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Early Morning Update - March 13, 2025

By: Dairy Team - Chicago, Dairy Chicago

 

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What a difference a week makes. Cheese buyers continued with more aggressive bids in the spot market Wednesday as blocks gained 5.5 cents and barrels 2.5 cent on 2 and 3 trades, respectively. Sellers stepped in at the end of the trading session to send a reminder that they’re still out there, but buyers are the aggressors this week. Ultimately $1.60 cheese spurred some willing demand likely from both domestic and international buy side interest as US prices remain cheap (see chart below). Now that spot is up about a dime this week, we may see upside slow short-term as the spot market wants to find some new market clearing level.

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Class III futures eclipsed $18.00 again, up 45 cents from the open, but on lower volume of 1,351 contracts. Open interest was slightly negative with a good mix of short covering in April and new contracts being established farther out. This may foreshadow a slowing of the nearby Class III and Cheese rally in the short-term. Trading both sides of unchanged today ought to be expected.

Trade war threats loom over commodities and the economy as the Trump administration adds and removes tariffs left and right. Looking outside of global trade, the overall US economy has shown signs of strength recently. Unemployment last Friday showed job growth in most major sectors (aside from government jobs of course) and CPI data on Tuesday was weaker than expected, although still well above the 2% federal mandate. Jobless claims fell this morning too. There is some stability here despite of the political turmoil.

Butter continues to slowly climb from last weeks lows as it rose 1 cent on 9 trades as 9 bids were left unfilled. Butter futures volume were able to increase nicely from bleak levels on Tuesday as 380 contracts traded. The biggest shock to the market yesterday was the NDPSR report as it came in about 9 cents lower than expected. There was talks of numbers these coming weeks coming in lower as we entered the new crop date on spot but it’s also possible that butter was made with discounted cream. Nearby futures offers are trading below settlement this morning.

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NFDM was also weaker than expected in NDPSR as it came in 2.6 cents below expectations as prices dropped 5 cents week to week which has also caused futures to open weaker this morning. We’ve seen some stability in spot these last few sessions and it has lent some support to futures but the weaker NDPSR print could take that back for now. Futures volume were steady from Tuesday as 381 contracts traded while open interest rose by 120.

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