Benchmark Milk Price Dips to End Year at $18.62
Published: Friday, January 10, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department announced the final federal order Class III milk price of 2024 at $18.62 per hundredweight, down $1.33 from November but $2.58 above December 2023. It's the lowest Class III price since May and put the 2024 average at $18.89, up from $17.02 in 2023 and compares to $21.96 in 2022.
Last Friday morning Class III futures showed the January contract trading at $20.41; February, $20.56; and March was at $20.25.
The Class IV price is $20.74, down 38 cents from November, but $1.51 above a year ago. It's the lowest Class IV price since May and the 2024 Class IV average stands at $20.75, up from $19.12 in 2023, and compares to $24.47 in 2022.
As we embark on a brand new year, our attention will generally be on tighter milk and cheese supplies and "wonky demand," says StoneX broker Dave Kurzawski in our first "Dairy Radio Now" broadcast of 2025.
"We saw periods of really strong demand in 2024," he said, "and then periods of very quiet demand, and we saw nearly a $1 swing on the price of block cheese, for example, between March and September." The March low was $1.39 per pound, he said, and the September high was just over $2.30 per pound. "I don't think that goes away as we enter 2025."
When asked about the effect of bird flu, Kurzawski said he had no crystal ball, but "Here at the end of 2024, it had a huge impact on California, worse than other states, and the big question is how quickly will California get back on its feet?"
Another question he raised was, "Will we see a resurgence of bird flu in Texas, Kansas, Colorado or Idaho, or does it move into other areas entirely?"
China also remains a big unknown for 2025. Will it be in the dairy market in a big way or not? And what will the relationship be between China and the U.S. with President Trump in the White House?
StoneX believes "Trump will not want to be super punitive to Mexico or Canada, but be more isolated on China," Kurzawski concluded. "Looking back on the Trump tariffs in 2018, a lot depended on the type of product involved, so it's pretty hard to make any blanket statement on this, but I suspect that our relationship with Mexico and with Canada will remain on solid footing in 2025."
Cash dairy prices start 2025 above a year ago except on butter. The Cheddar blocks closed the shortened holiday week at $1.92 per pound, up 4.75 cents on the week and 48.50 cents above a year ago. The block's Friday closings averaged $1.79 in 2024 and saw a low of $1.3925 per pound to a high of $2.2750. They averaged $1.73 in 2023 and ranged $1.3350 to $2.10 per pound.
The Cheddar barrels finished last Friday at $1.83, 6.25 cents higher on the week, 42 cents above a year ago and 9 cents below the blocks.
CME sales totaled seven loads of block on the week and 47 for the month of December, up from 38 in November. Barrel sales totaled five for the week and 49 for the month, up from 27 in November.
Cheese prices were pushing higher in the final trading days of 2024, according to Dairy Market News, and some Midwest contacts suggested that cheese markets may have reached their near-term basement and are steadying. Demand has been variant over the holiday weeks, as some processors reported continued strong demand while others noted a slowdown. Milk availability has grown in the region, as was expected during the holiday weeks. Milk handlers said the midweek holiday(s) gave them less capacity to work with, as spot milk prices in Christmas week were as low as $7-under Class III. New Year's Eve saw spot milk loads from $4-under class to 50 cents under class, according to DMN.
Cheese production in the West is mixed. Milk production has been strengthening in recent weeks, leaving plenty for cheese making. Some plants ran lighter schedules New Year's week to accommodate the midweek holiday. Spot loads of some varieties were tight, while others were more widely available, says DMN. Domestic cheese demand is strong, though export interest is lighter.
Cash butter fell to $2.5450 per pound last Thursday, but finished Friday at $2.5525, down 2.25 cents on the week, ending two weeks of gain, and was 2.25 cents below a year ago. There were 16 sales on the week and 94 for the month, up from 58 in November.
Butter's Friday closings averaged $2.86 per pound in 2024, ranging from a low of $2.4650, to a high of $3.1750. It topped $3 per pound for 19 weeks. It averaged $2.59 per pound in 2023, ranging from $2.2725 per pound to its record high $3.5025, and stayed above $3 per pound for six weeks in 2023.
Central butter plant activity steadied following Christmas week, but some plant managers said churning would return to normalcy after New Year's Day. Cream remains more than sufficient and is expected to remain so in the early weeks of 2025. Contracts for 2025 are reportedly favorable for processors, and spot cream demand may be slower, at least early in the new year. Butter sales have steadied as markets have found stable ground in the middle- to upper-$2.50s per pound.
Cream is plentiful in the West and loads were reportedly trading at lower multiples, compared to mid-month levels. Butter production has been lighter in recent weeks due to the holidays and plant operators modifying shifts to accommodate the mid-week closures. Spot loads of butter were available. Demand has been mixed in recent weeks, though some contacts reported the end of year holidays put a slight damper on sales this week, according to DMN.
Grade A nonfat dry milk closed last Friday at $1.3675 per pound, down 2 cents on the week but 19.50 cents above a year ago. Sales totaled 15 loads for the week and 81 for the month, up from 77 in November.
Dry whey saw its Friday finish at 75 cents per pound, unchanged on the short week, but 33.75 cents above a year ago, with only one sale put on the board for the week. There were 29 CME sales for December, compared to 30 in November.
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