6/29/2025
Dairy has gone on quite a rollercoaster this last two months sense my last report. July has gone from 17 to 20 and then back to 17. Cash is pricing in below 16 this week but Friday rallied 49 cent. These moves have been extreme for what we know is going on in the physical market. What we do know. Exports have been good, especially to Asian markets, domestic demand has been moderate with better demand in retail then food service. Production and cold storage are growing at normal rates. This information would normally be a pretty flat year for dairy prices, but the market uncertainty has participants on the edge and the moves have become more volatile.
Monthly Spot Prices Comparison
Monthly Future Prices Comparison
Cheese: A heat wave is crossing the Northeast, negatively affecting milk production in the region. Prior to the temperature rise, contacts reported a spring flush-like surge in milk production. Cheese production was heavy during this time. CME prices fell over the past week. International demand for Class III remains strong. In the Central region, summer heat is reducing cow comfort and having a negative impact on milk output. Some cheesemakers in the Midwest say they are offering loads of milk on the spot market due to unplanned down time. Spot Class III milk prices are holding steady in the Midwest ranging from $8-under to flat, as of report time. In the West, retail cheese demand is steady, but contacts report retail interest is light. Export demand for cheese is strengthening. Increasing temperatures in the West are having a negative impact on milk output. Spot loads of cheese are available for purchase, but some purchasers say specific varieties are more difficult to obtain than others. (USDA Cheese Highlights)
Butter: Domestic retail butter demand varies from steady to lighter throughout the country. Some eastern stakeholders convey bulk butter is stronger. Strong demand continues to be exhibited by international buyers. US butter remains competitively priced compared to butter produced outside of the country. Spot cream availability is mixed. Butter production schedules vary from steady to strong. In a few cases, production managers convey cream availability is limiting how strongly butter churns are running. Bulk butter overages range from 7 cents below to 5 cents above market across all regions. (USDA Butter Highlights)
Dry Whey: It was another quiet week for dry whey. Manufacturers are focusing efforts on higher protein whey derivatives. There were only a few reported sales of dry whey this week. The price range for whey did not change. The CME price for extra grade dry whey has changed only slightly since last week, moving up or down minimally each day. The international market for dry whey is slow. (USDA Dry Whey)
We are seeing a continued growth of the dairy herd. The beef price is at all-time highs and there are a lot of dairies taking advantage of this by breading toward beef. But, with the expansion of dairy processing capacity, the overall herd is still getting larger; mostly growing in the states where new cheese plants have been brought online. With the violent swings in the market option price have jumped. Recommendation this week would be put spreads: buy the 1850 put, sell the 1750 put, for 35 cent. On a further market move higher sell the 2100 call for 35 cent. This is a general recommendation feel free to give us a call and we can talk about a more targeted one for your operation. The markets are closed this coming Friday we wish all a happy and safe 4th of July.
