Big changes are here in the latest dairy market outlook! In this episode of Forecast Update Live, our panel dives into why cheese and butter forecasts have been revised upward and what’s driving bullish export momentum. Erica Maedke breaks down bearish risks like delayed capacity and global supply shifts, while Matt Gould highlights strong global demand and competitive U.S. pricing. Phil Plourd rounds things out with a fresh look at the weakening U.S. dollar and its impact on international trade.
📈 Cheese exports up?
🧈 Butter prices climbing?
💲 Dollar trends making the U.S. a global dairy bargain?
Tune in to hear why 2025 could be a pivotal year for U.S. dairy in the global market. Subscribe for more market insights every month.
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00;00;00;04 – 00;00;08;21
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00;00;08;23 – 00;00;30;01
Hello and welcome to Forecast Update Live, a video series from Egg Insights, where each month we gather to discuss our dairy market forecast. I’m your host John Spain. Our we’re joined today by Eric Mackey, Matt Gould and Phil Plourde to get us started. Erica, please run us through the highlights of this month’s forecast as compared to last.
00;00;30;02 – 00;00;55;10
Good morning. John. Happy start of summer. As we think about our forecast. We have made some pretty big revisions this month. I’d say two big factors. Some of the new capacity has been a little bit slower to come online. So the cheese that many were expecting to be here, including us, isn’t quite here yet. The other piece to that I would say we’ve had some very strong reports of export growth cheese, butter powder.
00;00;55;13 – 00;01;19;06
And that has kept the domestic market a lot more cleaned up. So as we think about the rest of 2025, we’ve significantly moved up our cheese and butter numbers, which is also gotten a tick higher. As we look at 2026. We’re getting close to an 18 months out to the end of 2026, expecting to see a little bit of softness in that butter powder complex later in 26.
00;01;19;08 – 00;01;33;11
All right. Thanks, Erica. Every month, we ask our panelists to take either the bull side of the story or the bear side of the story. And this month, Erica has agreed to take the bear side of the story. So, Erica, take it away and let us know what you’re seeing out there.
00;01;33;13 – 00;01;54;25
So as I mentioned, some of the things that we changed our forecast because of one cheese plant and other plant capacity expansions, a little delayed. I’d say first off, they will get here. So it may not be today, but everybody’s working very hard, I’m sure to get those plants up and running and the cheese will come. So I think that’s the first piece.
00;01;54;28 – 00;02;16;20
The other piece on the export side of things to do. Think about what could slow down exports out of the United States. And I see a lot of the market strength right now originating from Europe. And there’s been concerns about drought. There’s been a slow spring flush to really get product coming out of Europe. And the buyers there are nervous.
00;02;16;23 – 00;02;38;29
So as we think about what could bring on more milk flow, in particular out of Europe, the weather is starting to look better. So again, drought concerns. There is rain in the forecast coming forward. And we also see higher pay prices at the farm level. So with that we might be able to see some more milk coming out of Europe, which should ease some of that buyer anxiety.
00;02;39;05 – 00;02;55;28
And just globally speaking, yes, New Zealand is in their flower season, their winter. They will come out of winter. And right now the pasture conditions there look good for a start of the next season. And don’t forget, sometime South America can get sneaky and their numbers are looking really good right now too.
00;02;56;00 – 00;03;02;28
Don’t forget U.S. milk production, right? Erica too. That’s something that quiet early. We could see milk production up 2% here before too long.
00;03;03;05 – 00;03;21;01
And that might be conservative. Yeah, especially if you look at margins at U.S. farms right now. Just margin over feed $12 100 weight or so, then add on revenue from coal cows beef. There’s definitely profitability on the U.S. space that could push a lot more milk here in the U.S..
00;03;21;04 – 00;03;28;28
All right. Well, thank you, Erica. Okay, Matt, you’ve decided to take the bull side of the story this month. Let us know what you’re seeing out there.
00;03;28;29 – 00;03;50;27
Yeah. Thanks, John. I think coming into 2025, we all knew that the domestic environment was going to struggle. The US consumer has been weathered by inflation. You know, as Eric had mentioned, we knew about all these new cheese plants coming online. I know in our shop we talked a lot about the new farms being built to align with these new cheese plants.
00;03;50;29 – 00;04;17;22
And I don’t think any of that has changed. The domestic situation is, I think, at best neutral and maybe at worst is, as Erica said, bearish. The bullish story today isn’t really about anything going on here at home. It’s about what’s going on outside the US. And as it sits today, the US is on sale. Our cheese prices where they are currently sitting 30 to $0.40 cheaper than the rest of the world.
