Cheese prices crash 3.5¢ as demand falters; futures premiums signal trader optimism. Global trade wars loom over dairy exports.
EXECUTIVE SUMMARY: The CME dairy market saw significant declines on April 3, 2025, with cheese blocks and barrels plunging over 3.5¢ amid softening domestic demand, while dry whey bucked the trend with a slight gain. Despite cash market weakness, futures premiums for cheese ($0.19/lb) and butter ($0.15/lb) suggest traders anticipate a rebound. Global trade tensions escalated as potential retaliatory tariffs threaten $8.2B in U.S. dairy exports, while China’s 52% surge in whey imports offers a bright spot. Market sentiment remains cautious, with analysts advising producers to prioritize risk management and monitor export policy shifts.
KEY TAKEAWAYS:
- Steep cheese declines: Blocks (-3.50¢) and barrels (-3.75¢) erased prior gains on demand concerns.
- Futures signal divergence: Cheese futures hold a $0.19/lb premium over cash prices, indicating expected recovery.
- Trade policy risks: Proposed U.S. tariffs could trigger retaliatory measures, threatening 18% of milk production tied to exports.
- China’s shifting demand: Whey imports surged 52% YoY, potentially offsetting weaker whole milk powder sales.
- Strategic guidance: Producers are urged to hedge against volatility while processors leverage cash-futures spreads.
Cheese prices tumbled sharply today amid broader market declines, with blocks and barrels shedding over 3.5 cents despite higher weekly averages. Butter continued its downward trend, while dry whey provided the lone bright spot in an otherwise bearish session.
Key Price Changes & Market Trends
Today’s CME cash dairy product prices showed significant declines across most commodities:
| Product | Closing Price | Change from Yesterday |
| Cheese (Blocks) | $1.6300/lb | -3.50¢ |
| Cheese (Barrels) | $1.6600/lb | -3.75¢ |
| Butter | $2.3300/lb | -1.00¢ |
| Nonfat Dry Milk | $1.1675/lb | -0.50¢ |
| Dry Whey | $0.4925/lb | +0.25¢ |
Cheddar blocks and barrels experienced their most significant single-day declines over a month, erasing Wednesday’s gains and reflecting growing concerns about domestic demand. This reversal is particularly notable following yesterday’s strong performance when barrels jumped 3.75¢ and blocks gained 0.75¢. Butter continued its gradual descent, marking its fourth consecutive day of stagnant or declining prices despite tight cream supplies. Nonfat dry milk eased slightly while dry whey provided the session’s only increase, extending its recovery on improved export interest.
Volume and Trading Activity
Trading activity was notably subdued today across most dairy commodities:
| Product | Trades | Bids | Offers | Weekly Volume to Date |
| Cheese (Blocks) | 4 | 0 | 1 | 39 |
| Cheese (Barrels) | 3 | 0 | 1 | 13 |
| Butter | 9 | 1 | 1 | 17 |
| Nonfat Dry Milk | 6 | 5 | 3 | 10 |
| Dry Whey | 2 | 4 | 1 | 6 |
Butter saw the highest trading activity today with nine trades, though overall volume remained light compared to earlier. After yesterday’s active session, cheese markets displayed minimal bidding interest, suggesting buyers have stepped back to reassess positions. Multiple bids for dry whey indicate continued buyer interest despite limited seller participation.
Global Context
International factors continue to shape domestic dairy markets, creating crosscurrents for U.S. producers and exporters. Key dairy exporting regions are expected to see modest growth in production in 2025, with high milk prices and lower feed costs being the major drivers. However, trade uncertainty remains a key concern, particularly for U.S. trading partners.
China’s dairy imports have shown sustained growth for four consecutive months as of February 2025, with total dairy purchases reaching 255,516 tons, marking a 16% year-on-year increase. Notably, China imported more whey than whole milk powder, with whey imports up 52% from the previous year. This trend suggests a shift in China’s dairy import preferences and could provide support for U.S. whey prices.
European milk production is forecast to increase by 0.5% year-on-year, supported by good producer margins. However, risks such as Bluetongue and potential new U.S. tariffs could present barriers to growth. President Trump’s recent “Liberation Day” tariffs announcement has raised concerns about retaliatory measures from major trading partners, potentially threatening the $8.2 billion U.S. dairy export market.
