After Inauguration, Dairy Markets Have Down Week
Published: Friday, January 31, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
It was an historic week as the nation memorialized civil rights leader Dr. Martin Luther King and inaugurated its 47th President, Donald Trump. The markets were closed last Monday but cash block cheese plunged 11 cents the next day. It fell to $1.7750 per pound last Wednesday, lowest CME price since Dec. 11, 2024, but it finished the shortened week at $1.8325, 5.75 cents lower on the week, but 29.50 cents above a year ago, as traders awaited the afternoon's December Milk Production and Cold Storage reports.
The Cheddar barrels fell to $1.81 per pound last Wednesday, lowest since Dec. 30, 2024, but they closed last Friday at $1.82, down 7 cents on the week, 35 cents above a year ago, and 1.25 cents below the blocks. Sales totaled 13 loads of block on the week and eight of barrel.
Midwest cheesemakers told Dairy Market News that demand is either holding steady or improving somewhat noticeably since late 2024. Curd, barrel, Cheddar and Italian-style cheesemakers in the region reported steady to bullish demand. Some suggest that international cheese prices, currently above domestic values, are going to "keep a limit on market bears," said DMN. "Others, expect near- to mid-term bears to persist as cheese volumes are expected to increase with more production coming online in the region." Milk availability for cheesemakers was a bit heavier than the previous week, as some plants were down for partial or full days over the weekend and early last week. Mid-week spot milk prices ranged $1-under to Class III, with most at Class III. Last year, they ranged $1-under to $1-over class, according to DMN.
Cheese production varies from steady to strong in the West. Seasonally strengthening milk production in the region is generally providing more milk for Class III manufacturers. Cheese makers continue to have good demand for Class III milk. Some report tight spot load availability of domestic and foreign type cheeses. Demand for cheese from domestic and international buyers is stronger. Domestic prices are favorable for international buyers, according to DMN.
Cash butter fell to $2.5125 per pound last Thursday, lowest since Dec. 19, 2024, but finished last Friday at $2.53, unchanged on the week, and 23 cents below that week a year ago when it jumped 21.50 cents to $2.76. There were 13 sales.
Churning was mostly busy this week as plants focused on building stores for upcoming seasonal needs. There were minor plant slowdowns reported in the southern central states, but processing was generally active. Cream availability has balanced some since the glut of the holiday weeks, but it remains affordable for butter makers. Cream multiples are ticking higher in some areas but are holding steady with previous weeks for the most part, says DMN. Bulk butter is accessible, while demand is somewhat steady with previous weeks. Market tones are "quiet to stable."
Cream volumes are plentiful in the West and multiples on the low end were again below flat market, according to DMN. Some plants reported that there have been more cream offers than homes for what is typical thus far into January. In some cases, butter manufacturers are bringing in offered excess cream to their churns. Butter production varies from steady to strong. A few manufacturers stated that bulk butter production was busier this year compared to a year ago. Demand for butter is "mixed," said DMN.
Grade A nonfat dry milk closed last Friday at $1.3475 per pound, lowest since Oct. 3, 2024, down a quarter-cent on the week, but 12.75 cents above a year ago, with four sales posted on the board for the week.
Dry whey closed last Friday at 69.75 cents per pound, down 4 cents on the week, lowest since Nov. 26, 2024, but still 25.50 cents above a year ago, with seven CME sales reported on the week.
Powder, cheese and butter pulled the second Global Dairy Trade auction of 2025 higher. Last Tuesday's weighted average was up 1.4%, following a 1.4% decline on Jan. 7, and a 2.8% drop on Dec. 17. Volume fell to 61.3 million pounds, down from 66.5 million on Jan. 7, and was the lowest since July 16, 2024. The average metric ton price, crept to $4,146, up from $4,029 on Jan. 7.
Whole milk powder led the gains, up 5%, after falling 2.1% on Jan. 7. Skim milk powder was up 2%, following a 2.2% decline. Cheddar was up 2.8%, after a 1% rise, while GDT Mozzarella was off .3%. It saw a 3.6% jump on Jan. 7. Butter was up 2.2%, following a 2.6% rise. Anhydrous milkfat was down 7.8%, after dropping 1.6%, and lactose was off .8%, following a 2.4% decline last time.
StoneX says the GDT 80% butterfat butter price equates to $3.0905 per pound U.S., up 7.5 cents from Jan. 7, and compares to CME butter which closed last Friday at a bargain $2.53. GDT Cheddar equated to $2.1981, up 5.4 cents, and compares to last Friday's CME block Cheddar at a cheap $1.8325. GDT skim milk powder averaged $1.2378 per pound, up from $1.2166. Whole milk powder averaged $1.8089 per pound, up from $1.7255. CME Grade A nonfat dry milk closed last Friday at $1.3475 per pound.
Analyst Dustin Winson reported, "North Asia, which includes China, increased market share of GDT volume from both last event and last year. Whole milk powder purchases by the top two buying regions, North Asia and SE Asia, were strong, rising over last year's levels. European purchases were also strong, rising from last event and last year."
Speaking of China, December's dairy imports were much stronger than expected, according to StoneX. Milk equivalents were up 30.6% from December 2023, and compared to StoneX forecast of flat to up 5%.
Broker Dave Kurzawski stated in the Jan. 27 "Dairy Radio Now" broadcast that some of the product they thought would clear in November got pushed into December, but it bucks the trend. Year to date imports were still down 7.6%.
Skim milk powder imports were up 42.1%, while whole milk powder was up 110.9%. YTD imports were still down 33.5% and 4.6%, respectively.
