May 12

5/12 – Income-over-feed costs for dairy farmers were record high in Q4 2024, incenting cow retention and milk production increases that should persist through Q2 2025. Cheese output was up 1.4% year-over-year in March. Rising output and weak domestic demand have helped tame cheese prices. However, a significant discount to foreign markets has helped boost export demand. CME block, which had plunged to $1.5750/lb in mid-March, has recovered to $1.8175 (5/9). Mexico, our biggest export customer, is still protected by the zero-tariff USMCA. Butter prices that were $3.00/lb in Sept 2024, have declined to $2.33 (5/9). However, like cheese, exports are helping set a floor. Every time that butter prices have dipped below $2.30, they have rebounded. Butter output in March was 8.6% above a year ago and cold storage supplies were up 4.0%. Ample supplies should keep prices rangebound in the $2.30s for spring/summer.