The U.S. export outlook faces additional challenges as Canada, China, and Mexico consider retaliatory tariffs on U.S. dairy products. With approximately 18% of U.S. milk production sold abroad, these trade tensions add significant uncertainty to the market.
Forecasts and Analysis
Despite today’s cash market declines, futures markets tell a somewhat different story:
| Product | April Futures (Thursday) | Change from Wednesday | Premium to Cash |
| Class III Milk | $16.98/cwt | -0.15¢ | N/A |
| Class IV Milk | $18.26/cwt | -0.01¢ | N/A |
| Cheese | $1.8230/lb | -0.0170¢ | +0.1930¢ |
| Butter | $2.4825/lb | -0.0423¢ | +0.1525¢ |
The significant premium of cheese futures over cash prices ($1.8230 vs. $1.6300 for blocks) suggests traders anticipate strengthening markets despite today’s cash market weakness. Similarly, butter futures maintain a substantial premium over spot prices.
The USDA projects Class III milk prices to average $18.50/cwt for Q2 2025, which remains above current futures prices, indicating potential market pessimism compared to official forecasts. The all-milk price forecast for 2025 has been adjusted downward to $19.85 per hundredweight from earlier projections of $22.75, reflecting ongoing adjustments to market realities.
The margin outlook for the upcoming year has weakened over the past month, primarily due to declining milk prices. CME cash-settled cheese futures for April through June have dropped between $0.06 and $0.11 per pound, pushing Q2 2025 Class III prices down nearly $1/cwt.
Feed markets showed mixed performance, with corn closing at $4.5850/bushel (down slightly) while soybean meal edged to $287.90/ton. These moderate feed costs provide some margin relief for producers facing declining milk prices.
Market Sentiment
Market participants express growing concern about the sudden reversal in cheese prices after Wednesday’s positive session.
“The whipsaw action we’re seeing in cheese markets underscores the fundamental uncertainty about domestic demand as we head into what should be the spring buying season,” noted a Midwest dairy broker. “Today’s lackluster trading activity suggests buyers are stepping back to reassess price levels before committing to additional purchases.”
Another analyst observed: “The divergence between cash and futures markets points to trader expectations that current weakness is temporary. The substantial premium built into April cheese futures indicates confidence in strengthening fundamentals despite today’s cash market declines.”
The commissioning of new cheese plants across the U.S. is creating a two-sided market dynamic—increased processing capacity is supporting farmgate milk prices, while the potential for 6% growth in cheese manufacturing capacity could pressure cheese prices later in 2025 if domestic and export demand fail to keep pace with production.
Overall sentiment has shifted from cautiously optimistic to increasingly concerned, with many market participants watching export data closely for improvement that could support domestic prices.
Closing Summary & Recommendations
In summary, today’s dairy markets saw significant declines across most commodities, particularly cheese, where blocks and barrels dropped over 3.5 cents despite limited trading activity. This weakness contrasts with relatively stable futures markets that maintain substantial premiums over cash prices, suggesting traders view the current weakness as temporary.
The global dairy landscape presents both opportunities and challenges. Growing Chinese imports potentially support certain products, while trade tensions threaten the broader export market. Production growth in key exporting regions could pressure global prices if demand fails to keep pace.
Producers should consider implementing risk management strategies to protect against further cash market declines while maintaining flexibility to capture potential upside if future expectations materialize. Processors may find advantages in securing forward coverage at current levels, particularly for cheese, where the cash-to-futures spread provides opportunities for favorable hedge positions. All stakeholders should closely monitor upcoming export data and milk production reports for signs of market direction in the coming weeks while staying informed about international trade policy developments that could significantly impact market dynamics.
Learn more:
- USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers
Explore USDA’s latest projections for milk production, price dynamics, and actionable strategies to navigate a challenging yet opportunity-filled year. - Global Dairy Market Trends 2025: European Decline, US Expansion Reshaping Industry Landscape
Analyze how declining EU production and U.S. growth are reshaping global dairy markets, with insights on strategic pivots for producers. - Global Dairy Market in 2025: Production Shifts, Demand Fluctuations, and Trade Dynamics
Dive into the complexities of 2025’s global dairy market, including production trends, demand fluctuations, and evolving trade policies.
Join the Revolution!
Join the Revolution!Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
