Federal Reserve Cuts Interest Rates by Quarter Point
Published: Friday, November 7, 2025
The Federal Reserve lowered its benchmark interest rate for a second time this year by a quarter-point. The expected move will lead to lower interest costs for loans tied to the prime rate, such as some variable-rate credit cards, adjustable-rate mortgages, and home equity lines of credit.
The dairy industry and everyone else remains in a government shutdown cloud as October comes to an end, appropriately on Halloween. The Senate failed for the 13th time last Tuesday to reach the 60-vote margin to advance the continuing resolution to reopen. The shutdown reportedly will also impact the Fed's future decisions on interest rates due to the lack of data.
Pressure mounted as millions of Americans face the loss of their food assistance via the Supplemental Nutrition Assistance Program (SNAP) and prompted over 20 states to sue the Trump administration to prevent that. Meanwhile, federal workers, including air traffic controllers and the military, will miss paychecks. President Trump even called on the Senate to exercise the "nuclear option" of ending the filibuster and thus pave the way to reopen the government.
There weren't as many regularly scheduled USDA reports missed last week. However, next week's Dairy Products report will be sorely missed. As I reported last week, there was no September Milk Production or Cold Storage report.
StoneX stated, "We weren't expecting any big shifts in cold storage numbers. Cheese stocks were up 1.7% year over year in August and we think they built a little more and were up 2.4% at the end of September. Butter was down 5.7% from last year in August, and the forecast for September we have them down 6%." Hopefully, these reports will resume soon.
The September Milk Production report is a quarterly one, says StoneX. "So it includes more rigorous methodology and in the last few years the USDA made downwards revisions to cow numbers. If that happens this year, it would likely result in a revision lower in milk production. We're not counting on a revision, but history tells us it's a possibility. We doubt much changed between August and September. We expect September headline milk production to be up 3.2% which is the same growth as August. Dairy farmers likely continued to add cows to the herd between August and September, and milk production per cow growth likely remained good as we lap over the early impact of bird flu in California in September last year," said StoneX.
All eyes were on President Trump's latest trip out of country, with headline-making meetings with several world leaders.
They included Japan's new Prime Minister Sanae Takaichi and China's President Xi Jinping. The strained relations between Trump and Jinping appeared to have been healed and the issues of Fentanyl, rare earth and tariffs appears to have been resolved. China renewed purchases of U.S. soybeans. Trump called his meeting with Jinping "a 12 on a scale of 1 to 10."
The U.S. cattle market took a hit last week upon news from a couple of fronts. As I reported, the Agriculture Department announced steps to strengthen the beef industry and President Trump announced an increase in Argentina's tariff rate quota for beef from 20,000 to 80,000 metric tons (MT), a move opposed by U.S. beef producers.
Mexico's Agricultural Minister Julio Berdegué held a video conference with Agriculture Secretary Brooke Rollins to discuss reopening the border to live cattle imports, which have been suspended due to an outbreak of New World Screwworm. No date was set.
The National Milk Producers Federation and U.S. Dairy Export Council praised the announcement of new trade agreements with Malaysia and Cambodia, plus new trade agreement frameworks with Thailand and Vietnam. "With these new agreements, the administration has delivered big wins for America's dairy farmers," said Gregg Doud, president and CEO of NMPF. "Agreements like those struck with Malaysia and Cambodia will ensure we have fair access to Southeast Asia's fast-growing markets."
Checking prices at home, CME block Cheddar climbed to $1.8250 per pound last Wednesday, highest since Aug. 20, 2025, but it closed the week and the month at $1.7675, down a penny on the week, up 1.25 cents from Oct. 1, but 7 cents below a year ago. The Cheddar barrels made it to $1.82 last Tuesday, highest since Aug. 14, but saw their Friday finish at $1.8050, 3.50 cents lower on the week, 8 higher on the month, but 6.25 cents below a year ago.
Sales totaled 21 loads of block for the week and 106 for the month of October, down from 111 in September. Barrel sales amounted to just one load on the week and five for the month, down from eight in September.
Cheese production was steady to lighter in the Central region last week, according to Dairy Market News. Downtime was causing some plants to move milk to balancing plants or sell it to nearby cheesemakers. Spot trades remain light as Class I plants continue to pull on supply. Class III milk prices at mid-week ranged flat to $2-over class. Domestic cheese demand is steady. Contacts report exports to Mexico are steady, but interest from other countries remains light.
