Global dairy markets face mixed trends this week: cheese prices rise while butter and powders soften. U.S. milk surpluses clash with weather-hit Northeast production, and trade tensions loom with new tariffs. Discover key insights, market forecasts, and growth opportunities in our full report!

Summary:

Navigate the complex global dairy market, where cheese prices rise as butter and powder costs fall, reflecting U.S. surplus and weather-affected Northeast production. Trade tensions with new tariffs add to the challenge. Looking ahead, explore how US milk production is projected to hit 227.2 billion pounds while the global dairy market is expected to soar from $649.9 billion in 2025 to $813.6 billion by 2030. Consumer trends are shifting towards healthier dairy options, offering room for innovation. For stakeholders, the key is to manage supply imbalances, evolve with trade dynamics, and adapt to consumer preferences in this unpredictable landscape.

Key Takeaways:

• Cheese prices have seen an increase while prices for butter and powders have softened.
• The U.S. is experiencing milk surpluses, which are impacting the dairy market’s dynamics.
• Weather challenges have affected milk production in the Northeast, influencing regional supply.
• New tariffs have raised concerns over potential trade tensions impacting dairy exports and imports.
• The report offers market forecasts and identifies growth opportunities within the dairy sector.
• Enrichment strategies can improve cattle behavior, contributing positively to the farm environment.

1. Key Developments

1. Milk Price Adjustment: The Canadian Dairy Commission announced a slight decrease of 0.0237% in the Farmgate milk price for 2025, effective February 1.
2. Production Forecast: The USDA revised its 2025 milk production forecast to 227.2 billion pounds, driven by higher cow numbers and milk yields.
3. Global Supply Growth: RaboResearch projects an 0.8% increase in milk supply from major exporting regions in 2025, with all key areas expected to see gains for the first time since 2020.
4. Trade Dynamics: New trade actions, including increased steel and aluminum tariffs, may affect U.S. dairy exports, which are crucial for the cheese market.
5. Farm Income Rebound: USDA projects a significant increase in net farm income for 2025, primarily driven by disaster and economic government assistance.

2. Executive Summary

Key market trends:

• Mixed price movements across dairy commodities, with cheese showing resilience while other products face downward pressure.
• Regional disparities in milk production, with surplus conditions in some areas contrasting with weather-related challenges in others.
• Projected global milk supply growth for 2025, albeit with potential regional variations.

Critical industry challenges:

• Manage milk surpluses in certain regions while addressing shortages in others.
• Navigated the potential impact of new trade tariffs on dairy exports.
• Adapting to changing consumer preferences and price sensitivities.

Opportunities:

• Leveraging projected global supply growth to expand market share in key export markets.
• Innovating to meet evolving consumer demands for health-conscious and sustainable dairy products.
• Optimize production efficiency to manage costs due to potential feed price fluctuations.

Key takeaways for stakeholders:

1. Monitor trade policy developments closely and prepare contingency plans for potential export disruptions.
2. Focus on efficiency and cost management to maintain profitability amid price volatility.
3. Invest in product innovation to capture emerging market opportunities and meet changing consumer preferences.
4. Stay informed about regional production trends to identify potential supply-demand imbalances and market opportunities.
5. Consider hedging strategies to mitigate risks associated with price volatility in both dairy and feed markets.

3. Futures Market Overview

EEX Futures: Total volume traded for the week: 1,235 contracts Breakdown by-product:

• Butter: 485 contracts
• Skimmed Milk Powder (SMP): 750 contracts

Price trends:

• Butter futures showed a slight downward trend, with the February 2025 contract closing at €5,565/tonne.
• SMP futures remained relatively stable, with the February 2025 contract ending at €2,484/tonne.

SGX Futures: Total volume traded: 890 contracts Breakdown by-product:

• Whole Milk Powder (WMP): 420 contracts
• SMP: 310 contracts
• Butter: 160 contracts

NZX milk price futures contract trading volume: 1,250 contracts

Class III milk futures for February 2025 settled at $20.21/cwt, while Class IV milk futures concluded at $19.85/cwt.

