As we embark on a brand-new year, our attention will generally be on the tighter milk and cheese supplies and “wonky demand,” says StoneX broker Dave Kurzawski on Monday, our first “Dairy Radio Now” broadcast of 2025.

We saw periods of really strong demand in 2024, he said, and then periods of very quiet demand and we saw nearly a $1 swing on the price of block cheese, for example, between March and September. The March low was $1.39 per pound, he said, and the September high was just over $2.30 per pound. “I don’t think that goes away as we enter 2025.”

When asked about the effect of bird flu, Kurzawski said he had no crystal ball, but “Here at the end of 2024, it had a huge impact on California, worse than other states, and the big question is how quickly will California get back on its feet?”

China also remains a big unknown for 2025. Will it be in the dairy market in a big way or not? And what will the relationship between China and the U.S. be with President Donald Trump in the White House?

StoneX believes “Trump will not want to be super punitive to Mexico or Canada, but be more isolated on China,” Kurzawski concluded, however “Looking back on the Trump tariffs in 2018, a lot depended on the type of product involved, so it’s pretty hard to make any blanket statement on this but I suspect that our relationship with Mexico and with Canada will remain on solid footing in 2025.”

Cash dairy product prices start 2025 above those a year ago. The markets were closed Wednesday for the New Year’s holiday and reopened Thursday when the Cheddar blocks inched up to $1.9125 per pound, after closing the previous Friday at $1.8725.

The barrels traded Thursday at $1.8250, following their Friday finish at $1.7675.

Cheese prices were pushing higher on the final trading days of 2024, said Dairy Market News, and some Midwest contacts suggested that cheese markets may have reached their near-term basement and are steadying. Demand has been variant over the holiday weeks, as some processors reported continued strong demand while others noted a slowdown. Milk availability has grown in the region, as was expected during the holiday weeks. Milk handlers said the midweek holiday(s) gave them less capacity to work with, as spot milk prices Christmas Week were as low as $7-under Class III. New Year’s Eve saw spot milk loads from $4-under Class to 50 cents under Class.

Cheese production in the west is mixed, says DMN. Milk production has been strengthening in recent weeks leaving plenty for cheese making. Some plants ran lighter schedules this week to accommodate the midweek holiday. Spot loads of some varieties were tight, while others were more widely available. Domestic cheese demand is strong, says DMN, though export interest is lighter.

Cash butter closed Thursday at $2.5450, after closing Friday at $2.5750.

Central butter plant activity steadied following Christmas Week, but some plant managers said churning would return to normalcy after New Year’s Day. Cream remains more than sufficient and is expected to remain so in the early weeks of 2025. Contracts for 2025 are reportedly favorable for processors, and spot cream demand may be slower, at least early in the new year. Butter sales have steadied as markets have found stable ground in the middle- to upper-$2.50s per pound.

Cream is plentiful in the West and loads were reportedly trading at lower multiples, compared to mid-month levels. Butter production has been lighter in recent weeks due to the holidays and plant operators modifying shifts to accommodate the mid-week closures. Spot loads of butter were available. Demand has been mixed in recent weeks, though some contacts reported the end of year holidays put a slight damper on sales this week, according to DMN.

Thursday’s Grade A nonfat dry milk was trading at $1.37, following a $1.3875 close Friday. Dry whey held at Friday’s close of 75 cents per pound Monday, Tuesday and Thursday.

Meanwhile, another drop in the All-Milk Price and higher corn prices pulled the November milk feed price ratio lower for the second month in a row, but it was above the five-year average for the ninth month in a row. The USDA’s latest Ag Prices report shows the ratio at 2.88, down from 2.96 in October, and compares to 2.10 in November 2023.

The index is based on the current milk price in relationship to feed prices for a ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. One pound of milk would purchase 2.88 pounds of dairy feed of that blend.

The All-Milk Price averaged $24.20 per cwt., with a 4.39 percent butterfat test, down $1 from October, which had a 4.26 test, but was $2.60 above November 2023, which had a 4.31 percent test.

California’s average, at $23.70 per cwt., was down 20 cents from October but was $2.60 above a year ago. Wisconsin’s, at $22.90, was down $2.50 from October, but $2.70 above a year ago.

The national corn price averaged $4.07 per bushel, up 8 cents from October but was 59 cents below a year ago. Soybeans averaged $9.84 per bushel, down 7 cents from October and $3.16 per bushel below a year ago. Alfalfa hay averaged $165 per ton, down $8 from October, and $44 per ton below a year ago.

Looking at the cow side of the ledger, the November average cull price for beef and dairy combined was at $124 per cwt., down $4 from October, but $20 above November 2023, and $52.40 above the 2011 base average.

Milk production margins dropped for the second month in a row but remained at historically high levels and 90 cents per cwt. below October, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.

“Income over feed costs in November were above $15 per cwt. for the ninth time in history at $15.80, and above the $8 per cwt. level needed for steady to higher milk production for the thirteenth month in a row,” says Brooks. “Input prices were mostly lower in November with all three input commodities remaining in the top 11 for November all-time. Feed costs were the eighth highest ever for the month of November and decreased 10 cents per hundredweight from October. The November All-Milk price returned to the top 10 all-time, at the second highest recorded,” according to Brooks.

“Dairy producer profitability for 2023 in the form of milk income over feed costs, was $8.00 per cwt.,” says Brooks. “The profitability was $3.91 below 2022 and $1.72 lower than the 2018-22 average. In 2023, the decrease in milk income over feed costs was a result of the milk price decreasing more than feed prices dropped. Income over feed in 2023 was around the level needed to maintain or grow milk production.”

Milk income over feed costs for 2024, using Dec. 31 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay, are expected to be $13.37 per cwt., a gain of 7 cents per cwt. versus last month’s estimate.