Tariffs remained the No. 1 subject on a lot of people’s minds this week, particularly those in the dairy industry as the Trump Tariff Tit for Tat was changing almost by the hour. Tariffs were increased on all trading partners of the U.S. and response was almost immediate, with some countries reciprocating, while others asked for further negotiation, prompting Trump to drop them back to the 10 percent level and to postpone the bigger increases for three months for about 75 countries. The bellwether Standard and Poor’s 500 gained over 8 percent in minutes. Crude oil went from $4 lower on the day to $2 higher. Things reversed direction Thursday.

In the ongoing game of chicken with China, which increased its tariffs, Trump responded by raising China’s tariffs to 125 percent.

In the April 14 Dairy Radio Now broadcast, StoneX broker Dave Kurzawski spoke of the resulting uncertainty in all the markets, something they do not like. Food commodities fared better, he said, and remained rather stable.

The bellwether spot cheese market made its most recent low on March 21, two weeks before “Liberation Day,” he said, and the futures market made its low two days after April 2 Liberation Day. “U.S. cheese and butter prices remain attractive on the world stage, tariffs or no tariffs,” he concluded, and are “stable to higher.”

Rabobank Global Strategist, Mary Ledman, warned: “The escalating trade war between the U.S. and China is set to impact the global dairy market, particularly lactose and dry whey. With China imposing a 34 percent reciprocal tariff on U.S. imports, the U.S. dairy sector, which exports over 50 percent of its dry whey and lactose production to China, faces potential disruptions. This could lead to shifts in trade dynamics, with the EU and UK possibly stepping in to fill the gap. The intensifying trade war could result in lower prices for U.S. dairy producers, slimmer margins for traders, and higher prices for Chinese end users and consumers.”

The April 9 Daily Dairy Report pointed out: “Milk production in China fell for the seventh straight month in February. CN Agri data showed that milk collections were 6.1 billion pounds in both January and February, with year-to-date output down 9.2 percent compared to January and February 2024. Milk prices in China fell 15 percent in February relative to February 2024, according to RaboResearch. And skim milk powder production in January and February plummeted more than 30 percent compared to the same months in 2024.”

Per capita dairy consumption in China is far below the rest of the world, says the DDR, and not keeping pace with gains in milk output there.

One of the reasons is “Many Chinese are lactose intolerant, which is why milk historically has not been a staple of the Chinese diet and why adoption is slow,” according to the DDR.

Back home, you’ll recall February milk production was up 1.0 percent from a year ago, after factoring the Leap Day. Adjusting for fat and protein components, it was up 3.5 percent. The February Dairy Products report shows where the milk was used, keeping in mind, February 2024 had 29 days and February 2025 had 28, a phenomenon which occurs about every four years, so the totals are skewed.

Cheese output totaled 1.155 billion pounds, up 1.3 percent from February 2024, adjusted for leap year. Revisions added 10.3 million pounds to January’s total. Output for the two months stood at 2.3 billion pounds, down 0.2 percent from 2024.

Mozzarella production totaled 373.3 million pounds, up 3.4 percent from a year ago, with YTD output hitting 785.3 million pounds, up 1.7 percent.

Cheddar production hit 318 million pounds, up 1.0 percent, from a year ago. Revisions added 3 million pounds to the January total. Cheddar YTD hit 635.6 million pounds, down 1.5 percent from a year ago.

Butter production totaled 210 million pounds, up 12.4 million or 6.3 percent from a year ago, after increasing just 0.5 percent in January. YTD butter totaled 421.1 million pounds, up 1.5 percent from a year ago.

Weaker cheese, ice cream and sour cream production freed up some fat for butter, says StoneX.

Nonfat and skim milk powder production was up 0.2 percent from a year ago, which StoneX says is only the second time in 20 months that powder production has been up year over year.

HighGround Dairy warns: “Ballooning nonfat dry milk stocks will make it hard for this market to stage a rally.”

Ditto on whey stocks, according to HighGround. “Dry whey output tanked in February to the lowest volume for the month since the start of the century, yet stocks continued to build. Ultimately, trade wars will dictate the direction of this market.”

The USDA raised its milk production forecast from last month, in its latest World Agricultural Supply and Demand Estimates (WASDE) report, citing larger cow inventories and slightly higher milk per cow.

2025 production and marketings were projected at 226.9 and 225.9 billion pounds respectively, up 700 million on both. If realized, both would be up 1 billion pounds or 0.4 percent from 2024.

Imports are lower on both a fat and skim-solids basis, primarily due to additional duties placed on imported dairy products, in particular imports of butter fats and milk protein products. Exports on a skim-solid basis were reduced, primarily on lower shipments of dried skim milk products and whey products. Exports on a fat basis were raised on higher expected shipments of butter.

Prices for butter, cheese, nonfat dry milk (NDM), and whey were all lowered, based on recent prices and higher expected milk supplies. 

The Class III milk price was lowered on lower cheese and whey prices. The 2025 average was projected at $17.60 per hundredweight, down 35 cents from last month’s estimate, and compares to $18.89 in 2024 and $17.02 in 2023.

The Class IV price was lowered on lower butter and NDM prices, and is expected to average $18.20, down 60 cents from a month ago, and compares to $20.75 in 2024 and $19.12 in 2023.

CME 40-pound block Cheddar cheese climbed to $1.74 per pound Thursday morning, highest since March 13, and follows a Friday close at $1.64.

The 500-pound barrels hit $1.78 Thursday, highest since March 3, after closing Friday at $1.66.

StoneX says “The level of skepticism on any market strength, be it spot or futures, is rather staggering these days. And for good reason, as worries over demand and liquidity continue to plague outside energy and equity markets.”

“Indecisive” might be a good description for the dairy complex yet cheese and butter remain attractively priced, both for U.S. and international buyers.

Midwest contacts told Dairy Market News that cheese demand ranges from post-holiday order quiet to steady. Most said orders were steady after holiday deliveries had been prepared and/or out the door. Some cheesemakers were taking advantage of widely available and affordable spot milk and adding to production ahead of the upcoming seasonal demand. Milk prices are falling, with some as low as $5-under Class early in the week, while some were still around $1- under.

Seasonally stronger milk production is keeping a more than ample supply for western cheese manufacturers, says DMN.