The US dollar suffers its worst start to the year since 1973
Just seven months into 2025, the U.S. dollar has had its worst start to a year in over half a century, according to a new report by the Financial Times. The dollar index, which measures the dollar’s strength against other major currencies, has fallen by over 10% in the first six months.
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The Fourth of July week saw a marathon voting session in the Senate on President Trump’s “Big Beautiful Bill” which passed Tuesday by the Vice President’s tie breaking vote. The House approved it Thursday 218 to 214.
The June Federal order Class III milk price was announced last week at $18.82 per hundredweight, up 25 cents from May but $1.05 below June 2024. That put the six-month average at $19.00, up from $16.92 at this time a year ago, and compares to $17.48 in 2023. Wednesday’s futures settlements portended a July price at $17.32 and August at $18.24 with an $18.99 peak in October.
The June Class IV price is $18.30, up 17 cents from May, but $2.78 below a year ago. Its six-month average stands at $18.87, down from $ 20.17 a year ago, and compares to $18.59 in 2023.
You’ll recall May milk production was up 1.6% from a year ago. The USDA’s latest Dairy Products report shows milk continues to flow to the churn and vat.
Cheese output totaled 1.252 billion pounds, up 1.4% from April, and up 3.3% from May 2024. April output was revised up 6 million pounds. Total output for the first five months of 2025 hit 6.1 billion pounds, up 1.2% from 2024.
Wisconsin’s production totaled 317.2 million pounds, up 3.8% from April and 1.6% above a year ago. California produced 217.6 million pounds, up 3.3% from April and 1.4% above a year ago. Idaho contributed 85.9 million, down 5.9% from April, but 5.8% above a year ago. New Mexico, with 81.5 million pounds, was up 7.7% from April, and 0.7% above a year ago.
Mozzarella production totaled 408.4 million pounds, up 0.8% from a year ago. American cheese, at 511.8 million pounds, was up 3.3% from April and 5.6% above a year ago. Italian style cheeses totaled 517.4 million pounds, up 1.0% from April and up 2.4% from a year ago.
Cheddar production jumped to 355.7 million pounds, up 14.9 million pounds or 4.4% from April, and up a whopping 31.3 million or 9.6% from a year ago. Revisions added 2.7 million pounds to the April total. Year to date (YTD) cheddar hit 1.7 billion pounds, up 4.8% from a year ago.
Butter output fell to 211.9 million pounds, down 2.5 million pounds or 1.2% from April, but was up 7.1 million or 3.5% from a year ago. YTD butter hit 1.1 billion pounds, up 3.7% from a year ago.
Yogurt production totaled 423.7 million pounds, up 5.3% from a year ago. Hard ice cream, at 64.1 million pounds, was down 4.4% from 2024.
Dry whey output jumped to 72.7 million pounds, up 3.1 million pounds or 4.4% from April, and up 4.4 million or 6.5% from a year ago. Whey stocks grew to 63.7 million pounds, up 3.2 million or 5.3% from April, but down 800,000 pounds or 1.2% from a year ago.
Nonfat dry milk output fell to 158.3 million pounds, down 4.6 million or 2.8% from April, and down 9.4 million pounds or 5.6% from a year ago. Stocks fell to 249.9 million pounds, down 21.5 million, or 7.9% from April, and down 2.3 million pounds or 0.9% from 2024.
Skim milk powder production grew to 47.8 million pounds, up 12.3 million pounds or 34.8% from April, but was down 1.9 million or 3.8% from a year ago.
May U.S. dairy exports declined 0.7% from a year ago, “Primarily due to lower volumes of powders and trade tensions earlier in 2025,” says HighGround Dairy (HGD), “When these sales would have been made.”
Exports to China decreased 68% and exports to Mexico were down 6.9%. The decrease to Canada was not as drastic, says HGD, but was down 1.6% from a year ago. Sailings to Japan and South Korea rose and limited the losses.
U.S. cheese exports hit a record 113.6 million pounds, up 7.3%. And, for the second month in a row, cheddar exports surpassed 22 million, according to HGD, but “Surprisingly, shipments across the southern border dropped 12.1%. Sailings to South Korea were up 19.6%, Japan up 24% and Australia up 28%.
