Butter Exports Booming, Thanks to Strong Churning
Published: Friday, June 6, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
April butter and cheese inventories were below those of a year ago. The latest Cold Storage report showed April 30 butter stocks at 337.4 million pounds, up 14.2 million pounds, or 4.4%, from March, but 24.7 million, or 6.8%, below those in April 2024. March stocks were revised down 578,000 pounds from last month's report.
StoneX says this was the smallest seasonal butter build in 10 years, adding "There was plenty of milk/cream available in April, so we have to attribute this to demand—increased exports and maybe slower imports. With inventory this low, the second quarter stocks/use ratio is looking tighter than last year, which would justify a $2.60 per pound average."
American-type cheese stocks climbed to 805.9 million pounds, up 10.3 million pounds, or 1.3%, from the March level, but were down 19.6 million pounds, or 2.4%, from a year ago. The March total was revised 2.1 million pounds lower.
The "other" cheese category holdings inched up to 579.1 million pounds, up 753,000 pounds, or .1%, from the March level but were down 16.8 million pounds, or 2.8%, from a year ago. The March level was revised up 3.4 million pounds.
April's cheese inventory totaled 1.4 billion pounds, up 10.4 million pounds, or .7%, from March, but down 35.4 million, or 2.4%, from a year ago. The March total was revised up 5.9 million pounds.
The Daily Dairy Report stated, "Cheese stocks have now trailed prior-year levels for 14 consecutive months, but April's year-over-year decline was the narrowest loss seen in a year."
The DDR's Sarina Sharp wrote in the May 23 Milk Producers Council newsletter, "Plentiful milk and high components add up to a lot of cream. Churns are running hard. But U.S. butter is among the cheapest in the world and exports are booming. Domestic consumption is also record high. It was up 3.6% year over year in the first quarter. Insatiable demand for butter helped keep stocks in check." The March to April build was the smallest since 2014, according to the DDR, which added, "Butter stocks have topped year-ago volumes in every month since January 2024, but in April they fell 6.8% below prior-year levels."
Rabobank dairy analyst Lucas Fuess, speaking in the June 2 Dairy Radio Now broadcast, credited the Cold Storage report for the strength in dairy prices in the Memorial Day week, but warned that tariff and trade policy pose "some cloudiness."
He said limited escalation with Mexico has meant product continues to flow freely and we saw a reprieve in the relationship with China. But the tariff freeze with China is only for 90 days, he said, and we could see further escalation there so volatility is to be expected.
Worst case scenario would be any escalation of trade differences with Mexico, according to Fuess. "It is in the best interest for both countries to make sure that does not happen," he said, "due to the food that flows both ways across that U.S. Mexican border." He adds that there would be a lot of downside for our whey protein, permeate and lactose exports in any escalation with China.
Fuess does not see much more rise in cheese prices ahead, due to the anticipated higher supply in the coming weeks but concluded, "Thankfully cheese exports have remained strong at least through first quarter."
The latest weekly slaughter report showed 44,800 dairy cows were sent to slaughter the week ending May 17, down 1,100 from the previous week, and down 2,200, or 4.7%, from a year ago. Year to date, 1,018,400 head had been culled, down 94,300 head, or 8.5%, from a year ago.
CME Cheddar block cheese climbed to $1.95 per pound last Wednesday, highest since Oct. 3, 2024, but it closed the shortened Memorial Day week at $1.9475, up 7.75 cents on the week and 13.75 cents above a year ago. The barrels finished at $1.87, 1.75 cents higher, 7 cents below a year ago, and 7.75 cents below the blocks. There were 26 CME sales of block on the week and 13 barrel.
Retail cheese demand is strengthening in the Central region, according to Dairy Market News, and food service sales are steady. Exports are also strengthening. Class III milk is available and cheesemakers say they are purchasing additional loads as low as $7-under class and running busy schedules.
Spot milk availability is mixed in the west with decreasing farm level output in some parts and more educational institutions starting spring recesses. Cheese manufacturers convey that milk is sufficiently meeting needs. Cheese production was steady or stronger following the holiday weekend.
Inventories are extremely tight. Domestic demand is reported as steady, stronger, or in balance with supplies. International buying varies from steady to strong, according to DMN.
