Producer Pay Forecast: July 25, 2025
Attached you will find updated price estimates. All values for the month of June are finalized. July and August advanced prices have been published by the FMMO as well. The new FMMO ESL adjuster for July was announced at + $1.14/cwt and at +$0.57/cwt for the month of August.
As you all know, August will be the first month that we will see the results of the WNY State Order taking on the FMMO changes implemented on June 1, 2025. This is reflected in the attached forecast. With that being said, July forecast values reflect the prices estimated under both the new FMMO rules and the current WNY State Order rules. Please remember, forecasted PPD's remain provisional as we strive to understand the impact of amendments on the Federal Order 1 pool.
A few notes:
U.S butter and cheese prices remain highly competitive in the global market, and export growth has continued despite new tariff announcements. Domestically, cheese sales are not experiencing the same growth. Consumers are more price conscious, resulting in less business for the food service industry, although a 0.6% M-O-M uptick in food service spending in June provides a cautious optimism. Domestic retail butter sales remain steady as people go back to cooking at home. At the CME, spot butter prices have been steadily falling over the last week, reaching $2.4200/lb. for the first time since May on July 23rd, while spot block prices remain in the low $1.60's/lb.
Seasonal trends are in full swing as Class II and III production continue to beat out Class I and IV. Spot loads of cream and condensed skim milk are headed to ice cream production to keep up with the summer demand, resulting in less output from butter churns and lower production levels for NDM and dry whey.
According to the U.S milk production report:
U.S milk production grew 3.25% year-over-year in June, bumping YTD milk production to a 1% increase. An increase this large has not been seen since 2021.
This growth in milk production can largely be credited to a 19% YOY increase in Kansas, an 11.5% YOY increase in South Dakota, and over 9% YOY upticks in Texas, Idaho, and Georgia.
U.S Milk per cow was up 1.7% in June YOY.
Please feel free to reach out with any questions or concerns!
*Reminder:
The changes to skim milk composition factors will take effect December 1, 2025.
If you have any questions or would like to talk about the pay price outlook, please feel free to reach out to Allee at acoombe@uncdairy.com.
