CME dairy market sees mixed movements: cheese prices surge while NDM dips. USDA revises 2025 milk production forecast downward, but projects higher all-milk price. Exports remain strong. Weather impacts production. New FMMO pricing formulas coming in June. Stay tuned for full analysis and strategies.
Summary:
The CME dairy market on February 10, 2025, showed mixed results with cheese prices rising significantly while butter held steady and NDM slightly declined. Cheddar blocks and barrels saw notable gains, closing at $1.9025/lb and $1.8150/lb respectively. The USDA revised its 2025 milk production forecast downward to 227.2 billion pounds but projected a higher all-milk price of $23.05 per hundredweight. U.S. dairy exports remain strong, reaching $8.2 billion in 2024. The report highlights challenges for dairy farmers, including cost management, production efficiency, and market volatility, while offering strategies to address these issues. Looking ahead, the implementation of new Federal Milk Marketing Order pricing formulas in June 2025 may impact milk prices, and farmers are advised to stay informed and adjust strategies accordingly.
Key Takeaways:
- Cheese prices are strengthening, with cheddar blocks up 4.25 cents to $1.9025/lb and barrels up 3.50 cents to $1.8150/lb, potentially signaling improved market conditions.
- The USDA projects a higher all-milk price of $23.05 per hundredweight for 2025, despite lowering the milk production forecast.
- U.S. dairy exports remain strong, reaching $8.2 billion in 2024, with new opportunities in Central America due to trade agreements.
Today, the Chicago Mercantile Exchange (CME) dairy market experienced mixed movements, with notable gains in cheese prices and a slight decline in nonfat dry milk.
Daily CME Cash Dairy Product Prices ($/lb.)
| Final | Change ¢/lb. | Trades | Bids | Offers | |
| Butter | 2.3800 | NC | 0 | 0 | 1 |
| Cheddar Block | 1.9025 | +4.25 | 6 | 3 | 1 |
| Cheddar Barrel | 1.8150 | +3.50 | 4 | 3 | 1 |
| NDM Grade A | 1.3250 | -0.50 | 0 | 0 | 3 |
| Dry Whey | 0.5875 | NC | 0 | 2 | 3 |
Cash Market Overview
- Butter held steady at $2.3800/lb, with no trades and minimal activity.
- Cheddar blocks saw significant upward movement, closing at $1.9025/lb, up 4.25 cents, with six trades executed.
- Cheddar barrels also strengthened, rising 3.50 cents to $1.8150/lb with four trades.
- Nonfat dry milk (NDM) Grade A dipped slightly, down 0.50 cents to $1.3250/lb.
- Dry whey remained unchanged at $0.5875/lb.
Weekly CME Cash Dairy Product Prices ($/lb.)
| Mon | Tue | Wed | Thur | Fri | Current Avg. | Prior Week Avg. | Weekly Volume | |
| Butter | 2.3800 | – | – | – | – | 2.3800 | 2.4100 | 0 |
| Cheddar Block | 1.9025 | – | – | – | – | 1.9025 | 1.8685 | 6 |
| Cheddar Barrel | 1.8150 | – | – | – | – | 1.8150 | 1.7970 | 4 |
| NDM Grade A | 1.3250 | – | – | – | – | 1.3250 | 1.3380 | 0 |
| Dry Whey | 0.5875 | – | – | – | – | 0.5875 | 0.6055 | 0 |
Weekly Price Trends
Compared to last week’s averages, butter and dry whey are trending lower, while both cheddar varieties show strength. The current week’s averages (based on Monday’s prices) are:
- Butter: $2.3800/lb (down from $2.4100/lb)
- Cheddar blocks: $1.9025/lb (up from $1.8685/lb)
- Cheddar barrels: $1.8150/lb (up from $1.7970/lb)
- NDM Grade A: $1.3250/lb (down from $1.3380/lb)
- Dry whey: $0.5875/lb (down from $0.6055/lb)
CME Futures Settlement Prices
| Mon | Tue | Wed | Thur | Fri | |
| Class III (FEB) $/CWT | 20.21 | 0.00 | 0.00 | 0.00 | 0.00 |
| Class IV (FEB) $/CWT. | 19.46 | 0.00 | 0.00 | 0.00 | 0.00 |
| Cheese (FEB) $/LB. | 1.877 | 0.00 | 0.00 | 0.00 | 0.00 |
| Blocks (FEB) $/LB. | 1.903 | 0.00 | 0.00 | 0.00 | 0.00 |
| Dry Whey (FEB) $/LB. | 0.63 | 0.00 | 0.00 | 0.00 | 0.00 |
| NDM (FEB) $/LB. | 1.3023 | 0.00 | 0.00 | 0.00 | 0.00 |
| Butter (FEB) $/LB. | 2.459 | 0.00 | 0.00 | 0.00 | 0.00 |
| Corn (MAR) $/BU. | 4.9175 | 0.00 | 0.00 | 0.00 | 0.00 |
| Corn (DEC) $/BU. | 4.7075 | 0.00 | 0.00 | 0.00 | 0.00 |
| Soybeans (MAR) $/BU. | 10.4925 | 0.00 | 0.00 | 0.00 | 0.00 |
