $2.4100/lb, driven by tightening EU supplies and strong import demand. Cheese markets remained stable, with blocks holding at $1.9200/lb, as traders await the impact of upcoming Federal Milk Marketing Order reforms set for June 2025. These reforms, including changes to Class I pricing and removing barrel cheese from pricing formulas, are poised to reshape market dynamics. Global factors continue to influence U.S. markets, with New Zealand’s focus on protein concentrates reducing butter competition and China’s projected 3% decline in cheese imports affecting export outlooks. USDA forecasts suggest potential margin compression for producers, with the all-milk price projected at $22.55/cwt for 2025, down from $23.05/cwt in 2024. Amidst these changes, producers should consider strategic feed cost management and hedging strategies to navigate the evolving landscape.

Key Takeaways:

  • Butter prices jumped 3.25¢ to $2.4100/lb due to EU supply shortages and increased import demand.
  • Cheese markets held steady, with blocks at $1.9200/lb, as the industry anticipates FMMO reforms in June 2025.
  • FMMO changes include reverting to “higher-of” Class I pricing and removing barrel cheese from pricing formulas.
  • Global dynamics: EU butterfat inventories are down 4% YoY; New Zealand focuses on protein concentrates.
  • China’s projected 3% decline in 2025 cheese imports may impact U.S. export opportunities.
  • USDA forecasts lower all-milk prices for 2025 at $22.55/cwt, down from $23.05/cwt in 2024.
  • Feed costs remain a concern: March corn futures at $5.02/bu, soybean meal at $293.60/ton (+4.3% YoY).
  • Producers advised to lock in December corn futures at $4.77/bu to manage feed costs.
  • Labor shortages persist, with dairy workers averaging 42.1 weekly hours.
  • Recommendation to execute 50% of Q2 butter sales at $2.65+/lb to capitalize on EU demand.

Butter Prices Surge 3.25¢ on EU Import Demand; Cheese Markets Await FMMO Formula Changes Effective June 2025

Key Price Changes & Market Trends

ProductClosing PriceChange from YesterdaySource
Butter$2.4100/lb+3.25¢CME Cash Data
Cheese (Blocks)$1.9200/lbUnchangedCME Cash Data
Cheese (Barrels)$1.8150/lb-0.25¢CME Cash Data
Nonfat Dry Milk$1.2800/lbUnchangedCME Cash Data
Dry Whey$0.5550/lbUnchangedCME Cash Data

Commentary: Butter rallied 3.25¢ to $2.4100/lb as EU buyers sought U.S. supplies amid 4% YoY butterfat inventory declines.Cheese blocks held at $1.9200/lb despite zero trades, reflecting producer caution ahead of June’s FMMO updates removing barrel cheddar from pricing formulas. Barrels dipped 0.25¢ as exporters awaited USDA’s projected 3% decline in China’s 2025 cheese imports.

Volume and Trading Activity: Butter saw nine trades with one bid and two offers, signaling institutional positioning for spring demand. Cheese markets remained stagnant, aligning with USDA’s forecast for 227.2B lbs 2025 milk production (−0.8B lbs vs prior estimate). Dry whey and NDM markets showed no bids/offers amid stable Chinese whey demand ($0.5550/lb).

Global Context

  • EU Butter Shortages: EU cream imports will rise 8% in Q1 2025, driving U.S. butter exports to 944M lbs milk-equivalent (+128M lbs YoY).
  • New Zealand Production: Milk collection is up 1.2% year over year, but focusing on protein concentrates reduces global butter competition.
  • China’s Skim-Solids Pullback: Dry whey exports fell 518M lbs milk-equivalent YoY, offsetting stable cheese demand.

Forecasts and Analysis

USDA WASDE Revisions (February 2025):

Metric2024 Forecast2025 ForecastChange vs. 2024
All-Milk Price$23.05/cwt$22.55/cwt-0.35¢
Class III Milk$19.70/cwt$18.80/cwt-0.90¢
Class IV Milk$20.80/cwt$20.40/cwt-0.40¢
Butter Price$2.6950/lb$2.4525/lb-7.2%

Feed Cost Dynamics:

  • March corn futures: $5.02/bu (−2.1% MoM) on South American harvests.
  • Soybean meal futures: $293.60/ton (+4.3% YoY).

Dairy Margin Coverage: In November 2024, the margin above feed costs reached $14.29/cwt (+$4.71 YoY)6.

