Producer Pay Forecast: March 28, 2025
After several weeks of extreme uncertainty in the market, things are feeling slightly steadier this week. The threat of tariffs both within and outside the U.S. has resulted in rather swift shifts in the dairy market. So far, dairy has seen some positives from the tariff discussions. U.S butter and cheese exports were up in January as purchasers attempt to stock up before possible tariff implementations on April 1st. China has seen an 18% increase in cheese demand, which could result in additional exports from the U.S.
A few details:
- U.S milk production was up 0.95% Y-O-Y in February.
- In addition to milk production growing, component levels continue to increase.
- Lower prices have made the U.S. more competitive globally. Especially as Europe faces a decline in milk production due to disease.
- Butter prices may see a decline after Easter, prior the summer season production ramping up.
CME prices hit recent lows for the week ending 3/21, although remaining higher Y-O-Y. Most prices have seen an uptick this week. If prices remain around current levels, the U.S. could maintain their competitive advantage in the market, even if 25% tariffs were to go into effect.