| Soybeans (NOV) $/BU. | 10.5675 | 0.00 | 0.00 | 0.00 | 0.00 |
| Soybean Meal (MAR) $/TON | 300.20 | 0.00 | 0.00 | 0.00 | 0.00 |
| Soybean Meal (DEC) $/TON | 321.60 | 0.00 | 0.00 | 0.00 | 0.00 |
| Live Cattle (APR) $/CWT. | 198.225 | 0.00 | 0.00 | 0.00 | 0.0 |
Futures Market
In the futures market, Class III milk for February settled at $20.21/cwt, while Class IV settled at $19.46/cwt. Cheese futures for February closed at $1.877/lb, with blocks specifically at $1.903/lb.
Analysis for U.S. Dairy Farmers
Production and Pricing Outlook
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 milk-per-cow yields and adjustments in dairy cow inventories. Despite this, the all-milk price is projected to rise to $23.05 per hundredweight, up 50 cents from previous forecasts.
Market Dynamics
The cheese market shows signs of strength, with blocks and barrels posting significant gains. This upward movement could be attributed to increased demand or tightening supplies. While stable today, the butter market is trending lower than last week, possibly indicating a shift in the supply-demand balance.
Weather Impact
Weather conditions play a crucial role in both milk production and feed costs. Recent favorable weather has supported milk supply growth and led to more affordable feed costs. However, climate change poses long-term risks, potentially lowering milk yields through heat stress. Farmers should monitor weather forecasts closely and consider implementing heat mitigation strategies.
Export Opportunities
U.S. dairy exports reached $8.2 billion in 2024, marking the second-highest total export value ever. Mexico and Canada remain the top two global trading partners, representing over 40% of U.S. dairy exports. The full implementation of the CAFTA-DR trade deal has opened up new opportunities in Central America, with U.S. dairy exports surging to $441 million in 2025.
Challenges and Strategies
- Cost Management: Optimize your daily feed margin with rising feed costs and other expenses—total milk pay minus deductions and feed costs. Consider investing in herd management and feed quality to increase net income per stall.
- Production Efficiency: Maximize your quota with as few cows as possible to save on the cost of keeping additional animals. Utilize additional production days if available, as 20-25% of farms finish month after month with a non-deferrable quota.
- Technology Integration: Invest in automated milking systems and IoT technology for real-time herd health and behavior monitoring to boost productivity and streamline operations.
- Market Volatility: Prepare for price fluctuations by using future contracts to secure prices and avoid market surprises.
- Equipment Costs: Carefully analyze each equipment purchase, considering not just the purchase price but also fuel, maintenance, and repair costs. Consider renting equipment or hiring custom work when it is more cost-effective.
Looking Ahead
As we move into 2025, market participants will watch for any shifts in production patterns, export demand, and consumer preferences. The recent strengthening of cheese prices could signal improving market conditions for dairy producers, but the mixed performance across other products suggests a complex market environment.
Implementing new Federal Milk Marketing Order (FMMO) pricing formulas beginning in June 2025 may impact milk prices. Stay informed about these changes and adjust your strategies accordingly.
By focusing on efficiency, cost management, and strategic market positioning, U.S. dairy farmers can navigate the challenges and opportunities presented by the current market conditions and position themselves for success in the evolving dairy landscape.
Learn more:
- Mid-Year 2024 Global Dairy Business Review: Key Developments from January to June
- Dairy Executives’ Top Priorities: Sustainability Climbs Up, Talent Development Takes the Lead
- 7 Game-Changing Strategies to Skyrocket Customer Engagement When Marketing to Dairy Farmers
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