Let’s Chat Dairy is a weekly podcast, hosted by HighGround Dairy’s top analysts. At the end of every week, they sit down to recap the week in dairy markets and summarize recent reports and relevant news. The podcast can be found here on our dashboard, or wherever you listen to your podcasts. Subscribe so that you never miss an episode!
Listen on Spotify | Listen on Apple Podcasts | Listen on Amazon Music
Transcript:
(0:14) Alyssa Badger:
Hello everyone and welcome back to Let’s Chat Dairy, your favorite weekly market podcast powered by HighGround Dairy. Today’s Friday, January 3rd, 2025 and a very happy New Year to all of you. We hope you had a wonderful start to the year, and we’re absolutely thrilled to have you back as we dive into another exciting year of Dairy Market Insights. You’re joined today by me, Alyssa Badger, and Cara Murphy. And while this week was a bit quieter with markets closed on Wednesday for the New Year holiday, there’s still plenty to discuss. So let’s kick off 2025 with a recap of the first CME spot market activity and all the important details you need to stay informed.
(0:56) Cara Murphy:
Alright, the dry whey market went entirely unchanged this week at $0.75 per pound, seeing just a single trade which occurred today. In cheese, the market is moving up, blocks closed today at $1.92 per pound with 7 trades in all, while barrels settled at $1.83 per pound with a total of 5 trades. On the flip side, butter is moving lower, closing at $2.5525 per pound today with 16 trades in all, and nonfat dry milk still very comfortably range bound between $1.37 and $1.38 per pound with 15 trades on the week.
(1:29) Alyssa:
Thanks, Cara. Every Thursday, you know, the USDA publishes the Weekly US Dairy Cow Slaughter, Weekly Cream Multiples, and the Weekly Spot Class 3 Milk Price for the Upper Midwest, which we of course provide in a one-stop, easily digestible report for subscribers on that day. But Cara, what stood out to you the most within that data?
(1:50) Cara:
Hmm, well for that I would have to say some interesting trends are developing in the Dairy Cow Slaughter Data. Throughout 2024, slaughter trended well below the previous year as tight heifer inventories led to expensive replacement heifers, all while interest rates remained elevated, which drove farmers to keep cows in the herd for longer. However, as milk checks started to increase and feed costs declined, profit margins swelled and we’ve seen greater investment in expanding the dairy herds, particularly in the Central Plains region. Texas has added cows, as well as Kansas, and there has even been an upward swing in Iowa, of all places. With more cows moving into those states, it’s not surprising that farmers feel more comfortable culling some of the older herd. In November, slaughter in Region 6, the south-central region including Texas, began to turn positive against the previous year, while in Region 7, which includes Iowa, slaughter is moving upward week over week since the start of December. Now, one other thing to mention that stands out is the recent increase in slaughter in Region 10, the Pacific Northwest, which also includes Idaho. The milking herd in Washington and Oregon have seen substantial growth this year, however since July, the Idaho milking herd has increased by 7,000 head, and just like the Midwest, the additional cows may have led farmers to sell off older, low-producing animals.
(3:08) Alyssa:
Yeah, that’s a good point, and dairy farmer margins have been pretty good throughout the end of 2024, so it’ll be interesting to see how they approach the new year. How did the Class III Spot Milk Price and Cream Multiples look?
(3:21) Cara:
The Class III Spot Milk Price is in a pretty average range for this time of year, with the average at $3.75/CWT below class pricing, slightly above where it started 2024. Cream Multiples across the three regions of the US (the Northeast, the Midwest, and the West) are also starting off the year lower than they have in the past. It’s no surprise cream has been plentiful throughout 2024.