00;04;17;23 – 00;04;38;05
If you look at the high protein markets, we’re still cheap. And if you look at the butter market, even with the most recent price rally, I mean, we are still cheap. We’re sitting more than a buck below international price levels. So the bullish scenario is really about, you know, exports. And it’s about us winning market share in the global marketplace.
00;04;38;06 – 00;05;02;05
One thing that I have started to hear more about is international food service buyers talking to their U.S. suppliers less in transactional terms and more in partnership terms or strategic partners. And the reason for that is because if you look at where the milk supply growth is occurring and where the investment, which is now totaling billions of new processing capacity, it’s all here.
00;05;02;05 – 00;05;24;05
So, so strategically, we’re positioned to win those exports. And it’s also been true that the international market has been much more resilient than I think any of us expected. We know that the US is is taking market share, for example, from Europe in both butter and cheese. And even still, their prices have not flinched. So at least as it sits today.
00;05;24;08 – 00;05;46;14
You know, if I were to summarize the bull case, it’s all around our prices being supported by fundamentals overseas. And on the highlights of that list, I would include that there’s just not a lot of surplus milk being produced in Europe, that there’s a consolidation of the Chinese dairy farming sector, and as a result, their markets have stabilized and we’re starting to see them import more.
00;05;46;15 – 00;05;50;04
It’s all these global phenomenon, you know, lifting our prices higher.
00;05;50;07 – 00;06;08;11
Well thanks Matt. And as we said last month, domestically at the demand side of things, people haven’t felt great. Those that are international facing have been quite bullish. And it has been a real meeting of the minds, if you will. And sometimes and really watching those two economic forces battle it out there.
00;06;08;12 – 00;06;23;25
And I think even as you as you look forward, as Erika is saying, we’re going to see 2% plus potentially growth in the US. I don’t see that changing like our market, at least domestically speaking, looks well supplied. The bullish setup is just what the rest of the world isn’t.
00;06;24;02 – 00;06;33;17
Okay. I look forward to this part every month and that’s Phil’s favorite look. Phil, you always bring us something really interesting to think about. Let us know what you’re seeing out there. That’s pretty interesting.
00;06;33;17 – 00;06;50;26
This month I’m going to put some pebbles on the bullish scale for Matt this month. Our favorite look this time around is U.S. dollar weakness. And it’s a 180 degree change in direction from what we’ve been talking about a year ago at this time, which would’ve been how a U.S. dollar strength was a net negative for U.S. exports.
00;06;50;26 – 00;07;24;04
And blah, blah, blah. Or today, the U.S. dollar index is down 8% year to date. And if you look at the currencies of some of our major export customers, Japan, the yen is up almost 10% year to date. South Korean one is up more than 8%. And so in a world where we see U.S. dollar weakness, that is another reason America is on sale from an export perspective, because our customers, they’ll get more bang for their buck, they get more bang for their yen.
00;07;24;05 – 00;07;52;03
They get more bang for their one. They get more bang for their peso. And so the weaker dollar makes U.S. products more competitive in the world marketplace. The weaker U.S. dollar. And it also impairs the competitiveness of our competitors as the euro strengthens in value. That hurts European exporters. And so from a Chinese market perspective, but a market perspective and a skin perspective on balance, a weaker U.S. dollar is bullish.
00;07;52;09 – 00;08;11;12
And something to keep an eye on is the U.S. dollar Index. You know, we’ve been battling out at key support on the price graph between 99 and 100. If we break 99 convincingly, this could even get more dramatic in the months ahead. Kind of hanging on at this key support level today, which is producing, you know, an 8% year to date decline.
00;08;11;12 – 00;08;15;15
If we break below 99, the U.S. dollar index, it could take another leg further.
00;08;15;18 – 00;08;25;21
You know, Phil, it’s so interesting because currency is obviously a huge part of international trade, but it’s just not something that’s necessarily at the forefront of our mind all the time.
00;08;25;22 – 00;08;29;25
And it may not be the most important thing, but it’s shapes. The pricing landscape.
00;08;29;26 – 00;08;47;26
Is certainly is a factor and it’s one to keep an eye on. So thanks for bringing that to our attention. Okay, that’ll do it for this month’s episode of forecast Update Live. Thank you to all our panelists, and thank you to everyone on the Drag Insights team for their work on the forecast. And finally, thank you, the viewers, for tuning in.
00;08;48;01 – 00;09;07;28
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