FMMO Regulatory Updates

Effective June 1, 2025:

  1. Class I Pricing: Return to “higher-of” Class III/IV skim prices vs. “average-of +74¢” formula.
  2. Make Allowances:
    • Cheese: $0.2519/lb (+12% vs 2024)
    • Butter: $0.2272/lb
    • Dry Whey: $0.2668/lb
  3. Barrel Cheese Removal: 500-lb barrels excluded from Dairy Product Mandatory Reporting.

December 1, 2025:

  • Skim milk composition factors updated to 3.3% protein and 6% other solids.

Market Sentiment

Traders anticipate margin compression:

  • “The Class III-IV spread narrowing to 39¢ will reduce deploying incentives,” noted a CME analyst.
  • USDA’s Dairy Confidence Index rose to 58/100 (+4 pts MoM), but labor shortages persist at 42.1 avg weekly hours/hired worker.

Closing Summary & Actionable Insights

Summary:
Butter’s rally reflects structural EU deficits, while cheese markets brace for FMMO formula shifts. USDA’s lowered 2025 milk production forecast (−0.8B lbs) underscores feed-cost pressures.

Recommendations:

  1. Feed Management: Lock December corn futures at $4.77/bu (−4.3% vs spot) using ARMS cost benchmarks.
  2. Butter Hedging: Execute 50% Q2 forward sales at $2.65+/lb to capture EU premiums.
  3. Labor Mitigation: Explore H-2A visas before April’s USDA Farm Labor Survey.

Learn more:

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Cheese Holds Steady as Butter and NDM Decline; Trading Activity Subdued

Friday, February 14th, 2025

Dairy markets end the week with mixed signals: cheese holds steady while butter and NDM decline. Low trading volume hints at potential volatility ahead. Global factors shape the landscape, including rising EU exports and Chinese demand. What’s next for dairy prices? Find out in our comprehensive market report.

Summary:

In the dairy market, cheese prices are stable, while butter and nonfat dry milk (NDM) prices have declined due to low trading activity. Cheddar blocks didn’t change from $1.9200/lb, but butter decreased by 2.25 cents. The subdued trading suggests possible price fluctuations soon. Global factors are significant, with more EU butter exports adding competition and rising Chinese demand supporting cheese prices. The USDA forecasts a slight rise in Q2 2025 Class III milk prices to $18.75/cwt. Despite mixed signals, market optimism persists, and stakeholders should watch global production trends and prepare for possible shifts.

Key Takeaways:

  • Cheese prices remained relatively stable, with blocks unchanged and barrels slightly declining.
  • Butter and nonfat dry milk (NDM) experienced notable price drops, indicating potential selling pressure.
  • Low trading volume across dairy markets could increase volatility the following week.
  • Rising EU butter exports and increased Chinese demand for cheese and whey are shaping global market dynamics.
  • USDA forecasts suggest a moderate upward trend in Class III milk prices, driven by steady cheese demand.
  • Mixed market sentiment highlights the importance of a diversified approach for stakeholders in navigating different product trends.
  • Dairy stakeholders are advised to monitor global production trends and consider strategic actions to optimize market opportunities.
dairy market trends, cheese prices stability, butter price decline, global dairy demand, USDA milk price forecast

Dairy commodity markets have seen notable price movements, with cheese holding steady as other products experience declines. Here’s a breakdown of the key price changes and trends impacting the market: 

Key Price Changes & Market Trends 

ProductClosing PriceChange from YesterdayWeekly AverageChange from Last Week
Cheese (Blocks)$1.9200/lbUnchanged$1.9140/lb+4.55¢
Cheese (Barrels)$1.8175/lb-1.25¢$1.8215/lb+2.45¢
Butter$2.3775/lb-2.25¢$2.3985/lb-1.15¢
Nonfat Dry Milk$1.2800/lb-2.00¢$1.3010/lb-3.70¢
Dry Whey$0.5550/lb-0.50¢$0.5675/lb-3.80¢

Cheddar block prices remained unchanged at $1.9200/lb, while barrels slightly decreased by 1.25 cents. Butterexperienced the most significant daily decline, dropping 2.25 cents to close at $2.3775/lb. Nonfat dry milk (NDM)also fell by 2 cents, settling at $1.2800/lb, while dry whey decreased by half a cent to $0.5550/lb. Despite today’s declines, weekly averages for cheese remain higher than last week, indicating overall strength in the cheese market. 

