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.

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

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.)

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.

Learn more:

• CME Dairy Market Report: March 13, 2025 – Dairy Prices Under Pressure
• Global Dairy Market Analysis: Butter Strength, SMP Weakness Signal Strategic Opportunities
• DAIRY MARKET WARNING: How The Egg Price Collapse Reveals Your Farm’s Hidden Vulnerabilities

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