USA: Dairy Prices Expected to Stay High in Early 2025 Despite Global Supply Recovery

In its October 2024 World Agricultural Supply and Demand Estimates (WASDE), the USDA predicted U.S. cheddar cheese prices for 2025 at $1.88 per pound, down slightly from the previous month, while butter prices were forecasted to be $2.79 per pound. Although these figures represent a small decrease from earlier estimates, they remain higher than pre-pandemic levels.

U.S. dairy prices have surged in 2024, with cheddar cheese rising 7% and butter up 12% year-over-year. The market imbalance is fueled by a seasonal dip in milk production, coupled with rising consumer demand for dairy during key periods like Thanksgiving, Christmas, and the Super Bowl.

Globally, the European Union has seen an 83% increase in butter prices, while Asia has experienced double-digit price jumps for butter and cheese. The recent downturn in milk production, exacerbated by diseases affecting dairy herds and cost-cutting measures taken by farmers during a prolonged period of low milk prices, has added further pressure to supply.

Despite expectations of higher prices in early 2025, analysts predict that dairy production will recover later in the year as global producers adapt to market conditions. With dairy producers in countries like the U.S., EU, and New Zealand expected to show marginal production gains, dairy prices may stabilize by the second half of 2025.

For now, the combination of robust domestic and export demand, coupled with supply shortages, is likely to keep prices elevated, especially for cheese and butter, into the beginning of the new year.