Milk Price Futures Heat Up on Seasonal Momentum

amy55735
May 15
1 min read

Class III milk futures came to life at the beginning of the month following underlying cheese prices higher, but more importantly, a seemingly change of attitude. Class III milk futures had been under pressure since the beginning of the year and accelerated to the downside with the announcement of widespread tariffs at the beginning of February. The price increases in cheese became short-lived, with the traders uncertain over international demand. Not only was international demand a concern, but slower domestic demand also weighed on the market.

The commercial disappearance of all dairy products for 2024 was about half a percent below the previous year, and the beginning of 2025 did not look any better. The potential for continued slower domestic and international demand left prices on the daily spot market floundering. Class III futures moved later contracts to a discount to the cash prices rather than a premium, generally maintained through September or October.

The increase in cheese prices at the end of April broke out of the short-term pattern, exceeding what traders had anticipated during the spring flush. It seemed the attitude of traders began to change. Class III milk futures not only followed the higher cheese prices but also removed the discount that was held to put a premium back into the market. This magnified the increase more than the underlying cash prices would have suggested.

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