Key Takeaways:
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Block Cheddar and dry whey prices dropped in March, as higher production and weaker demand pressured the CME spot market. But, as the saying goes, “the cure for low prices is low prices.” Competitive export pricing, increased clarity on trade policy, and proactive buying for 2025 budgets have propelled cheese/Class III futures back to levels at or near contract highs. While the recent rally has grabbed headlines, HighGround sees this move as more of an opportunistic wave for dairy producers—not a tidal shift in market direction. Domestic demand remains soft, trade policy uncertainty lingers, and added processing capacity for cheese and whey may continue to cap upside potential.
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Despite a projected record U.S. corn harvest in 2025-26, global supplies are expected to tighten to a 12-year low. The USDA forecasts global ending stocks down 16% from last year, driven by strong demand and reduced stockpiling in China. This would push the global stocks-to-use ratio to 18.9%, the lowest since 2012-13. U.S. yields are projected at a record 181 bushels per acre, but domestic ending stocks are seen at the lower end of trade expectations. Given these dynamics, HighGround recommends that producers consider implementing flexible coverage strategies to manage potential price volatility and safeguard against unforeseen supply disruptions.
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With improved milk prices and softened feed costs, margins have significantly improved from last month and are sitting at historically strong levels. Even with upcoming changes to Federal Milk Marketing Order pricing formulas set for June 2025, current price signals remain favorable. That said, uncertainty still looms, and markets could shift quickly. HighGround encourages producers to stay proactive and take advantage of favorable margin opportunities as they emerge in the futures market, helping to lock in profitability and buffer against potential volatility ahead.
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