HGD says the tariff troubles with China likely caused the drop in U.S. cheese shipments as “These contracts were likely signed in February, when the trade spat was at its height. U.S. cheese remains at a huge discount to the rest of the world, which will likely mean more record-setting exports in coming months.”
The U.S. was a net exporter of butter for the second consecutive month, shipping 11.6 million pounds abroad, while importing only 7.4 million. The export surplus was the highest since March 2022, according to HGD. “While exports to Canada were up significantly from May 2024, year-ago values were relatively weak and down from April, March and February 2025, suggesting that trade tensions were weighing on volumes there,” HGD stated.
Cash cheddar block cheese jumped 10 cents Monday and hit $1.7225 per pound Tuesday, but retreated to a Thursday close at $1.6850 in the shortened holiday week, up 6.50 cents and ending four weeks of declines, but 21.50 cents below a year ago, as traders awaited the afternoon’s Dairy Products report. The barrels finished at $1.72, 5.50 cents higher and 18.25 cents below a year ago.
Sales totaled 26 loads of block on the week and 178 for June, up from 136 in May. Barrel sales totaled 10 for the week and 33 for June, down from 53 in May.
High summer temperatures in the Central region are contributing to lighter milk output, reports Dairy Market News (DMN), and some cheesemakers were turning to the spot market for milk to run full production. Some planned to take a break for the holiday and were selling milk. Others noted unplanned production problems. Class III prices ranged $8 to $1-under at mid-week. Cheese production is steady to lighter in the Central region. Retail cheese demand is steady, but food service sales remain light. Export demand is steady and remains up from a year ago.
Milk handlers in the west say demand from cheese manufacturers is strong but increasing temperatures are decreasing farm milk output. Cheese production is steady for the most part. Domestic demand varies from steady to stronger, while export demand is stronger, says DMN.
CME butter saw its Thursday close at $2.6050 per pound, 4.25 cents higher on the week, but 52.75 cents below a year ago. There were 20 sales on the week and a whopping 286 for all of June, up from 123 in May, and the highest monthly total since October 2024’s 318 loads.
Milk output and components are declining in the Central region, but plenty of cream was available ahead of the holiday. Downtime, both planned for July 4th and unplanned due to churning troubles, at some facilities last week was keeping cream plentiful in the region. Cream demand is strong as ice cream makers and butter makers are pulling on available volumes. Domestic butter demand remains soft, though contacts report export sales are strong.
Increasing temperatures are negatively impacting cream volumes in the west, which is tightening availability of spot loads. Butter production for the holiday week was steady for the most part. Domestic butter demand is steady and demand from international buyers is strong, according to DMN.
CME powder closed Thursday at $1.26 per pound, up a penny on the week, and 8 cents above a year ago. There were 29 sales on the week, 25 on Thursday alone, and 32 for June, down from 102 in May.
Dry whey finished the short week at 60.75 cents per pound, 2.25 cents higher, highest since Feb. 5, 2025, and 11.50 cents above a year ago. There were 10 CME sales on the week and 40 for the month of June, up from 29 in May.
Higher feed prices offset a rise in the All Milk Price and resulted in the May milk feed price ratio being down for the fourth consecutive month. The latest Ag Prices report shows the May ratio at 2.24, down from 2.27 in March, and compares to 2.24 in May 2024.
The All Milk Price averaged $21.30 per cwt. with a 4.24% butterfat test, up 30 cents from April which had a 4.32 test, and compares to $22.00 in May 2024, with a 4.17% test.
The national corn price averaged $4.64 per bushel, up 2 cents from April, and 13 cents above a year ago. Soybeans averaged $10.40 per bushel, up 20 cents from April, but $1.50 below a year ago. Alfalfa hay averaged $191 per ton, up $11 from April, but $11 below a year ago.
The May average cull price for beef and dairy combined was at $147 per cwt., up $5 from April, $15 above May 2024, and $75.40 above the 2011 base average.
