January 2025 Dairy Producer Market Update

January 2025 Dairy Producer Market Update

 

Key Takeaways:

  • Milk prices have shown some improvement over the past month, with Class III and IV prices mostly ticking higher. Cheese markets have rallied from early December lows, supported by stronger export activity as the price gap between U.S. and European cheese narrows. However, new production capacity that is expected to come online in the coming months may temper further price gains. Meanwhile, butter production remained strong in November despite significant milk production challenges in California due to bird flu. A notable stock drawdown in November, coupled with soaring imports, helped meet surging demand during the month, keeping the market in balance.

  • Uncertainty is a defining theme for feed markets in the new year. Drought conditions in southern Brazil and Argentina, driven by La Niña, could significantly impact global corn and soybean production. In the U.S., soybean crush is off to a strong start, with record demand for soybean oil in renewable diesel. Meanwhile, the incoming Trump administration’s tariff-focused trade policies add another layer of risk, particularly for soybean exports, which may prompt more U.S. farmers to favor planting corn over soybeans this season. All these factors have contributed to volatile corn and soybean meal markets in the past month and remain key concerns for the upcoming year.

  • Despite some challenges with both milk prices and feed costs, margins remain among the highest levels seen in the past decade. Opportunities still exist to secure favorable margins in the months ahead. HighGround continues to encourage producers to measure, monitor, and actively manage their margins in 2025.

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