Welcome to Forecast Update Live, a monthly video series from Ever.Ag Insights, where we unpack the latest dairy market dynamics and forecast trends. Host Jon Spainhour is joined by Erica Maedke, Matt Gould, and Phil Plourd to break down the July 2025 outlook.
This month’s debate pits bullish weather and international demand against bearish domestic oversupply. Plus, Phil’s “favorite look” reveals record-setting block cheddar volumes that could shape the months ahead.
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Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;19 – 00;00;31;06
Hello and welcome to another edition of Forecast Update Live, a video series from Ever AG Insights, where each month we gather to discuss our dairy market forecast. I’m your host, Jon Spain. Our. We’re joined today by Eric McKee, Matt Gould and Phil Floor to get us started. Erica, please run us through the highlights of this month’s forecast. Compared to last month’s.
00;00;31;08 – 00;00;53;21
Hi, Jon. Happy July. It is definitely summertime in our forecast. We are getting a little bit hotter here. Overall our 2025 numbers are on the increase. So we do have green across the board. They’re not anything huge but taking the curve up a bit. It is also the first month that we had the full 2026 forecast in the mix.
00;00;53;21 – 00;00;57;20
So we go out 18 months. Here we are. So definitely a hot summer.
00;00;57;22 – 00;01;11;07
All right. Thanks, Erica. Well each month we ask our panelists bring their bare side of the argument and the bullish side of the argument. This month we’ve asked Erica to bring the bull side. Erica. Take it away and let us know what you’re seeing out there that leans bullish.
00;01;11;10 – 00;01;30;12
There’s actually quite a few things right now that I would say lean bullish. And as I just said our forecast is also going up in the near term. So I might have the strength of that argument right now. I would say the two biggest things that I’m watching is what’s going on in Europe. I do feel like that’s the root cause of the price strength across the globe.
00;01;30;14 – 00;02;02;24
They’ve been a bit tighter through the beginning of the year into their spring flush. A number of the major producers, France, Germany have been behind. We’re seeing even the components are not necessarily keeping up. So in general, there’s a supply tightness in Europe that is spilling over into the rest of the world. And by spilling over. It’s not so much that people are able to get access into the Europe, especially U.S. manufacturers, but that I think the Europeans are having a little bit of a harder time just finding product in order to export.
00;02;03;02 – 00;02;28;25
So the contestable markets truly are a hotbed of activity and a lot of deals getting done there. I think the second one is again, it’s summertime. It’s hot. Now, I will qualify that by saying it’s summer every year the calendar flips. This is not abnormal. But if you do look at the forecast for both North America as well as for the continent of Europe, we are seeing read higher than average expected temperatures.
00;02;28;28 – 00;02;49;27
So first off, that’s not real good for the girls in their fur coats. That usually knocks back milk production. We’re seeing that already here in the United States with our first major heat wave across the country. The other thing is you also see lower milk powder production. You see higher ice cream consumption. That just overall adds some strength in the marketplace.
00;02;50;00 – 00;03;14;28
A few minor things. Just to note that we do see some strengthening in consumer sentiment, particularly in Europe. The expansions have been a little bit slower in some of the new plants, and I’ll give it to Matt. The cheese is coming. It’s not here fully yet. And then finally, from a currency perspective, especially as it relates to exports, when the US dollar depreciates, it just makes all of our products that much more attractive for international buyers.
00;03;15;01 – 00;03;23;03
I like to think of it as double coupon days. When we have low prices in the US, we have a lower currency. It’s a great deal for international buyer.
00;03;23;05 – 00;03;39;21
Well thanks Erica. Those are all really good points. And I know there’s definitely things that we talk about each and every day here in the office and in the general discussion. So thank you for bringing that to the conversation. Matt, you’re on the bear side of the argument today. What’s out there right now that you see that leans bearish.
00;03;39;23 – 00;04;05;22
Yep. Thanks Jon. First kudos to Erica. Double coupon days I love that as a as a descriptor on the bear side of the story, the marketplace today looks well supplied domestically and maybe that’s an understatement. I think in some products today we are oversupplied for domestic consumption. I’ll dive into that and then looking forward, we have more cows, more cows and more cows is at least the way maybe I’d describe it.
00;04;05;25 – 00;04;27;24
And so, you know, just as a general market structure, as Erica pointed out, our market today is super dependent on exports. And the reason why we’re super dependent on exports is because we have plenty for us here at home. Let’s talk about milk supply, our our milk supply forecast now has milk supply exceeding 2% through every month through the end of the year.
00;04;27;25 – 00;04;50;17
And that’s a milk production milk pounds basis. You add in components and we’re well well above that. That level of growth is basically allowing the new cheese plants are built to get filled because there has been, spot milk available in the country. Milk supply maybe hasn’t been a limiting factor in them keeping on their schedule. And then as we get towards the end of the year, there’s going to be form and then some.
00;04;50;18 – 00;05;16;13
So we have a growing dairy herd growing milk production. And we have all this new stainless steel. We’re gone from the period of time where we’re concerned about so much what’s going to happen in terms of of new cheese production, because we have so much that’s already arrived. Just to put it in perspective, the new stainless steel has us increasing American type cheese production by five, six, 7% as it gets full in a good dairy demand year.
