Cheese
At a pivotal junction of prosperity intertwined with uncertainty, the U.S. dairy industry seeks resolution to ongoing trade disputes. With committed leaders aiming to expand international partnerships, strategic negotiation appears essential for sustaining and enhancing the industry’s growth.
U.S. tariffs are in full effect with Canada, Mexico and China, contributing to the already heavy atmosphere.
Tariffs set to take effect tomorrow may have contributed to market movement, while increased cheese production capacity continues to weigh on the outlook.
After what had been a pretty quiet month, the spot cheese market finished February with a thud.
The on-again, off-again rollercoaster in terms of trade and tariff headlines continued today, following an early morning post from President Trump.
Class III futures are still trading at a discount to current spot prices, indicating an expectation of a significant spot market break.
Class III futures tumbled further, with the March contract down 31 cents to $18.70 per hundredweight and Q2 futures settling at $18.33, a 23-cent loss.
Coming off Friday’s January Milk Production report, which was lower than expected, dairy markets largely moved lower this morning.
Today’s USDA Milk Production report will likely set the tone for the week ahead.
Cheese futures experienced strong activity, posting gains across the forward curve.
Today, futures reacted to strong offers on the spot auction for block cheddar cheese, which had been a point of strength for seasonally high cheese prices.
Dairy markets weren’t feeling the love today, with both Class III and Class IV mostly moving lower.
The softness in butter continues to line up with anecdotal reports that butterfat levels are high and cream is available
Class III futures started the day 10-20 cents lower in the nearby contracts before a positive spot cheese auction brought them up on the day.
The CME butter market rebounded off its recent lows, climbing to $2.4300 per pound, gaining a nickel.
Much like the Philadelphia Eagles’ dominant Super Bowl victory, the cheese market put up a strong performance today, with blocks and barrels climbing higher in the spot session.
Class III futures tumbled today, erasing the week’s stronger activity following a weaker spot session.
U.S. cheese exports surged ahead in December, totaling 96.7 million pounds.
Class III futures were on a roller coaster with back-and-forth tariff news.
“It’s unlikely that changes in tariffs will impact prices headed into the Super Bowl, however, we’ll see how it plays out in the coming weeks,” Dr. Michael Swanson says.
Ramped up conversations around possible 25% tariffs on Mexico and Canada plus 10% tariffs on Chinese goods sent the cheese market sharply lower last night and weakness continued through today’s session.
Dairy cow slaughter rates are well above prior-year levels. For the week ending January 18, culling totaled 58,000 head, up 13.5% on the year.
Class III futures were reluctant to follow several days of green with further higher price action, and showed modest declines or gains depending on the month.
Class III milk futures continued their strong momentum today, with blocks and barrels both posting gains with no offers appearing during the cheese session.
The U.S. dairy industry faces a pivotal moment as it contends with both gripping challenges and promising prospects amidst fluctuating global market dynamics.
It’s pretty safe to say that the Class III market direction remains unclear.
The market appears to be grappling with uncertainty around Class III prices, particularly as we approach a critical day tomorrow with the release of the Milk Production and Cold Storage reports.
After the three-day weekend, spot cheese prices reacted with a series of offers that pushed the entire Class III forward curve downward.
Volatility in futures is one thing but volatility in the spot market is another. The volatility in the futures market is difficult to predict, but volatility in the spot market makes it impossible to predict.
And then there was quiet. After a week of see-saw action in the spot cheese market, Friday’s CME cheddar prices finished unchanged