A dollar fifty a pound now buys almost anything on the CME spot call. Butter, both cheese grades and NFDM are all sitting within a few cents of that mark, a level of convergence this board hasn’t shown in a while.
Butter and NFDM were the cheaper products just a couple of weeks ago, but both have lifted quickly now that fresh milk is less available. Cheese has moved the other way, drifting back down from the higher values it printed last week to meet the rest of the board. Fairlife’s ongoing plant outage is playing a bigger role in that shift than expected, a reminder of how narrow the gap is between an oversupplied market and a tight one.
USDA’s June Dairy Products report, released this week, backs up what the spot board has been signalling. The US dairy herd stood at 9.677 million head in June, the largest June herd in at least five years, so there’s little reason to expect output to pull back soon.
Milkfat production hit a June record, up 3.3% year on year, and butter output rose 8.5% even after the usual seasonal step-down from May’s flush-driven high. With that much cream still moving through plants, the recent firmness on the board looks more like a pause than a floor.
Combined NFDM and SMP output eased in June as the spring flush faded, a normal seasonal move rather than a supply scare, while cheese production grew just 1.1% year on year and stocks held roughly flat. That’s despite more than $10 billion committed to new or expanded cheese capacity due online by 2028: until that capacity actually ramps up, cheese looks set to stay well supported.
Trade flows tell their own story. US cheese exports hit another monthly record in June, up 24% year on year, and dry whey posted its strongest month in years, up 47%. Butter exports jumped 35% for the month and 90% over the first half. NFDM/SMP exports lagged, down 19% for the month on tougher comparisons. On the import side, butter arrivals into the US nearly tripled in June, with New Zealand and Ireland now the two largest dairy suppliers to the US by value for the first half of the year.
This news article is part of a broader Vesper market analysis on the US dairy market. For the full market analysis, visit: https://app.vespertool.com/market-analysis/3310