The butter soared 10 cents last Tuesday, then added a half cent last Wednesday to hit $2.5250, highest CME price since Jan. 27, 2025. It closed last Friday at $2.4750, up 5.50 cents on the week but 61.50 cents below a year ago, on 39 sales this week.
StoneX May 27 Early Morning Update attributed butter's strength to "end-users seeking more price coverage through year end and into 2026 amid global fat prices that have yet to show material weakness."
DMN says milk output is steady in the Central region, and contacts report cooler temperatures in parts of the region are leaving plenty of cream available. Ice cream makers are pulling on cream supplies as they prepare for the summer. Cream multiples are holding steady in the Central region. Butter makers are actively churning, and spot loads of butter are available.
Cream continues to be more than ample in the West, despite milk production decreasing week-to-week for parts of the region, and ice cream production increasing. Cream multiples remained above flat market at mid-week. Churning schedules were steady or stronger following the holiday weekend. Domestic butter demand is steady. Retail demand is described as at or above expectations. Food service demand was termed as down from expectations while export demand is strong, according to DMN.
Grade A nonfat dry milk climbed to $1.2875 per pound last Friday, highest since Feb. 13, up 3.50 cents on the week, and 12 cents above a year ago. There were 14 sales put on the board for the short week.
The DDR's Sarina Sharp said, "The anemic dollar is helping U.S. milk powder compete abroad. That's boosting export prospects and finally starting to prop up U.S. prices."
Dry whey closed last Friday at 57.25 cents per pound last Tuesday, up 3 cents on the week, highest since Feb. 10, and 15.75 cents above a year ago on nine sales.
Sarina Sharp said, "The U.S. accounted for a typical share of China's whey imports in April, as shipments that arrived last month were not subject to the temporary but significant 145% tariff. Chinese importers stocked up on product and China's whey imports outpaced April 2024 by 13.9%. There will likely be fewer ships arriving at Chinese ports this month," she warned. "But U.S. exporters are now rushing to book sales and ship them during the 90-day pause."
Agriculture Secretary Brooke Rollins provided an update last week on the USDA's ongoing partnership with Mexico to combat New World Screwworm (NWS). Rollins held a call with her counterpart in Mexico, Secretary Berdegue, to discuss the ongoing threat and actions being taken by both countries to contain the threat south of the U.S. border.
"USDA is working daily with Mexico to make sure the resources, tactics, and tools are in place to effectively eradicate NWS," a USDA press release stated. "Additionally, Secretary Rollins announced that USDA is investing $21 million to renovate an existing fruit fly production facility in Metapa, Mexico to further the long-term goal of eradicating this insect. When operational, this facility will produce 60-100 million additional sterile NWS flies weekly to push the population further south in Mexico. Given the geographic spread of NWS, this additional production capacity will be critical to our response," said the USDA.
"Our partnership with Mexico is crucial in making this effort a success," Rollins said. "We are continuing to work closely with Mexico to push NWS away from the U.S. and out of Mexico. The investment I am announcing today is one of many efforts my team is making around the clock to protect our animals, our farm economy, and the security of our nation's food supply." Current restrictions on live animal imports from Mexico remain in place, and as previously announced, USDA evaluates the suspension every 30 days.
Meanwhile, the National Milk Producers Federation reported that U.S. and Mexican dairy sectors renewed a partnership and unveiled a work plan to "enhance industry collaboration" at their seventh annual summit convened last week in Madison, Wis. "Industry representatives reaffirmed their shared commitment to strengthening bilateral collaboration and supporting the long-term success of the North American dairy industry," according to NMPF.
In other trade news, Rollins announced last week that "American dairy producers will have greater market access to Costa Rica, which has approved the first U.S. dairy facility to be registered under their new streamlined approval process. The Trump administration continues to break down non-tariff barriers, and this latest action is the first of many wins ahead for American dairy producers," Rollins stated.
The announcement drew praise the International Dairy Foods Assn., which stated, "Costa Rica is a market growing in importance for U.S. dairy. After being a net importer of dairy products a decade ago, the United States now exports more than $8 billion worth of dairy products to 145 countries. U.S. dairy exports topped $8.2 billion in 2024, with Central American markets surging, including Costa Rica, Guatemala and El Salvador all importing record values of U.S. dairy. In fact, U.S. dairy exports to Costa Rica doubled in value between 2021 and 2024, growing from $31 million to $60 million," according to the IDFA.
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