Producer Pay Forecast: February 26, 2025

Weakness in the butter market is weighing on the near-term outlook and adding to the overall air of bearishness around the dairy complex.  We've attempted to incorporate the new ESL adjustment into our forecast which will be adopted beginning June 2025 - please note that this will continue to evolve as we refine the processes around forecasting the new adjustment.

A few notes:

• CME Butter prices remain lower than expected due to large cream supplies. Butter reached a low of $2.3450 on February 25^th — a  price not seen since early 2023.
• Block cheese prices at the CME continue to sit above expectations, settling at $1.8800/lb. on February 25^th.
• UDSA estimated that that Total Fluid Milk Sales were up 0.8% Y-O-Y in 2024!
• January 2025 milk production was up 0.1% Y-O-Y.  This may be attributed to California once again, where production was down 5.7% on the year due to Avian flu.
• Tariffs on Canada and Mexico are set to go into effect March 1, 2025, as confirmed by President Trump on February 24, 2025. Increased exports will likely continue prior to this implementation.

For producers, a quick reminder that PPD forecasts are uncertain beyond June and subject to change.  Please do not hesitate to reach out if you have any questions or concerns.  Our contact information is below.

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