Dairy markets stumbled Monday as cheese prices hit three-week lows and feed costs spiked. While a temporary Mexico tariff deal provided relief, all CME dairy products closed lower. What’s driving the selloff, and how can farmers protect their margins? Here’s your complete market breakdown.
Summary:
The US-Canada tariffs caused a significant downturn in dairy markets on February 3, resulting in plummeting prices for cheese, butter, and dry whey at the CME, compounding challenges for farmers already facing high feed costs for corn and soybeans. Given the volatility, dairy farmers should consider proactive strategies, such as securing feed prices and discussing forward contracts with co-ops, to protect narrowing margins. With key dates for USDA reports and trade decisions approaching, monitoring market developments is essential to staying ahead of further fluctuations. Maintaining a close watch on expenses is crucial as milk prices remain unpredictable, affecting the farms’ financial health.
Key Takeaways:
- Dairy prices significantly declined, affecting farmers’ revenue amidst rising costs.
- Cheese markets experienced notable price drops, with blocks and barrels decreasing.
- General market instability is attributed to uncertain Mexican trade developments.
- Feed costs are escalating, adding pressure to farming budgets.
- Farmers are advised to mitigate costs by managing feed waste and considering forward contracts.
- Upcoming dates are crucial for market insights and influencing decision-making strategies.
- Maintaining a close watch on expenses is vital, given the current market volatility.
Dairy producers face a double squeeze as US-Canada trade tensions spill over into commodity markets, sending CME spot prices tumbling while feed costs surge. The February 3rd market saw cheese prices hit three-week lows and dry whey drop 3.1%, eroding already thin margins for North American dairy farmers.
All dairy prices fell at the CME on February 3, 2025, hitting farmers with lower milk checks just as corn and soybean costs jumped. Let’s break down what this means for your farm’s bottom line.
Today’s Price Changes
Daily CME Cash Dairy Product Prices ($/lb.)
| Final | Change ¢/lb. | Trades | Bids | Offers | |
| Butter | 2.4300 | -0.25 | 3 | 2 | 2 |
| Cheddar Block | 1.8625 | -1.50 | 4 | 0 | 3 |
| Cheddar Barrel | 1.7900 | -2.00 | 4 | 0 | 1 |
| NDM Grade A | 1.3400 | -0.50 | 7 | 2 | 5 |
| Dry Whey | 0.6200 | -2.00 | 2 | 1 | 2 |
Cheese markets took the biggest hit:
- Blocks down 1.5 cents to $1.86/lb
- Barrels down 2 cents to $1.79/lb
- Butter slipped to $2.43/lb
- Dry whey dropped to 62 cents/lb
What’s Behind the Drop?
Mexico buys nearly half of our cheese exports. Today, prices bounced around because of news about Mexican trade deals. First, they fell, then jumped up, and then lost again. This kind of up-and-down trading makes it harder to know when to sell your milk.
Feed Costs Rising
Bad news on feed prices today:
- Corn up 7 cents to $4.89/bushel
- Soybeans up 16 cents to $10.58/bushel
These higher feed costs will eat into your milk check. For a 100-cow dairy, today’s jump in feed prices adds about $20 per day to costs.
What This Means for Your Farm
- Milk prices look shaky through spring
- Feed costs are trending up
- Margins are getting tighter
What You Can Do Now
Think about these moves:
- Lock in feed prices if you can
- Talk to your co-op about forward contracts
- Watch your feed waste
- Hold off on significant spending
Looking Ahead
Keep an eye on these dates:
- March 1: New USDA dairy report
- March 15: Decision on Mexico trade
- April 5: Spring feed prices set
Bottom Line
With milk prices dropping and feed costs rising, now is the time to monitor expenses closely. Your break-even price might be higher than current futures prices suggest.
Learn more:
- Rising Milk Prices and Lower Feed Costs Boost Profitability: May Dairy Margin Watch
- Heads Up, Dairy Farmers: Low Feed Prices Won’t Last – Lock Them In Now!
- Big Milk Checks and Low Feed Costs: A Profitable Summer for Dairy Producers
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