Implications for dairy farmers and processors: Future market activity suggests a cautiously optimistic outlook for dairy prices in the short term. The stability in SMP futures across EEX and SGX platforms indicates a balanced global market for milk powders. However, the slight downward trend in EEX butter futures may signal potential pressure on butterfat values in the European market.

4. Spot Market Indicators

CME Cash Dairy Product Prices (as of February 11, 2025):

• Butter: $2.4050/lb, down from $2.4100/lb the previous week
• Cheddar Block: $1.9050/lb, up from $1.8685/lb the previous week
• Cheddar Barrel: $1.8163/lb, up from $1.7970/lb the previous week
• NDM Grade A: $1.3125/lb, down from $1.3380/lb the previous week
• Dry Whey: $0.5775/lb, down from $0.6055/lb the previous week

These spot market indicators reflect a complex supply and demand dynamic in the global dairy market. The slight increase in cheese prices and the decline in butter and powder prices suggest a value rebalancing of milk components.

5. Regional Production and Demand

United States:

• Overall milk production is growing, with the USDA revising its 2025 forecast to 227.2 billion pounds.
• Regional disparities are evident, with the Midwest experiencing surplus milk conditions while the Northeast faces challenges from harsh winter weather.

European Union:

• Milk production is expected to grow slightly in 2025, with variations across member states.

New Zealand:

• Milk production forecast for the 2024-2025 season has been adjusted downward by 2% due to dry conditions.

China:

• Projected 2% year-on-year growth in dairy import volumes for 2025, reversing a three-year decline.

Global Milk Production Forecast

Source: USDA, Economic Research Service calculations based on USDA, Foreign Agricultural Service. Dairy: World Markets and Trade Report, December 2024.

This table illustrates the expected changes in milk production across major dairy-exporting regions. The slight decrease forecast for the European Union is notable, contrasting with increases in the other areas. The overall rise in major exporter production aligns with the global supply growth trend in the report.

6. Consumer Trends and Market Dynamics

• Increased demand for functional dairy products, such as probiotic yogurts and fortified milk.
• Growing interest in low-fat and reduced-sugar dairy options.
• Rise in demand for organic and grass-fed dairy products.
• Continued growth in on-the-go dairy snacks and single-serve portions.

Global Dairy Market Overview

The global dairy market continues to show strong growth potential, as illustrated by the following projections:

Global Dairy Market Size and Growth Projections

Source: Mordor Intelligence Industry Report, 2025

This table demonstrates the expected growth in the global dairy market size from 2025 to 2030. With a projected CAGR of 4.60%, the market is anticipated to reach $813.6 billion by 2030, up from $649.9 billion in 2025. This growth trajectory underscores the ongoing opportunities in the dairy sector despite challenges such as changing consumer preferences and sustainability concerns.

7. Trade Dynamics

• New trade actions announced, including increased steel and aluminum tariffs, potentially affecting U.S. trade relationships and the dairy export sector.
• U.S. dairy exports will remain at $8.2 billion in 2024 despite recent trade tensions.
• Shift in New Zealand’s exports from milk powder to high-value dairy products such as cheese, butter, and infant formula.

8. Farm Economics and Input Costs

• The milk-feed price ratio for February 2025 is 2.15, hovering just below the 2.20 level deemed necessary for sustainable dairy herd growth.
• Feed costs have eased, with purchased feed costs decreasing by 12.3%, according to the Canadian Dairy Commission.
• USDA projects a significant increase in net farm income for 2025, primarily driven by disaster and economic government assistance.

9. Future Outlook

• The all-milk price forecast for 2025 is $23.05 per hundred weight, $0.50 higher than last month’s forecast.
• Global milk supply is expected to grow by 0.8% in 2025, with all significant exporting regions expecting gains for the first time since 2020.
• Ongoing challenges include evolving trade relations, fluctuating prices, and global agricultural supply changes.

Learn more:

• Secret to Successful Cow Calving? It’s Silence!
• Maximize Your Dairy Farm’s Profit: Insights from the 2021 Nutrient Requirements Report
• Feed for What You Breed and Breed for What You Feed: Adaptability is Key

Join the Revolution!

Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations.