Milk Prices
Spot cheese prices slid sharply with blocks closing below $1.60 for the first time since March, dragging July Class III under $17 and creating a strong carry incentive for storage and hedging.
The U.S. dairy herd is at the highest level since August 2021 as farmers continue to hold onto cattle, reducing culling. The USDA made a large revision to cattle numbers on the May Milk Production report.
Spot block prices continued to decline, nearing one-year lows and dragging Class III futures with them, while widening global discounts could reopen doors for U.S. export opportunities.
Class III futures ended lower as cheese prices declined, despite a boost from dry whey. May milk production rose 1.6% year-over-year and the U.S. herd reached its largest size since 2021.
CME butter trading hit its busiest week since October, helping support Class IV gains, while soybean futures jumped on biofuel policy news.
Higher cheese and butter production has not moved supplies above year-earlier levels. Increased milk production is being absorbed domestically and internationally.
Class III milk futures edged higher today amid steady butter trade and seasonal pressures on milk output, while Class IV markets held mostly flat.
Butter saw heavy trading activity with 35 loads moved, but Class III futures continued to slide amid weak cheese prices, as markets await key USDA supply and demand data.
Cheese sellers pressured the market today, driving Class III and cheese futures sharply lower amid weak Global Dairy Trade results and steady supply.
Over the weekend, the most sweeping updates to the Federal Milk Marketing Orders in over two decades officially took effect, impacting how milk is priced across all 11 orders nationwide.
Butter prices climbed to $2.51 per lb. on the heaviest trading day since March as markets eye upcoming reports for clues on tight supplies.
Strong global demand, especially for butter, is fueling a post-holiday rally in dairy markets, pushing Class IV milk futures back above $20 and lifting cheese and powder prices across the board.
Dairy markets rallied strongly this week, led by a sharp jump in butter prices and gains in Class III and IV futures, despite declines in global milk powder prices.
The butter price has the potential to increase as fundamentals become supportive. Higher milk production will require increased demand to maintain or improve milk prices.
Dairy markets diverged ahead of the holiday weekend, with cheese prices falling sharply while butter surged to three-month highs on tighter cream supplies and strong exports.
A transformation is unfolding with geographic shifts, milk solids and revenue streams
Class III milk strengthened on rising cheese and whey prices, while April milk production climbed 1.5% year-over-year, led by growth in the Southwest.
Block cheese prices edged higher on active trading, but Class III futures remained under pressure amid broader market softness.
One of the prominent milk processors in the Northwest, Darigold, has made significant deductions from farmers’ milk checks.
Spot cheese prices fell to start the week, pressuring nearby Class III futures, as mixed signals on supply clouded market direction and traders tested the $1.90-per-pound level.
Class III milk futures faltered mid-session despite stronger spot cheese prices, as heavy selling pressure erased early gains but contracts still closed above last Friday’s levels.
Class III milk futures continued climbing on strong cheese exports and tightening block supplies, with markets bracing for next week’s shift to block-based pricing under the new FMMO formula.
Despite a jump in block prices, a wide gap persists between spot markets and Class III futures, raising questions about how long the premium can hold.
Class III milk futures surged early this month, driven by rising cheese prices and a shift in market sentiment that replaced discounts with a seasonal premium.
With June cheese futures nearing $1.92 and spot blocks lagging at $1.78, a price correction is looming as the two markets head for a collision.
Butter makers have sopped up much of the additional cream as other high-fat dairy products stumble to keep pace.
A 90-day tariff truce between the U.S. and China sparked a market rally, sending Class III milk futures surging and breathing new life into Class IV ingredients.
Producers could face weaker prices as rising supplies outpace demand and weigh on dairy markets.
Class III milk futures slipped to end the week but still posted solid gains compared to last Friday, despite spot cheese pulling back from midweek highs.
After a strong rally, Class III futures paused as markets hit resistance above $1.90, with traders watching for stronger spot buying to push prices higher.