Butter imports were up 38.5%, while cheese was up 16.6%. Whey and whey protein concentrate imports were up 11.9%.
When asked about Trump's tariff sabre rattling, Kurzawski said, "We don't know what those are going to look like. "There seems to be a lot of posturing right now, which makes markets and people more nervous, but is more bark than bite at this point."
When asked about cheese demand following Super Bowl and what that would mean for prices, he said cheese demand has been off for the past year with some shoots of demand popping up, but then it goes back down.
Current conditions mirror those of a year ago, he explained, with tighter cheese inventories, somewhat tighter milk production, and lackluster cheese demand. "The net effect is you can have markets that are not super weak because we just don't have the inventory overhanging them, but, if you don't have demand, things get lackluster and trade in the $1.70s, then the $1.80s, but it keeps you away from $2.50 and $1.50," he concluded.
Dairy Demand
The Agriculture Department gave us a little more perspective on dairy demand in November's Dairy Supply and Utilization report. As suspected, cheese demand was down, totaling 1.2 billion pounds, down 1.8% from November 2023, although year to date demand was up 1%. American cheese demand made up the lions share of the total cheese decline, being down 3.7%.
Domestic cheese demand totaled 1.1 billion pounds, down 2.1%. Exports however were positive for the first time in five months, according to HighGround Dairy, hitting 87.1 million pounds, up 2.4% from a year ago, and up 17.2% YTD.
Butter data was encouraging. Disappearance totaled 248.2 million pounds, up a whopping 23.1% from a year ago. Domestic usage hit record 241.5 million pounds, up 21.8%. Exports were up for the seventh time in eight months, says HGD, and totaled 6.7 million, up 97.1% from 2023.
Unfortunately, nonfat dry milk and skim milk powder utilization came in at 163.9 million pounds, down 21.9% from 2023. Domestic usage was down 27.2% and exports were down 19.7%. Year-to-date totals were the worst since 2012, according to HGD.
Dry whey utilization totaled 59.1 million pounds, down 18.8% from a year ago, the largest year-on-year decline since March 2019, says HGD, and its smallest November volume on record, with data back to 2011. Domestic consumption was down 32.3%, lowest value in 2024, and exports were down 2.2%, as buying interest moves to Europe in search of cheaper product, says HGD.
The Agriculture Department announced the February federal order class base milk price at $21.27 per hundredweight, up 89 cents from January, $3.28 above February 2024, and equates to $1.83 per gallon, up from $1.55 a year ago.
Tariffs Ahead
A quick footnote: Reuters reported that President Trump's pick to lead the Agriculture Department, Brooke Rollins, said last Thursday that she would "consider direct payments to farmers to offset losses from proposed tariffs, modeled after the approach taken in Trump's first term." We shall see.
The Agriculture Department's Animal and Plant Health Inspection Service announced an additional six states have enrolled in the National Milk Testing Strategy (NMTS) program, bringing the total number to 36 since the first round was announced in early December. With the added states, the NMTS will account for bulk milk tank samples from two-thirds of the nation's dairy herds, or nearly three-quarters of the nation's milk production, says the USDA.
"This data will further enhance understanding of H5N1 presence among dairy herds for USDA and its federal partners." The six added states included Arkansas, Louisiana, Nebraska, New Hampshire, North Carolina and West Virginia. This brings USDA closer to conducting mandatory, nationwide bulk milk surveillance in all 48 contiguous states.
USDA's National Milk Testing Strategy involves five stages that describe a state's testing activity and the presence of H5N1 in that state. Of the 36 states enrolled as of today, 17 states are considered to be in Stage 2, meaning they have state-level bulk tank sampling programs already underway. California, Michigan and Nevada are considered to be in Stage 3, meaning that they are affected states that have rapid response measures in place to address detections. Sixteen states are in Stage 1, meaning that silo testing is underway or is set to begin imminently. Mississippi has moved to Stage 4, which means all dairy herds in the state are considered to be unaffected.
USDA continues to work directly with states to bring them on board as quickly as possible while also accommodating state-specific needs based on their infrastructure, state personnel availability, and other considerations.
Meanwhile, dairy cow culling continues to lag year ago numbers. The week ending on Jan. 11 saw 55,400 head go to slaughter, up 11,300 from the previous week, but 600, or 1.1%. below that week a year ago. So far in 2025, 99,500 head had been retired from the dairy business, down 5,000, or 4.8%, from a year ago.
In politics, legislation referred to as the "Whole Milk for Healthy Kids Act of 2025" was reintroduced last week by Reps. Glenn "GT" Thompson (R-Pa.) and Kim Schrier (D-Wash.) and U.S. Sens. Roger Marshall (R-Kan.), Peter Welch (D-Vt.), Dave McCormick (R-Pa.) and John Fetterman (D-Pa.).
The measure drew praise from the International Dairy Foods Assn. and National Milk Producers Federation. IDFA President and CEO Michael Dykes thanked the lawmakers involved and said the act will "Allow schools to provide the nutritious milk options that children prefer. Whole milk provides them with milk's 13 essential nutrients for growth, development, healthy immune function and overall wellness. A wide majority of parents and medical and nutrition professionals know that offering whole milk increases school meal participation, reduces food waste, and provides nutritionally valuable school meals for children and adolescents."
Back on the farm, U.S. milk output is generally increasing in all regions, according to DMN weekly update. "Some contacts continue to report year-over-year records regarding component levels (milkfat and protein) after some relayed their December monthly report numbers this week. Even with increasing farm production, milk availability is staying at snug levels as strong demand for milk prevails. With educational institutions back in session and some retailers stocking up ahead of adverse weather events bottlers are actively looking for Class I milk."
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