2/22/2025
It has been a rollercoaster of a ride for the last month. With the cow numbers on the low end and replacement heifers in short supply we should be looking at supportive prices this year. The only hiccup in that scenario is demand. If exports and domestic demand both drop this year. There will be too much cheese to hold these prices.
Monthly Spot Prices Comparison
Monthly Future Prices Comparison
Cheese: Cheese production schedules are trending steady throughout the U.S. In the East region, contacts relay steady cheese production schedules. Processors share cheese demand is seasonally steady, with some noting strong seasonal demand for some Italian cheese varieties. In the Central region, cheesemakers note both plant maintenance and inclement weather have caused mixed production schedules. Milk availability, too, is mixed in some pockets of the region. Spot milk prices range from $2 under Class to $0.25 over Class III. In the West region, cheese production schedules are steady. Some cheesemakers share production has been tempered by tighter spot milk availability. Cheese inventories vary by type throughout the region. (USDA Cheese Highlights)
Butter: Butter demand varies from steady to lighter throughout the country. Some sellers convey buyers are purchasing fewer loads at a time than seasonally anticipated. Affordable cream volumes are plentiful. Some distressed cream load offers at very low multiples were again reported. Butter production schedules are generally busy working through cream volumes. However, some Central region butter manufactures noted adverse weather caused lightened production schedules to various degrees this week. Bulk butter overages range
from 12 cents below to 5 cents above market, across all regions. (USDA Butter Highlights)
Dry Whey: The Central and East low/medium heat nonfat dry milk (NDM) price range contracted as the West NDM price range moved lower. Demand is mixed. High heat NDM prices moved higher in the Central and East but lower in the West. Dry buttermilk prices are steady to lower. Some buyers are making partial load purchases to cover immediate needs but are hesitant to take on additional volumes. The dry whole milk price range contracted. Nationwide, dry whey prices moved lower. A growth in availability and tepid domestic and export demand has contributed to a weaker whey market. Lactose prices are unchanged, but Q2 contracting is underway. Whey protein concentrate 34% prices are trending higher. Acid and rennet casein prices are unchanged. (USDA Dry Whey)
Milk Production report was out on Friday and January was up slightly from last year. This was in line with expectations but a change in the trend of the preceding three months. Cow numbers are also on the rise. Production per cow was lower reflecting some continued effects of bird flu and farmers willingness to hold onto lower producing cow. The bird flu will run its course and California’s production should start to rebound. But lower production cows may stick around with replacements in short supply and at very high prices. Over production should not be a big concern this year but with new cheese plants coming online and concern about demand I do think farms need to get covered. DRP is starting to drop below cost of production so I would talk with your broker. I like three ways starting in the second half. Buy 1850 put sell the 1700 put sell the 2000 call for even. First half look to sell rallies and protect those sold positions with calls as the market could turn on a dime.
