MRV BLOG: MRV Market Commentary June 16, 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 dairy commodities market continues to evolve, with recent trends highlighting both rising prices and shifting demand dynamics across key products like butter, cheddar cheese, and nonfat dry milk. Butter prices have modestly risen, while 40-pound block cheddar cheese has experienced a significant increase due to limited supplies and robust demand, with steady trading volumes keeping prices high from late May into June. Nonfat dry milk (NFDM) has also climbed, propelled by strong global exports and beverage innovations, though elevated prices may soon dampen demand.

U.S. Dairy Exports Update

U.S. dairy exports are experiencing robust growth in 2025, driven by strong global demand and competitive pricing, with total export volumes approaching record levels. Mexico is the top importer, accounting for over 80% of the U.S.’s dairy product exports, particularly cheese (40.4 million pounds in May 2024, a record high) and nonfat dry milk, fueled by a 25-30% domestic production deficit. China ranks as the second-largest importer, with significant demand for whey (up 41.7% in March 2025) and whole milk powder (up 30.7%), though U.S. exports face challenges from 125% tariffs, redirecting some trade to New Zealand and Australia. Cheese and butter exports are thriving due to new domestic processing capacity and high global prices, but whey and lactose exports struggle with tariff-related headwinds. Increased milk solids production and a weaker dollar further bolster export competitiveness, though domestic inventory risks and softening foodservice demand could temper gains.

Class I Dairy Calculation Changes (June 1, 2025)

Effective June 1, 2025, the USDA implemented changes to Class I dairy pricing under the Federal Milk Marketing Order, adjusting milk composition factors to 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids, and updating the butterfat recovery factor to 91% from 90%. The changes eliminated 500-pound barrel cheddar prices from the pricing formula, using only 40-pound block cheddar prices, and revised make allowances while returning to the “higher of” Class III or IV skim milk pricing factors. A rolling monthly Class I extended shelf life (ESL) adjustment was introduced to ensure price equity for ESL products, and Class I differential values were updated to reflect higher servicing costs. These changes increased Class I milk prices by approximately $0.50 per hundredweight, driven by higher cheese prices and tighter milk supply, though increased wholesale costs may reduce export competitiveness and raise consumer prices.

National Dairy Month

National Dairy Month, celebrated every June, honors the dairy industry’s vital role in providing nutritious, high-quality products like milk, cheese, and yogurt. Established in 1937 as National Milk Month to promote dairy consumption during peak production, it has grown into a month-long recognition of dairy farmers, processors, and their contributions to health and the economy. Events across the U.S., from farm tours to festivals, highlight dairy’s nutritional benefits, including calcium and protein, while showcasing sustainable farming practices. It’s a time to appreciate the hard work behind every glass of milk and the industry’s impact on communities nationwide.

Summary

In summary, the U.S. dairy commodities market in June 2025 reflects dynamic growth, with rising prices for butter, 40-pound block cheddar, and nonfat dry milk driven by tight supplies and strong demand, though high prices may soon moderate. Robust U.S. dairy exports, led by Mexico and China, approach record levels, bolstered by competitive pricing and new processing capacity, despite tariff challenges for whey and lactose. The USDA’s Class I pricing changes, effective June 1, have increased milk prices by about $0.50 per hundredweight, potentially impacting export competitiveness and consumer costs. National Dairy Month celebrations underscore the industry’s vital role in delivering nutritious products and supporting sustainable farming. MRV Dairy Solutions remains committed to navigating these market shifts, offering expert sourcing and innovative strategies to enhance your dairy portfolio. Contact us to leverage these opportunities for your business.

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.