Tuesday Morning Dairy Market Update - Tariff Uncertainty Puts Further Pressure on the Market

OPENING CALLS:

Class III Milk Futures:	15 to 20 Lower
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 5 Lower
Soybean Futures:	10 to 12 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	3 to 5 Lower

MILK:

Milk futures have been unable to find support due to the uncertainty of demand. Tariffs on Canada, Mexico and China went into effect Tuesday and China has already reciprocated with additional tariffs. A 10% tariff will be put on dairy products beginning March 10. It is uncertain whether this will curtail the importation of dairy products by them or whether demand will remain, and higher prices will be paid. However, the uncertainty has permeated the market over the past month. The Global Dairy Trade Auction will take place Tuesday, March 4. Also, Tuesday is the last day to trade February futures and options with the Federal Order prices announced on Wednesday, March 5.

CHEESE:

The block cheese price weakness of the past two days has been a surprise. The price has fallen 15 cents to the lowest level since Dec. 6, 2024. Buyers are uncertain over demand and have stepped back. The price was lower than this in November and rebounded nicely, but it is uncertain whether this could be repeated.

BUTTER:

The butter price held on Monday, but with continued weakness in nonfat dry milk, it is likely the butter price will see further weakness. Churning is active with abundant cream remaining available for churning. This will limit the upside price potential.