Key Takeaways:
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CME spot dairy price declines have weighed on Class III and IV futures, with Class IV taking the hardest hit. From January 17th to February 19th, butter and NFDM prices dropped $0.09/lb. and $0.1025/lb., respectively. At the same time, dry whey tumbled more than $0.19/lb., adding downward pressure to Class III. With improving milk production, robust butter and butterfat output, and new cheese capacity coming online, the dairy market appears to be in bearish territory.
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Uncertainty reigns in the corn and soybean markets, fueling volatility over the past month. While South American weather, U.S. ethanol policy, and export strength are supporting feed markets, new U.S. tariffs and expected retaliatory measures are adding turbulence and raising concerns about reduced global demand.
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Milk prices have declined while feed costs have climbed, tightening margin projections for the year ahead. Despite this, margins remain relatively favorable compared to the past decade, and opportunities persist to secure strong margins. HighGround continues to encourage producers to proactively manage their margins, especially when considering the recent volatility in the marketplace.
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