Milk production throughout the West is providing plenty of supply for cheese producers. Spot milk is generally available, but demand was not high as many cheese manufacturers are receiving adequate deliveries of contractual milk.
Cheese production was steady to stronger but domestic demand is flat. Retail holiday promotions are not yet robust and food service activity continues to lag 2024 levels. Export demand is mixed, as global prices continue to become more competitive. Spot cheese loads are widely available to somewhat tight depending on the variety according to DMN.
StoneX dairy broker Dave Kurzawski said in the Nov. 3 Dairy Radio Now broadcast that market sentiment is "bearish," when looking at the sustainability of a $1.80 cheese price. "The market is focused on the supply of milk, and the number of cows out there, 9.5 million, plus the lack of demand, new cheese processing capacity, and the lack of exports. We had good cheese exports all year, he said, but prices globally have come down, specifically in Europe, and it's becoming harder to export cheese, not being as competitive as we were."
The flip side is butter, according to Kurzawski, as exports are record high, but we're not getting that news because the government is shut down. The butter price has fallen and we have the cheapest butter in the world, he said, but the market has "bearish blinders" on right now, evidenced with cheese currently at $1.82 while first quarter 2026 it's at $1.63. He quickly added, "We're at the time of year when we tend to see domestic demand rise a little, so we might see a stronger price in November and some kind of Christmas rally for dairy farmers."
The brightest spot is whey. Kurzawski credited "the high value protein consumer who doesn't seem to care about price as 2025 is the year of protein." That's helping to pull on the dry whey market, he concluded. "Those markets aren't totally correlated very well but ultimately the demand for whey is there."
Cash butter sunk to $1.5550 per pound last Wednesday, lowest level since Feb. 26, 2021, but closed last Friday at $1.61, up .75 cents on the week, 11.50 cents below its Oct. 1 print, and $1.06 below a year ago. There were 22 sales on the week and 184 for October, one less than in September.
Milk output is steady in the Central region, and component levels are increasing. Cream production is strong, but demand is strengthening from cream cheese and other Class II processors. Spot cream sales to butter makers are light, as butter makers are utilizing cream from within their network rather than purchasing it. Butter production is strong, though some plant downtime is still affecting output. Domestic butter demand is steady and international sales remain strong. Spot loads of 80% butterfat butter are available, but inventories of 82% remain tight.
Milk production and fat components in the West are also providing plenty of cream, says DMN. Cream multiples at mid-week were unchanged from last week. Demand for spot cream was stronger with heavily active seasonal churning. Butter production continues to focus more heavily on 80% butterfat butter than 82%. Retail butter is widely available, while bulk butter and 82% butterfat butter is comparatively less readily available.
Some manufacturers report export butter demand is still outpacing production. Domestic demand is steady and sales for next quarter are picking up, says DMN.
Grade A nonfat dry milk clawed its way back to $1.1825 per pound last Tuesday, highest since Sept. 10, but it closed last Friday at $1.1325, 2.75 cents lower on the week, lowest since Feb. 25, 2021, 3 cents lower than its Oct. 1 print, and 24.50 cents below a year ago. There were seven sales on the week and 77 for the month, down from 117 in September.
Dry whey closed last Friday at its highest mark since Jan. 21, 2025, hitting 71 cents per pound, up 2 cents on the week, 7 cents above its Oct. 1 level, and 10.50 cents above a year ago. There was one sale on the week and 16 in October, down from 18 in September.
Dairy Market News reports that milk output was seasonally increasing in the East and West, as Southern states in the regions are now experiencing colder temperatures and, as a result, better cow comfort, leading to more milk. Milk production in the Central region is steady.
Looking globally, DMN reports that milk prices dropped sharply in September, led by declines in Germany and the Netherlands. Processors in Poland planned further cuts in October, while a major European cooperative prepared another price adjustment. Ukraine is working to steady its market, but volatility and weak demand remains. Tight margins and rising costs are squeezing producers.
"Milk prices in East Europe remained steady throughout summer before slipping in September," said DMN. "Ongoing geopolitical tensions and war-related trade pressures continue, but Ukraine's dairy sector is expanding-boosting quality, rebuilding capacity, aligning with EU standards, and targeting full compliance by 2030."
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