00;05;16;13 – 00;05;40;25
We’re growing cheese demand by maybe 2% or 3%. The current environment is not a good dairy demand year. Maybe if we’re optimistic, describe it as okay. Which leaves us just in surplus of cheese. And that means that exports are what the market is living and dying. And when we don’t have those export sales, we see cheese prices plummet like we just went through, with cheese prices dropping below 160 for a moment.
00;05;40;25 – 00;06;06;12
Well, we have plenty around. Now, I want to talk about cow numbers because this is a new dynamic. I’ve been trying out this phrase. Jon called it workshopping yesterday. I describe it as dairy farming is over. There are no more dairy farmers left. We now have cow calf operators that make a milk as a byproduct. And the reality is, is that the profitability of a dairy farm at this very moment is primarily driven by beef.
00;06;06;13 – 00;06;31;16
Today, milk is actually second. And what that also means is that farmers will be able to continue to be profitable amidst lower milk prices. And what that also means is that because there’s a value on beef, and specifically on day old calves, farmers are doing everything they can to retain cows. The dairy cow slaughter numbers were down something like more than 100,000 cows in the first half of the year.
00;06;31;18 – 00;06;49;09
We’re on track for the full year to be down more than a couple hundred thousand. Those cows that were not slaughtered are just being retained in the dairy herd. That’s to my comments. More cows, more cows, more cows. That’s the reality of the current marketplace, where we’re talking maybe as much about beef as we are about prices. So you put that together.
00;06;49;09 – 00;07;17;10
You have a US marketplace that for most products, cheese, butter, especially up here, are very well supplied now and on a forward basis, which means that we live and die by exports. I guess if you’re going to finish out the bearish argument, we are days away from the pause that is supposed to end here. And so to say the least, we’re in a dynamic trade environment that certainly seems to, in my estimation, to bring an additional bearish tilt to this market.
00;07;17;11 – 00;07;31;14
So what we definitely need to see, Matt, is that convergence between that world price and that US price. You and I just took the opposite sides of whether the US price is going to come up to meet the world price, or whether the world price is going to come down to meet the US price.
00;07;31;14 – 00;07;33;00
Yeah, I think that’s an excellent framework.
00;07;33;00 – 00;07;42;05
Well, thanks, Matt and Erica, as we move forward here, the bill is always so great at bringing what we call our favorite look. And it’s it’s really unique perspective. So what do you see in this month.
00;07;42;10 – 00;08;06;12
Yeah our research report forecast update colliders. We’ll get a look at CME block cheddar volume and price as our favorite look this month. And it ties into the story that Matt was telling around capacity expansion. We’re making more cheese. And I would say the process of that capacity coming robustly online has been a little slower than anticipated this year.
00;08;06;12 – 00;08;29;13
But last week, we may have gotten a glimpse of what it means to have extra cheese, extra volume available to the marketplace because CME spot volume for block cheddar was at 70 carloads last week, and that was the biggest week for blocks since December of 2010. We had a day in there last week that was on the top list as well.
00;08;29;15 – 00;09;00;19
And so, you know, Siri loads a week, 50 loads a week is quite a bit. It’s going to be hard to see prices maintain strength in my opinion, in an environment where we start seeing if and when we start seeing those kind of volumes come to town, it’s possible. Pretty good hint at what’s going on as we see more and more number one cheese being made every day at some of these new facilities, what could come to market and what the impact could be, it doesn’t mean we’re gonna be at 159 cheese, which is where we got to one day last week.
00;09;00;19 – 00;09;20;24
But the market that to keep clearing into the export channels to keep this cheese away from Chicago. We talked about it last year in terms of export or perish. And Matt kind of said that’s the same thing. And so if we’re not exporting and we’re making more cheese, or the volume comes to Chicago and prices will struggle to stay high, get high and stay high in that environment.
00;09;20;29 – 00;09;39;19
You know, it is neat, though, just from a development of the marketplace over the years, something that we’ve really struggled with on the spot. CME market for all of our products has been sell side and the willingness of people are buying product there. We saw huge volumes and butter a few weeks ago, and now we’re seeing big volumes and spot cheese.
00;09;39;23 – 00;09;56;28
So I do think it is really, at the very least, a really incredible development in the spot markets at the same point in time. It does tell us, possibly tell us something about the underlying fundamentals. And I think that dovetails and to Matt’s discussion about increased cheese capacity.
00;09;56;28 – 00;10;12;27
Last Friday, you did a block volume of 680 carloads. And as best I can tell, that’s a record year to date volume through June since the daily trading area began in 1999. So to your point, which the market still developing.
00;10;13;04 – 00;10;34;17
Okay, that’ll do it for this month’s episode of Forecast Update live. Thank you to our panels. Thank you to everyone on the Ever Egg Insights team for their work on the forecast. And thank you, the viewers, for tuning in. If you don’t receive our forecast update and would like to subscribe, please reach out via email at Insights at Evercore Egg.
00;10;34;20 – 00;10;45;11
If you liked the video, be sure to subscribe on our YouTube channel. Give us a thumbs up and share with a friend. We’ll see you next month for another edition of Forecast Update Live.
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