4/27/2025
Dairy has come down from its highs from a few weeks ago. Milk production and cold storage were out this week. Milk Production up 1 percent and cow numbers were up 9,000 from last month. Cold storage was also up 1 percent from last month but still down from last year. These numbers were in line with expectations and would traditionally be neutral to a little bullish. This year with food banks, foreign aid, and school lunch programs getting defunded; this will become a problem and there may need to be a contraction of milk before a true rally can be sustained.
Monthly Spot Prices Comparison
Monthly Future Prices Comparison
Cheese: Contacts in the East region share spring flush milk volumes have allowed cheesemakers to run seven-day production schedules. Cheese plant contacts relay inventories are growing. Cheese demand for the holiday weekend was lower than some contacts anticipated but is solid overall. Cheesemakers in the Central region note strong cheese demand. Some contacts say they have little to no spot load availability. Spot milk prices were reported at $7 under to $1 under Class III. In the West region, contacts share cheese production schedules are strong following the holiday weekend. Some manufacturers relay spot cheese availability is very tight regardless of variety (USDA Cheese Highlights)
Butter: East and central region stakeholders note domestic butter demand is steady. West region stakeholders note domestic retail butter demand varies from steady to strong. Food service demand is indicated to be weaker in comparison to retail demand. Butter demand from international buyers is strong. Cream remains far from short throughout the country. Butter production is stronger with the holiday weekend in the rearview mirror. Butter inventories are generally seasonally growing. Bulk butter overages range from 7 cents below to 5 cents above market across all regions (USDA Butter Highlights)
Dry Whey: prices firmed in all regions this week. Spot market activity is somewhat active, and international demand has held up despite impending hurdles as NDM prices remain a value when compared to skim milk powder prices globally. Dry buttermilk prices were steady to higher in the Central/East regions, while moving slightly lower in the West. International demand, according to West contacts, remains somewhat robust. Dry whole milk prices moved northbound this week on limited production activity. Dry whey prices were steady in the Central and East regions, while shifting lower in the West. Dry whey production is stronger with plentiful milk levels throughout the country. Whey protein concentrate 34% prices continued on a bullish trajectory this week, as inventories have recovered to open up some spot market opportunities for both processors and buyers. Lactose prices were steady to higher, as inventories of high-mesh lactose remain snug. Rennet and acid casein prices were stable this week (USDA Dry Whey)
If you flip the Cold storage graph over it is a good indicator of where the dairy market is going overall. The dairy market peaked in November and has been dropping ever sense. Right now, the market is still better than the last five years for this time of the year and has some bullish sentiment as prices are low, and the overall economy is moving along. The updates are good on demand, but milk supply is ample with reports of spot loads of milk going for 7 dollars under class. Recommendation, sell the rallies. Spot cheese prices have moved from the lows in the 1.60s to the highs in the 1.80s. These moves have created a lot of volatility and opportunities to sell milk at high levels then they are right now. Another good option is a three way, Aug – Dec buy 1800 put, sell 1650 put and sell the 2000 call for 16 cents to the buy side. With all recommendations talk to your broker to see if these would be right for your operation.
