Get the CME dairy market update. How do cheese, butter, and futures influence your strategy? Stay informed to lead in the dairy industry.

Summary:

On October 30th, 2024, the CME Dairy Markets report highlighted a mix of activity, with block cheese prices dipping slightly and barrel prices rising by 3.5 cents, revealing a complex landscape influenced by multiple signals. Concerns over potential disruptions arose due to avian flu cases in California and Utah, potentially affecting demand trends. December and January Class III futures reached two-month lows, whereas Class IV futures presented a consistent upward trajectory. The spot butter market demonstrated resilience, bolstered by international market influences such as the increase in SGX/NZX powder prices following solid results in the latest GDT Pulse, indicating ongoing strategic adjustments within the market.

Key takeaways:

• The trading activity in the November-December Class III spread shows significant movements, indicating a strategic focus on short-term market dynamics.
• Class III and Cheese Futures present mixed signals, reflecting cautious yet active trading patterns among market participants.
• The NFDM market is experiencing volatility, driven by international influences and fluctuating spot prices, emphasizing the need for strategic navigation.
• European dairy products maintain a premium price, sustaining global trade interest and serving as a competitive challenge for other regions.
• Butter’s market resilience is highlighted by its rebound from previous lows, supported by strategic futures trading and robust open interest.
• Fluctuations in market spreads may signal potential shifts in broader market fundamentals, requiring close observation from stakeholders.
• Overall, bullish market traction and solid buyer-seller interactions show tempered price fluctuations shortly.

On October 30th, 2024, the dairy markets were in flux, challenging industry norms and sparking speculation. However, the market’s resilience is a testament to its stability. Have you considered how fluctuating cheese and butter prices could impact global trade and your operation’s profitability? As block prices dip by half a cent, barrels rise to $1.9250 per pound, and butter prices advance to $2.7050 per pound. Understanding these market dynamics is crucial for informed business decisions, especially when prices are this volatile.

Fluctuating Trends and External Challenges Shape Dairy Market Dynamics

The market conditions present a mixed bag of activities, especially in the spot cheese segment. Block prices decreased slightly, slipping by half a cent, while barrel prices increased by 3.5 cents. This diverging trend reflects a complex market landscape in which buyers and sellers respond differently to various signals. 

Adding to this complexity, external factors such as the recent avian flu cases reported in California and Utah have cast a shadow over market sentiment. Such outbreaks typically heighten concerns over potential disruptions, impacting demand trends as the year-end approaches. Market participants remain vigilant, assessing how these health-related developments might further influence consumer demand and market dynamics in the dairy sector.

Strategic Trading Patterns: Navigating Class III Futures’ Two-Month Lows

Examining the recent performance of Class III futures, prices for December and January contracts have hit two-month lows. This decline aligns closely with key technical support levels, suggesting potential stabilization points that traders are likely monitoring. The robust trading volume, with over 2,400 contracts exchanged, highlights a significant engagement from market participants. This activity was notably driven by the Nov/Dec spread trading, which saw an impressive 500 trades executed in just one day. 

The dynamics of the Nov/Dec spread trading have had a palpable impact on open interest, showing a unique pattern. By rolling positions from November to December, traders have maintained a steady open interest overall, only increasing by three contracts. However, the shifting interest from November to December indicates a strategic repositioning by traders to optimize their exposure to price movements. This strategic spread trading suggests carefully watching near-term price shifts, with participants positioning themselves to manage potential volatility.

Exploring Divergent Paths: Class III’s Cautious Moves vs. Class IV’s Steady Ascendancy

The Class III futures experienced a complex landscape as the nearby contract slightly advanced to $20.57 per hundredweight, marking a minor increase of five cents. However, the upward movement was juxtaposed with a decline in Q1 prices, which descended to $19.63 per hundredweight, shedding 14 cents. This mixed performance highlights a potential recalibration within the Class III space, indicating a cautious market sentiment trying to balance immediate gains against longer-term uncertainties. 

Conversely, Class IV futures demonstrated a more uniform positive trend. November futures cemented their standing at $21.04 per hundredweight, climbing an additional three cents, while Q1 futures also saw an incremental rise to $21.21 per hundredweight, adding three cents. These steady gains suggest that Class IV products might benefit from more robust demand or tighter supply scenarios, contrasting the more volatile Class III trends. 

The divergence in Class III and IV futures performance could indicate underlying shifts in market demand patterns. While Class III markets are wrestling with variabilities and competitive pressures, Class IV products are riding a wave of steady, albeit modest, positivity. The potential impact on the dairy market could manifest in tactical adjustments by producers and traders, resulting in a strategic shift toward maximizing opportunities within the more stable Class IV domain.

Spot Butter’s Valiant Rebound: A Testament to Market Resilience and Strategic Futures Play 

The spot butter market is exhibiting significant resilience. It recovered from last week’s lows, with prices rising by 1.5 cents to $2.705 per pound. This rebound not only injects optimism into future trading activities but also presents potential profit opportunities. Notably, the futures market has witnessed a commendable level of liquidity throughout 2025, bolstered by the rise in spot prices and strategic trading trends. 

