Market Reports

The dairy markets moved higher again as the trade grappled with structural barriers to expansion throughout the Northern Hemisphere. In the United States, limits to growth are well known.

Tighter milk supplies and lower milk solids output have stiffened competition among dairy processors. While there are no obvious winners, there is a clear loser.

The bears went into hibernation a little early this year, and the bulls enjoyed raucous celebrations on LaSalle Street. Milk and dairy product futures soared to life-of-contract highs amid continued barriers to growth.

U.S. milk output has trailed prior-year volumes for 13 straight months. In Wednesday’s Milk Production report, USDA slashed its initial estimate of June milk output. The agency now reports a 1.7% drop in milk production during the tail end of the flush.

Like Katie Ledecky in a Paris pool, the dairy spot markets hit one milestone after another. CME spot Cheddar barrels gave a standout performance, blocks tied for their highest mark since January 2023, butter leapt to its loftiest value since last October, and spot nonfat dry milk (NDM) cleared the bar for the first time in 18 months.

Hot temperatures continue to challenge output in some areas, but the suffocating heat and humidity seen in recent weeks has largely subsided. Even so, spot milk remains tight, and manufacturers are paying a premium to get their hands on extra loads.