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.
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:
- 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.
- 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.
- 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.
- 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.
- 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.
Learn more:
- Global Dairy Market Trends July 2024: Australia’s Rise as Argentina and New Zealand Face Challenges
- Is 2024 Shaping Up a Disappointing Year for Dairy Exports and Milk Yields?
- Mid-Year 2024 Global Dairy Business Review: Key Developments from January to June
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