MRV BLOG: MRV Market Commentary April 2, 2025

Check-in here to see the MRV commentary on what we have seen and are seeing in the dairy market.  These insights have been developed from MRV’s proprietary data, industry experience, and industry reports referenced below. Here’s our latest:

Domestic

The latest USDA report is showing changes in supply, demand, and pricing across butter, cheese, nonfat dry milk, and dry whey. Butter prices have experienced a downward trend due to increased production and higher butterfat supplies. In January 2025, butter production reached 218 million pounds, a 0.5% increase from the previous year. This surplus has exerted downward pressure on butter prices, resulting in a 13 cent decrease MoM. Cheese, both 40# block and 500# barrel, saw a decrease as well at 9 cents and 11 cents respectively. This story didn’t change for dry whey or NFDM either, both moving down heavily Month over Month. Dry whey saw a 10 cent decrease and NFDM had a 13 cent decrease.

Butter and Cheese

Butter inventories continued to rise in February, marking a 2.6% increase from the same month last year and reaching the highest level for February since 2021. However, the year-over-year growth in stocks was among the smallest recorded in the past year. The USDA also adjusted January’s butter stock figures downward indicating a slower buildup than initially estimated. Ample milk production and higher butterfat content have kept cream supplies plentiful, supporting strong butter output. Although domestic demand remains solid, increased imports have contributed to rising storage levels. As a result, butter prices have dropped significantly since the start of the year, with additional stock accumulation likely to keep prices under pressure.

Cheese inventories, though still lower than the previous year, are gradually closing the gap. At the end of February, total cheese stocks were down 5.3% from a year earlier. American cheese inventories declined by 5.7% year-over-year, the narrowest gap since May 2024, while other cheese stocks saw a 5.2% drop, consistent with recent months.

Shifts in China’s Dairy Demand

China’s demand for skim milk powder (SMP) and whole milk powder (WMP) started the year on a weaker note. January SMP imports were the lowest for any month since 2013, though February saw a 16% increase compared to the previous year. Despite this improvement, overall SMP imports for the first two months of 2025 remained 6% below last year’s levels. U.S. shipments were hit particularly hard, plunging 60% in January, with no recorded imports in February—the first time since May 2019. WMP imports also declined, falling 4% in the first two months of the year. Ultra-high temperature (UHT) milk imports continued their downward trend, with January volumes down 4.7% before stabilizing in February to match last year’s levels.

Meanwhile, butter, cheese, and whey imports showed strength. Butter imports posted double-digit growth in both January and February, while cheese shipments initially slowed but surged 50% in February, pushing year-to-date totals above 2024 levels. Dry whey imports remained steady, with the U.S. holding its position as China’s top supplier. However, China’s broader economic challenges add uncertainty to future dairy imports. With deflation concerns rising and inflation dropping 0.7% in February, the government has introduced stimulus measures, including childcare subsidies and wage increases. While these policies may eventually boost demand, it remains unclear whether U.S. dairy exports to China will benefit.

Summary

The latest USDA report highlights changes in supply, demand, and pricing for butter, cheese, nonfat dry milk (NFDM), and dry whey. Butter prices have fallen due to increased production and higher butterfat supplies, with production rising by 0.5% in January 2025. Cheese prices also decreased, with 40# block cheese down by 9 cents and 500# barrel cheese down by 11 cents. Both dry whey and NFDM saw significant price drops as well. Butter inventories rose by 2.6% in February, reaching the highest level for February since 2021, with increased imports contributing to stock buildup. Cheese inventories decreased by 5.3% year-over-year, with American cheese stocks showing the smallest drop since May 2024. China’s demand for dairy weakened, with skim milk powder (SMP) imports at a 12-year low in January, though there was a 16% increase in February. However, imports of butter, cheese, and dry whey saw growth, while China’s economic challenges add uncertainty to future dairy imports. MRV projects prices to remain lower but slowly build up throughout the year.

This information cited by MRV Marketing, LLC is for informational and reference purposes only. It is not intended to be a conclusive statement of future market conditions. It is not legal advice or legal documents. The data used in these documents contains references to information created and maintained by other organizations or agencies. Please note that MRV Marketing, LLC does not control and cannot guarantee the accuracy of these outside materials.

Statistical data referenced here is gleaned from reports by MRV Proprietary Data, CME Group, Dairy Herd Management, USDEC and USDA.