The US dairy market faced significant downward pressure this week, with cheese prices dropping sharply despite continued uncertainties in global markets. The latest market developments reflect a complex interplay of regional production shifts, trade tensions, and growing disease concerns in Europe.

US cheese prices decline as regional production shifts

Cheese prices experienced a notable decline this week, influenced by production capacity expansions in key growth states. While overall US milk production growth remains uncertain ahead of February’s official figures, states like Texas and Idaho continue to drive positive production trends.

These same regions have seen substantial increases in cheese processing capacity over the past six months, creating additional downward pressure on current market prices. Although not all production will enter the CME spot market, the expanded capacity is already influencing market sentiment.

FMD outbreak crosses borders in Europe

In a concerning development for global dairy markets, Slovakia has confirmed multiple cases of foot-and-mouth disease (FMD) on three separate farms in the Dunajská Streda district, marking the spread of the disease beyond Hungary where it was initially reported.

Slovak officials confirmed positive cases at facilities housing over 1,900 dairy cattle combined. The affected district represents a significant agricultural region, home to over 12,700 cattle and 128,000 pigs. Despite implementing strict biosecurity measures following the Hungarian outbreak, the disease’s high transmissibility proved challenging to contain.

Currency movements create export opportunities

While tariffs continue to dominate trade discussions, currency movements are quietly reshaping competitive dynamics for dairy exporters. Recent USD weakness against the Euro has created a natural buffer against tariff pressures for US dairy exports.

This currency advantage amplifies the already significant price gap between US and European dairy products, potentially maintaining US origin as the competitive choice in many international markets despite trade tensions.

Market outlook

Dry whey prices found modest support this week, moving from $0.45/lb to $0.48/lb after more than two months of stable or decreasing prices. However, analysts remain uncertain whether this represents a sustainable shift or temporary price action against a backdrop of generally weaker market fundamentals.

As global markets navigate disease concerns, production shifts, and trade uncertainties, market participants are closely monitoring how these converging factors will influence dairy commodity prices in the coming weeks.

Read our full US Weekly market analysis here: https://app.vespertool.com/market-analysis/1806?commodity=dairy