(3:45)
Speaking of which, this week we received the Milk Fat Test for November. Unsurprisingly, the all-US Milk Fat Test printed another record high for the month of November. Surprisingly, though, was the California Milk Fat Test. After two consecutive months below prior year levels, the Milk Fat Test registered 4.37% in November, an all-time high, not just for the month, but ever. Given that California Milk Production was down 9.2% year-over-year in November, as bird flu sweeps through the dairy cow population, this outcome was rather surprising. That said, with such a drastic decline in milk output from the largest milk-producing state in the nation, who also supplies nearly one-third of the total US butter production, one would initially expect markets to move higher during the months of November and December, which was not necessarily the case. It’s quite possible this was a result of higher component values in the milk helping to offset the loss in total milk volumes, which means even with less milk, the greater fat content in the milk that was collected helped to support dairy products production such as butter. The November Dairy Products Production Report will be released on Monday at 2pm CST, which should provide some more insight into how this dynamic of greater components but lower milk volume worked out.
(4:57) Alyssa:
Yeah, you’re not kidding, Cara. That is an unexpected outcome. The California milking herd hasn’t particularly grown this year. So rather than invest in herd expansion, it seems that farmers have used extra cash from good profit margins to improve their feed quality. Additionally, under the effects of bird flu, milk per cow in the state drastically declined, which may also be impacting the milk fat test results. However, this result was also influenced by multiple factors. Is there anything else before we hop onto the international side of things?
(5:28) Cara:
Oh yes. Be on the alert because the first polar vortex of 2025 is coming to town, at least in the Midwest, that is. Expect single-digit temperatures (about -15 degrees Celsius) in northern states and uncommonly colder temperatures in the southern states throughout the start of January. When it gets unseasonably cold like this, cows put more energy into maintaining their body heat, which could possibly weigh on milk output. Farmers know how to keep cows warm and comfy in these freezing times, though. We don’t want any iced cream. Ha – had to. On to you, Alyssa. What was shaken down around the globe this week?
(6:04) Alyssa:
You know, it’s been a relatively quiet week from the international market as well because let’s face it, they know how to take time off a little better than we do as Americans. But the main area of focus was on this week’s GDT Pulse Event, which leaned pretty bearish, followed by Fonterra releasing their Forecast Volumes for next week’s first GDT event of 2025. On Tuesday’s pulse event, regular whole milk powder prices eased 1.5%, finishing the event at $3,705/MT, while skim milk powder prices slipped around 2.9%, down to $2,655/MT. There were more winning bidders, but less participating bidders, compared to the last pulse auction, implying that those that picked up product likely purchased smaller quantities.
(6:52)
Moving on to expectations for next week’s large GDT event, Fonterra has left its Offer Volumes unchanged ahead of the first auction of 2025. During December, though, offer volumes of anhydrous milk fat did increase twice, with those volumes still reflected in the 12-month forecast. Oceania Dairy Commodities corrected throughout the month of December, although finished the calendar year significantly above the year’s starting point. The SGX futures market is projecting further declines throughout this month, aligning to expectations that both supply and demand fundamentals are displaying some rather non-supportive outlooks. SGX whole milk powder futures are currently signaling a sharp drop, with a $200/MT decline projected for the entire month, an outlook that is hard to dispute right now. The skim milk powder market was sluggish throughout 2024, trading within a very tight range. However, this dynamic appears set to shift, with SGX traders pricing in a sharp decline there as well, and projecting prices around the $2,700/MT mark for January. Milk fats were the bell of the ball in 2024, reaching impressive high-water marks throughout the calendar year. However, 2025 seems unlikely to repeat that script as the supply side of the market appears poised to better meet demand. I think the bigger ongoing concern in all this, though, is the continued strength in the US dollar that has been eroding importers’ purchasing power. But be sure to head to our dashboard at to read our full analysis.
And that wraps up this week’s episode of Let’s Chat Dairy. Thank you so much for tuning in and starting the new year with us. As always, we’ll be here every week to bring you the latest market insights and updates to keep you ahead in the dairy industry. If you enjoyed today’s episode, don’t forget to subscribe, leave us a review, and share it with your network. Your support means the world to us and helps us reach even more listeners. Until next time, this is Alyssa Badger and Cara Murphy wishing you a prosperous start to 2025. Cheers.
