CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - January 6, 2025
By: Dairy Team - Chicago, Dairy Chicago
Class III and Cheese futures kicked off the New Year with an orderly recovery bounce over the last two trading sessions following the NYE sell off. Futures prices climbed modestly lighter trade volume Friday as spot cheese continued to see a good two sided trade with prices rising slightly putting the block/barrel average at $1.8750. With Block cheese now at $1.9200. the trade is trying to reconcile what happened to the $1.63 block price of early December. That’s right – spot block cheese gained nearly 30 cents in three weeks.
While we don’t have all the answers, we will point out that despite all the new cheese productive capacity coming online – most of that forthcoming cheese production has not yet been made. And while there are questions and concerns broadly around the wherewithal of producers to increase US milk production without issue in 2025, the reality is that bird flu in California has turned out to be a bigger issue than people gave it credit for back in September (around the time in broke). With California milk production down 9.2% in November, Bird Flu swept the leg of milk production – and as a corollary cheddar production, which had already been underwhelming in 2024. Cheese inventories were and remain tight (=7% in November), which leaves demand in the driver’s seat.
While demand did not necessarily turn red hot in December – at least as far as we can tell – it seems plausible that folks in the cheese pipeline have been carrying less inventory than normal given higher cost of money. But what is worse than high priced cheese? No cheese. We realize that is a bit hyperbolic as spot loads have been offered for sale at many price points the entire rally, but generally tighter supplies of fresh was the key theme to close out 2024 and begin 2025.
Class III and Cheese prices responded with a swift Christmas rally (to new highs in some cases, ex. The February contract) but has remained rather choppy over the last week. As we’ve said before, big directional moves happen but they’re not necessarily the goal of futures markets. Futures are trying to carve out some equilibrium price level and after the last few trading sessions, we’d saw we’re finding that price “area” now. We also suspect that the cheese market has adjusted high enough for now – call the cheese average between $1.85-$1.95 the target there.
Dry Whey, which has underpinned Class III prices as well, remains relatively stable for now in themed-70 cent price area for the past two weeks. We expect more of the same for now for Dry Whey.
Spot Butter spent December 2024 between $245.000 and $258.000. Friday the spot market finished at $255.250. While not apparent in conversations, there seems to be some building market momentum for upside price action. We’ll need to see the $258.000 level taken out, but a recovery bounce for butter may be in the works. Futures, which firmed up the week of Christmas, were modestly lower last week and on Friday, but there is little technical evidence that more immediate downside is in store. $2.50 may be the floor until we see milk production recover in California.
US NFDM prices 10 cents above the world prices was hard to wrap our head around earlier in 2024. Now the US price is closing in on 20 cents above global SMP prices. Which is right? For the sake of argument, we’ll say both. The US has a unique problem with Bird Flu in the state that produced 50% of US powder back in 2023. Issues with normal demand concerns be damned these days. That said, NFDM futures are not rallying like crazy. In fact, they’re rangebound since October. Back and forth we go as markets try to find that “equilibrium” price level we mentioned earlier in this piece. NFDM found it – and it’s in the high $130s for now.
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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