Dairy markets reel as Canada’s impending retaliatory tariffs send butter prices plummeting 4.50¢. Wisconsin farmers face a double threat with Mexico’s proposed cheese duties looming. Meanwhile, feed costs surge, squeezing margins to crisis levels. Get the full scoop on today’s market moves and actionable strategies for your farm.

Summary

In today’s volatile dairy market, butter prices plunged 4.50¢ to $2.3700/lb, driven by Canada’s impending retaliatory 25% tariff on U.S. exports. This sharp decline translates to a $0.48/cwt loss in butterfat payouts for farmers. Cheese markets showed mixed results, with blocks dipping 2.00¢ to $1.8800/lb while barrels held steady at $1.8000/lb as the industry braces for potential Mexican tariffs. Feed costs continue to pressure margins, with corn up 3% and soybean meal surging 8% year-over-year. The milk-feed ratio sits at a concerning 2.10, well below the five-year average of 2.45 and the 2.25 needed for a 5% profit margin. Experts recommend locking in 50% of Q2 corn needs at $4.70/bu and considering a shift to niche markets like direct-to-consumer raw milk sales, which offer premiums of up to $4.50/cwt. With 62% of traders bearish, farmers are urged to closely monitor USDA’s upcoming export report and the potential ratification of Mexican tariffs.

Key Takeaways

• Butter prices crashed 4.50¢ to $2.3700/lb due to Canada’s impending 25% retaliatory tariff on U.S. dairy exports.
• Cheese blocks fell 2.00¢ to $1.8800/lb; barrels steady at $1.8000/lb amid Mexican tariff uncertainty.
• Feed costs are rising: corn is up 3%, soybean meal is up 8% yearly, and profit margins are squeezing.
• Milk-feed ratio at 2.10, below the 5-year average (2.45) and breakeven (2.25 for 5% profit).
• Experts advise hedging 50% of Q2 corn needs at $4.70/bu (December futures).
• Consider pivoting to niche markets: raw milk sales offer +$4.50/cwt premiums.
• 62% of traders are bearish; watch for the USDA export report and Mexico tariff decision.
• Wisconsin dairy exports are particularly vulnerable to Canadian and Mexican trade disputes.

Butter Prices Collapse 4.50¢ as Canada Retaliates; Cheese Holds Steady Amid Feed Cost Uncertainty

Class III Milk vs. Feed Costs (Feb 2025):

• Class III: $19.15/cwt ➔ ━━━━━━━━ (Flat since Feb 10)
• Corn: $4.82/bu ➔ ↑3% vs. Jan 📈
• Soybean Meal: $301.10/ton ➔ ↑8% YoY 📉

Butterfat vs. Protein Payouts:

• Butterfat: $2.37/lb ➔ 🔻12% below 2024 peak
• Protein: $1.88/lb ➔ ▬▬▬ (3% above Jan avg)

Key Price Changes & Market Trends

Component Impact Calculation: Based on USDA Class III/IV formulas (3.5% butterfat, 3.1% protein). Sources: [USDA WASDE].

Commentary:

• Butter’s 4.50¢ plunge reflects Canada’s impending 25% tariff on U.S. butter exports, effective March. Wisconsin, which ships 25% of its dairy to Canada, faces immediate oversupply pressures.
• Cheese blocks dipped 2.00¢ as Mexico’s proposed 25% cheese tariff looms. Barrels stabilized due to steady domestic demand.
• NDM’s decline (-1.50¢) aligns with USDA’s lowered 2025 skim-solids export forecast (-3%).

Volume and Trading Activity

Key Takeaway: Butter’s two trades (-4.50¢) signal panic selling; Wisconsin exporters report canceled Canadian orders.

Global Context

• Canada’s Retaliation: Impending counter-tariffs of $155B target U.S. dairy products, including Wisconsin cheese. For every $1M in lost exports, 12 Wisconsin farms risk closure.
• New Zealand Competition: NZ’s 2% milk output rise floods Asia with 25M lbs/month of butter, undercutting U.S. prices by $0.10/lb.
• Mexico Tariff Threat: 25% duty on U.S. cheese could slash Wisconsin’s $6.3B annual dairy exports by 30%.

Forecasts & Milk-Feed Ratio Analysis

Actionable Insight:

• Hedging Strategy: Lock 50% of Q2 corn via DEC futures ($4.70/bu) to offset soybean meal’s 8% YoY surge ($301.10/ton).
• Milk Check Impact: Current butterfat/protein prices equate to $20.15/cwt Class III—$0.95 below breakeven for 500 cow herds.

Market Sentiment

• Wisconsin Dairy Co-op Manager: “Canada’s tariffs could idle 15% of our processing lines. We’re scrambling for domestic buyers.”
• Feed Analyst: “With corn at $4.82/bu and soybean meal up 8%, revisit feed efficiency or cull low-yield cows.”
• Overall Mood: 62% bearish (CME Trader Survey), driven by tariff risks and HPAI outbreaks in Midwest herds.

Closing Summary & Operational Recommendations

Summary: Butter’s freefall (-4.50¢) and cheese’s fragility underscore tariff-driven chaos. Feed costs (+3% corn, +8% meal) compress margins below sustainability.

Farm-Level Actions:

1. Feed: Secure 50% of Q2 corn at $4.70/bu (DEC futures). Use options for soybean meal exposure.
2. Export Pivot: If Mexico tariffs pass, shift 20% of April milk to NDM (despite weak prices) or direct-to-consumer raw milk (+$4.50/cwt premiums).
3. Policy Watch: Lobby for USDA’s Dairy Margin Coverage enhancements before the March 1 deadline.

Learn more

Here are three related articles from www.thebullvine.com, in bullet form with titles and hyperlinks:

• Global Dairy Market Dynamics: Navigating Volatility and Strategic Opportunities in 2025
• Milk Market Turmoil: Navigating the Global Dairy Downturn Amid Challenges and Opportunities
• Good News for Dairy in 2025: Higher Milk Prices, Lower Feed Costs Ahead