Milk production margins moved higher for the first time since January in May and remained at historically high levels with a 3 cent per cwt. gain above April, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Missouri. “Income over feed costs (IOFC) in May were above the $8 per cwt. level needed for steady to higher milk production for the 19th month in a row,” he said. “Input prices were higher in May with two of the three input commodities inside of the top ten for May all-time. Feed costs were the tenth highest ever for the month of May and increased 27 cents per cwt. from April.”
IOFC for 2025, (using June 27 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $13.12 per cwt., says Brooks, a loss of 25 cents per cwt. versus last month’s estimate, and would be above the level needed to maintain or grow milk production, and down 27 cents from 2024.
The USDA’s Acreage report estimated corn acreage at 95.2 million acres for the 2025-26 crop year, up 5% or 4.61 million acres from last year, and the third highest planted acreage in the US since 1944. June 1 corn stocks totaled 4.64 billion bushels, down 7% from June 2024.
Soybean planted area was estimated at 83.4 million acres, down 4% from last year. Stored beans totaled 1.01 billion bushels, up 4%. Cotton planting was estimated at 10.1 million acres, down 10% from last year.
Dairy margins ticked higher in the final trading days of the month as lower feed costs were coupled with a bounce in Class III milk futures, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. The MW detailed the May Milk Production and Cold Storage reports.
Feed costs continued to fall, according to the MW. “New crop corn futures scored contract lows as the crop is off to a great start heading into the all-important month of July. The corn crop was rated 73% good to excellent through the week ending June 29. This was 3 points higher than the previous week and 9% higher than the 5-year average.
Soybean meal futures fell to contract lows in the last half of June as regulations regarding soybean oil production and biofuel mandates are expected to lead to increase meal availability,” the MW concluded.
Powder and fat took the July 1 Global Dairy Trade weighted average down 4.1%, following a 1.0% decline on June 17, biggest decline since Aug. 15, 2023. Volume soared to 56.7 million pounds, up from 33.5 million on June 17. The average metric ton price slipped to $4,274 U.S., down from $4,389.
Whole milk powder saw the biggest decline, down 5.1%, after dropping 2.1% on June 17. Skim milk powder was down 1.7%, following a 1.3% decline. Butter was down 4.3% after rising 1.4% on June 17, while anhydrous milkfat was down 4.2%, following a 1.3% loss. Cheddar was down 2.8%, after jumping 5.1% last time, and GDT mozzarella was off 0.2% after dropping 1.9%. Buttermilk powder was up 9.3% and lactose was up 4.2%, following a 3.6% decline.
StoneX says the GDT 80% butterfat butter price equates to $3.3288 per pound US, down 16.3 cents, after gaining 3.5 cents last time, and compares to CME butter which closed Thursday at $2.6050. GDT cheddar equated to $2.2046, down 6 cents, after jumping 10.6 cents, and compares to Thursday’s CME block cheddar at $1.6850. GDT skim milk powder averaged $1.2329 per pound, down from $1.2588. Whole milk powder averaged $1.7506 per pound, down from $1.8523. CME Grade A nonfat dry milk closed Thursday at $1.26 per pound.
Speaking in the July 7 Dairy Radio Now broadcast, broker Dave Kurzawski said this is the time of year we typically see powder prices weaken seasonally so he’s not overly concerned, though it is a headwind to U.S. powder. He said U.S. cheese and butter prices remain the cheapest in the world so he expects exports to remain strong, especially considering the U.S. dollar is at the weakest level in over three years. There are a lot of factors that go into the ultimate price. We have a good supply of milk in the U.S. but that could change as summer heat hits. The bigger question is what lies ahead on domestic demand, he concluded.
Agriculture Secretary Brooke Rollins announced port reopenings for cattle, bison and equines from Mexico last week. The USDA, following collaboration between USDA Animal and Plant Health Inspection Service experts and their counterparts in Mexico to increase New World Screwworm (NWS) surveillance, detection and eradication efforts.
“Progress has been made in several critical areas since the ports were closed on May 11th, including: resolution of challenges with conducting flights in Mexico that has allowed our team to consistently conduct sterile NWS fly dispersal 7 days each week and dispersal of more than 100 million flies each week,” says Rollins. “We also sent five teams of APHIS staff to visit/observe and gain a deeper understanding of Mexico’s NWS response.”
Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.