One of the intriguing aspects of current market activities is the initiation of a cash-and-carry trade. This strategy becomes viable when spot prices hover around $2.70 while deferred futures beyond January surpass $2.80 per pound. The cash-and-carry trade is significant as it creates opportunities for market players to lock in profits by buying at current spot prices and selling in the futures market at higher rates. This trend has attracted new market participants on both ends, with buyers eager to secure prices below the speculated $3.00 threshold and sellers strategically leveraging the market’s forward carry. 

The influx of new buyers and sellers testifies to the market’s robustness and traders’ ever-evolving strategies. These new entrants infuse vitality into the trading environment, presenting a dynamic marketplace where informed price locking and speculative selling coexist. Consequently, this lively interaction between buyers and sellers improves the market’s health. 

Furthermore, the recovery in butter open interest is worthy of mention. Across all open contracts, we are almost back to levels reminiscent of 2020 and 2022, highlighting sustained interest and active participation in the market. While open interest does not inherently indicate a directional bias, it underscores a well-balanced arena where willing buyers and sellers find common ground.

Subtle Movements in NFDM Prices: A Cautious Yet Active Market Navigates International Influence

Spot Nonfat Dry Milk (NFDM) prices have displayed subtle dynamism in recent sessions. They climbed to $1.3950 during trading before settling marginally lower at $1.3850. This slight dip occurred over seven trades, indicating a cautious yet active market. Futures activity surrounding NFDM showed mixed patterns, with price changes holding close to a one-cent fluctuation, reflecting an overall cautious investor sentiment. 

The influence of international markets can’t be overlooked, as seen with the SGX/NZX powder prices continuing to strengthen following a robust performance in the latest GDT Pulse. This international surge propels domestic considerations, presenting potential upward pressure on future NFDM pricing trends. Although domestic futures traded with limited volume—81 contracts post a vigorous Tuesday session—the global market movements highlight a pivotal influence on dairy pricing strategies.

European Dairy’s Premium Edge: A Global Trade Catalyst and Innovative Challenge for Rivals

In our ever-evolving global dairy market, European butter and cheese continue to command significant premiums compared to their counterparts in New Zealand and the United States. This premium positions the European Union (EU) as a crucial player in the international dairy landscape. EU cheese prices are currently averaging $2.46 per pound, markedly higher than New Zealand’s $2.13 per pound and the U.S.’s $1.91 per pound. As for butter, the EU’s average is $3.74 per pound, significantly outpricing New Zealand’s $2.87 per pound and the U.S.’s $2.69 per pound, with all prices adjusted for 80% butterfat. This premium edge reflects the quality and demand for European dairy products. It presents an innovative challenge for rivals to match or surpass these standards to compete in the global market. 

This distinctive price gap has increasingly made the EU a focal point in global trade discussions. The high pricing structure reflects EU dairy products’ perceived quality and stringent regulatory standards, underscoring Europe’s competitive advantage over its global counterparts. Such disparities in pricing invite strategic export opportunities for EU producers, who are poised to capitalize on favorable exchange rates and burgeoning demand in emerging markets where quality is at a premium. 

The implications for global trade dynamics are profound. On the one hand, the EU’s competitive pricing may draw new trading partnerships, especially in regions where consumers are willing to pay more for premium quality. On the other hand, it challenges New Zealand and the U.S. producers to innovate, possibly driving them to enhance efficiency or pivot towards niche markets to maintain relevance. As these dynamics unfold, industry stakeholders must remain vigilant and poised to adapt to shifting consumer preferences and strategic international trade policies.

The Bottom Line

As 2024 unfolds, the dairy market presents a complex tapestry of challenges and opportunities. From fluctuating cheese prices affected by avian flu outbreaks to strategic maneuvers in the Class III futures market, each trend paints a picture of an industry at a critical junction. Butter prices are rebounding, highlighting the resilience and adaptability of market participants. At the same time, Nonfat Dry Milk (NFDM) displays subtle movements amidst international market influences. European dairy products, maintaining a premium edge, serve as both a catalyst and a challenge in the global market landscape. 

These shifts and strategies prompt us to ask: How prepared is your business to navigate these evolving trends? The intimation of a shifting market suggests pivotal moments where strategic decisions could have lasting impacts. Reflect on your place in this dynamic environment—are you positioning yourself for success? 

We invite you to share your thoughts and engage with this community of dairy professionals. Comment below with your insights, share this article with your colleagues, and foster a dialogue that propels us toward informed and proactive decision-making. Your voice is crucial in shaping the discourse around these developing market trends.

Learn more:

• Milk Futures Rise at Chicago Mercantile Exchange Amid Dollar Dip and Butter-Buying Spree
• Chicago’s Dairy Market in Flux: A Look at Rising Milk Futures and Dairy Prices
• Steady Outlook on Chicago Mercantile Exchange Milk Prices

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.