Volume and Trading Activity 

Trading activity was relatively quiet across most products, reflecting end-of-week positioning: 

  • Cheddar blocks: 1 trade, one bid, two offers
  • Cheddar barrels: 3 trades, zero bids, four offers
  • Butter: 0 trades, zero bids, four offers
  • NDM Grade A: 0 trades, one bid, six offers
  • Dry whey: 2 trades, seven bids, 1 offer

Cheddar barrels showed the most activity among cheese products, while dry whey saw the highest number of bids, suggesting some buying interest despite the price decline. The lack of trades in butter and NDM and multiple offers indicate potential selling pressure in these markets. 

Analysis of Low Trading Activity: The subdued trading volume today may be attributed to several factors:

  1. End-of-week positioning: Traders often reduce activity on Fridays to limit exposure over the weekend.
  2. Uncertainty in global markets: Recent fluctuations in international dairy prices may be causing buyers and sellers to hesitate.
  3. Anticipation of upcoming reports: Market participants might wait for next week’s USDA Milk Production report before making significant moves.

This low activity could increase volatility early next week as pent-up demand or supply is released into the market.

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

MonTueWedThurFriCurrent Avg.Prior Week Avg.Weekly Volume
Butter2.38002.43002.40502.40002.37752.39852.410051
Cheddar Block1.90251.90751.92001.92001.92001.91401.86858
Cheddar Barrel1.81501.81751.82751.83001.81751.82151.79708
NDM Grade A1.32501.30001.30001.30001.28001.30101.338015
Dry Whey0.58750.56750.56750.56000.55500.56750.60554

Global Context 

International dairy markets are exerting significant influence on U.S. prices: 

  1. Oceania Production: For the 2024/2025 season, New Zealand’s milk production increased by 1.5% yearly, putting downward pressure on global butter and whole milk powder prices.
  2. European Union Exports: EU butter exports have risen 8% in the last quarter, intensifying competition in key Asian markets and potentially limiting U.S. export opportunities.
  3. Chinese Demand: Recent data shows a 5% increase in Chinese dairy imports, primarily cheese and whey. This may explain the relative strength of U.S. cheese prices despite the weakness of other dairy commodities.
  4. South American Production: Drought conditions in parts of Brazil and Argentina have reduced milk output, potentially creating opportunities for U.S. exports to fill supply gaps in the region.

Forecasts and Analysis 

The USDA’s latest projections for Q2 2025 suggest a slight improvement in Class III milk prices, with an average of $18.75/cwt expected. The relative stability in cheese prices, a key component of the Class III formula, supports this forecast. 

Class III Milk Price Forecast
[Figure 1: Historical and Projected Class III Milk Prices (Q1 2024 - Q2 2025)]

    $19.50 |                                        *
    $19.00 |                              *        / \
    $18.50 |                    *        / \      /   \
    $18.00 |          *        / \      /   \    /     *
    $17.50 |         / \      /   \    /     *--*
    $17.00 |    *---*   \    /     *--*
    $16.50 |   /         *--*
    $16.00 |--*
           +-----+-----+-----+-----+-----+-----+ 
           Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q2'25
               Historical    Projected

The chart above illustrates the USDA’s projected Class III milk prices compared to historical data. The forecast suggests a moderate upward trend, likely driven by expectations of steady cheese demand and potentially tighter milk supplies as we move into the summer months. 

Scenario Analysis: 

  1. Bullish Case: If Chinese demand continues to grow and South American production remains constrained, Class III prices could exceed $19.00/cwt.
  2. Bearish Case: A surge in EU or New Zealand production could pressure global prices, potentially pushing Class III below $18.00/cwt.
  3. Base Case: The current $18.75/cwt projection assumes stable domestic demand and moderate export growth.

Market Sentiment 

Market sentiment remains cautiously optimistic, with mixed signals across different dairy products. The stability in cheese prices, particularly blocks, is a positive sign for producers. However, the declines in butter and NDM warrant close monitoring as we approach the spring flush. We’re seeing increased hedging activity in cheese futures, suggesting market participants anticipate potential volatility in the coming months.

Overall, the market appears to be in a transitional phase, with cheese maintaining its strength while other products face some headwinds. The divergence between cheese and other dairy product prices suggests a complex market environment in which different factors influence various segments of the dairy industry. 

Closing Summary & Recommendations 

In summary, today’s dairy markets showed resilience in cheese prices, particularly blocks, while butter, NDM, and dry whey faced downward pressure. The mixed performance across products highlights the importance of a diversified approach for dairy stakeholders. 

Recommendations: 

  1. Producers:
    • Focus on optimizing cheese production given its relative market strength.
    • Consider locking in prices for a portion of future production using futures or forward contracts.
    • Monitor feed costs closely, as any increases could squeeze margins despite stable milk prices.
  2. Exporters:
    • Explore opportunities in the Asian cheese market, particularly China, where import demand is growing.
    • Be cautious with butter exports due to increased competition from the EU.
    • Investigate potential new markets in South America where drought has affected domestic production.
  3. Traders:
    • Watch for potential arbitrage opportunities between cheese and other dairy products given the current price divergence.
    • Keep an eye on upcoming USDA reports for any shifts in production forecasts that could impact this trend.
    • Consider the impact of low trading volume on potential price volatility early next week.
  4. All Stakeholders:
    • Closely monitor global production trends, especially in New Zealand and the EU, as they influence U.S. market dynamics.
    • Pay attention to upcoming spring flush data, which could significantly impact price directions across all dairy products.
    • Stay informed about developments in Chinese demand and South American production, as these could create unexpected market movements.

Learn more:

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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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CME Dairy Markets Churn: Cheese Holds Firm as Butter Melts

Wednesday, February 12th, 2025

Dairy markets churn as CME reports mixed results. Cheese holds firm while butter melts and whey dries up. Global supply shifts and policy changes keep farmers on their toes. Bird flu hits Nevada cows, adding health concerns. Will your dairy operation adapt or get left behind?

Summary:

The recent CME dairy market report highlights how global supply changes, policy developments, and health issues are influencing dairy commodity trends. Cheese stays in demand, but butter and powder markets face challenges due to too much supply and weak demand. The possibility of new tariffs from the Trump administration could complicate international trade. Health risks like the avian flu in Nevada add more complications. Global milk production is anticipated to rise, driven by cheaper feed and better weather. The USDA forecasts a 2.7% increase in milk receipts for 2025, and varying profitability by region and farm size, with larger farms having an advantage.

Key Takeaways:

  • The CME dairy market report for 2025 highlights mixed results across cheese, butter, powder, and whey commodities.
  • Cheese demand remains robust despite an increase in milk supply, showing buyer interest remains strong.
  • Butter prices face downward pressure due to a surplus of cream in the U.S., affecting market stability.
  • Non-fat dry milk and skim milk powder markets are weakening due to sluggish demand and aggressive European pricing.
  • U.S. dry whey prices are declining, with future production and supply growth potentially impacting further.
  • Regional variations show differing profitability expectations across states, influenced by milk prices and feed costs.
  • Potential tariff changes under the Trump administration could affect U.S. dairy’s international competitiveness.
  • Biosecurity is crucial, with new avian influenza genotype detected in Nevada dairy cows, raising health concerns.
  • The USDA forecasts milk receipts to grow, but regional and farm size disparities will affect profitability.
  • Farmers are advised to stay informed on policy, enhance biosecurity, and explore hedging strategies for volatility.
dairy market trends, cheese demand, butter prices, avian influenza, milk production forecasts

The Chicago Mercantile Exchange’s latest dairy market report reveals a complex landscape with diverging trends across key commodities. Recent developments in global supply and demand dynamics, potential policy changes, and health concerns are shaping the industry’s outlook for 2025. 

Commodity-Specific Trends 

Cheese Maintains Strength 

CME cheese futures demonstrated resilience this week. Despite a soft start that suggested the rally might end, spot cheese prices steadily increased throughout the week. This strength persists despite the growing global milk supply, indicating robust demand for cheese products. 

Butter Prices Under Pressure 

CME spot butter prices have fluctuated within a narrow range around $2.40. An abundance of cream across the U.S. exerts downward pressure on butter prices. Distressed loads of cream are trading at significantly discounted rates, allowing butter makers with available capacity to produce at a cost basis of $2.10 or lower. 

Powder Markets Weaken 

Non-fat dry milk (NFDM) and skim milk powder (SMP) prices fell across major dairy exporting regions this week. The European Union continues to offer SMP at a substantial discount, while demand from key markets like Mexico and Southeast Asia remains sluggish. 

Whey Prices Continue Descent 

U.S. dry whey prices extended their downward trend. This decline comes as global milk production growth is expected to turn positive in the latter half of 2024 and continue into 2025. Gains are anticipated across all major exporting regions for the first time since 2020. 

Market Implications 

The mixed results reflect a complex interplay of factors:

  1. Global supply growth: Milk production is forecast to increase by 0.8% in 2025, supported by affordable feed costs and improved weather conditions.
  2. Shifting demand patterns: While cheese demand remains strong, other sectors, such as butter and whey, face challenges.
  3. Regional variations: The EU’s discounted SMP prices impact global markets, highlighting the importance of international trade dynamics.

Policy Developments 

The Trump administration has been discussing “reciprocal” tariffs, which could significantly impact dairy trade. Under this policy, the U.S. would impose tariffs on imported dairy products equal to those faced by U.S. exports in other countries. For example, if the EU has a 1,896/MT tariff on U.S. butter, the U.S. would apply the same tariff to EU butter imports. This approach could complicate operations for many companies involved in the international dairy trade. 

Health Concerns 

A new genotype of avian influenza has been detected in dairy cows in Nevada, marking another spillover event from wild birds to cattle. This development raises concerns about disease transmission in the dairy industry and could impact production or trade. 

Regional Outlook 

The report provides detailed farm gate prices and margins for several key dairy-producing states: 

State2025 Projected Milk Price (USD/cwt)2025 Projected Margin (USD/cwt)
Arizona$21.94$10.02
California$20.82$8.99
Idaho$21.79$10.76
Wisconsin$21.55$11.68
Texas$22.51$10.54
New York$22.73$11.84

These projections consider expected milk prices and feed costs, providing a comprehensive view of potential profitability across different regions. 

Market Outlook 

As the dairy landscape continues to evolve, industry stakeholders should closely monitor these trends: 

  • The USDA projects an increase in milk receipts by 2.7% to $52.1 billion for 2025, while feed costs are expected to decrease by 10.1%.
  • The all-milk price is forecast at $23.05 per hundredweight, a $0.50 increase from previous estimates.
  • Profitability expectations vary significantly by region and farm size, with more extensive operations generally better positioned to capitalize on economies of scale.

Recommendations for Dairy Farmers 

  1. Monitor trade policy developments: Stay informed about potential reciprocal tariffs and their impact on market access and profitability.
  2. Implement strict biosecurity measures: Given the new avian influenza genotype detected in Nevada, protect your herd from potential disease transmission.
  3. Optimize operations based on regional projections: Use the state-specific farm gate prices and margins to inform your production and marketing strategies.
  4. Consider hedging strategies: With the volatility in dairy markets, explore risk management tools to protect against price fluctuations.
  5. Stay informed on global supply and demand trends. Monitor production levels in major exporting regions and demand shifts in key importing countries.
  6. Explore value-added opportunities: Given the strength of cheese markets, consider diversifying into cheese production if feasible for your operation.
  7. Monitor feed costs closely. As feed costs are projected to decrease, look for opportunities to lock in favorable prices for the coming year.
  8. Invest in efficiency: As margins vary by farm size, consider improving operational efficiency to remain competitive.
  9. Stay adaptable: Be prepared to adjust your strategies in response to changing market conditions, policy developments, and health concerns in the industry.

Margin Dashboard 

2/12/2025Mar-25Apr-25May-25Jun-25Jul-25Aug-25Sep-25Oct-25Nov-25
US Margin12.3111.6211.0010.0410.0810.5611.1811.4811.51
Class III19.7819.3719.3518.6818.7618.7618.9418.9518.56
Class IV19.4619.4819.6419.0819.4019.6519.8519.9520.00
Corn4.904.975.045.065.074.914.744.744.74
SBM294298302306309312313313315

This margin dashboard provides a comprehensive overview of projected margins, milk prices, and feed costs for the next nine months, offering valuable insights for dairy farmers planning their operations. 

Conclusion 

The dairy market 2025 presents a complex landscape with challenges and opportunities. Dairy farmers can better navigate these dynamic market conditions by staying informed, implementing strategic planning, and remaining adaptable. The diverging trends across different dairy products and regions underscore the importance of a tailored approach to dairy farm management and marketing strategies.

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A.I. Industry animal welfare biosecurity measures butter prices challenges cheese prices China cow health Dairy Cattle Dairy Cattle Marketing dairy cows dairy farmers Dairy Farming dairy farms Dairy Industry dairy industry trends dairy market trends dairy producers dairy production efficiency farmers Feed Costs Feed Efficiency Genetic Evaluation System Genomics Global Dairy Market growth Health Herd Health innovation Management milk output milk prices Milk Production milk quality production productivity Profitability resilience sustainability sustainable dairy farming Technology United States USDA World Dairy Expo

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