Class III milk futures prices have shown considerable volatility over the past decade, with recent indications suggesting potential price shifts driven by external market conditions.
Over the past decade, Class III milk futures, like many commodities, saw extreme and volatile price swings. Heading into summer, milk futures prices may be gearing up for another big move.
What's happened
In 2014, milk prices were as high as $24 per hundredweight, while the pitfall of COVID in 2020 brought milk to as low as $11.50 per hundredweight. Currently, May 2025 Class III milk futures are hovering near $18.50, nearly smack dab in the middle of that historic range, as the market waits for fresh fundamental news to dictate the next price turn.
From a marketing perspective
Looking at U.S. milk production over the past few months, production numbers have been relatively neutral. However, that sentiment may be starting to change based on the April milk production report. The recent April report from
USDA showed April milk production up 1.5% thanks largely to the reality of 89,000 more dairy cows than a year ago. In addition, for the April report USDA went back and revised the March milk production report to show higher production, with growth now up 1% (from the previously reported 0.9%).
Prepare yourself
With Class III milk prices in the middle of an historically wide trading range, U.S. and global production will continue to be monitored in the coming months, along with global demand for dairy production, which overall has been strong. The cold storage report comes out later this week. Traders will watch to see if cheese inventories are building, and if so, at what pace. If traders see that U.S. cheese (and butter) inventory is growing, that may keep a lid on any summer price rally.
