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 $18.50/cwt in Q2 2025, which remains below current futures levels, signaling potential downside risk.
- Market Sentiment: The recovery in futures prices suggests cautious optimism, but global supply pressures and export challenges may weigh on future performance.
- Price Volatility: The sharp drop early in the week, followed by a steady climb, highlights ongoing price volatility in the dairy market.
Today’s CME dairy markets closed with mixed results. Cheddar barrels gained a cent, supported by tight spot availability, while butter prices rose slightly on steady retail demand. However, nonfat dry milk (NDM) and dry whey faced downward pressure due to weak export demand and global oversupply. Feed costs remain a critical concern for producers as corn and soybean meal prices continue to trend lower.
Key Price Changes & Market Trends
The following table summarizes the closing prices and price changes for key dairy products traded on the CME today:
| Product | Closing Price ($/lb) | Change from Yesterday (¢) |
| Butter | 2.3450 | +1.00 |
| Cheddar Block | 1.8700 | NC |
| Cheddar Barrel | 1.8050 | +1.00 |
| Nonfat Dry Milk | 1.2000 | -0.75 |
| Dry Whey | 0.5250 | -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 $18.50/cwt suggests potential downside risk for futures if global supply growth continues to outpace demand.
Implications for Stakeholders
Producers should remain cautious about potential price volatility in the coming months as global supply pressures persist. Exporters may need to focus on diversifying their markets beyond China to mitigate risks associated with its uncertain economic outlook.
Weekly Averages & Trends
The table below highlights weekly averages compared to the prior week:
| Product | Current Weekly Avg ($/lb) | Prior Week Avg ($/lb) | Weekly Volume |
| Butter | 2.3488 | 2.4219 | 33 |
| Cheddar Block | 1.8750 | 1.9044 | 9 |
| Cheddar Barrel | 1.7981 | 1.8019 | 6 |
| Nonfat Dry Milk | 1.2081 | 1.2600 | 19 |
| Dry Whey | 0.5325 | 0.5475 | 4 |
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.
Learn More
- Canadian Quotas vs. American Free Market – Who’s Right?
- 2025 Canadian Dairy Outlook: Slight Dip in Milk Prices, but Steady Growth Ahead
- New 25% Border Tax Hits Dairy Trade: What It Means For Your Farm.
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