Many commodity markets have been unpredictable lately due to the volatility of the equity markets and the uncertainty over the impact of tariffs. Trend traders do not like uncertainty, which leaves much of the activity being short-term trades as traders scalp the market in hopes of making a quick profit. However, that can become difficult as well.
The dairy markets had been under pressure for about a month before it seemed prices had reached the bottom and had more than factored in any impact that could come from tariffs. This resulted in a three-day rebound in cheese prices and milk futures. It was hoped the market would break the pattern that had been prevalent for a few months of short-lived price rallies. Those hopes were dashed as milk futures fell back nearly eliminating the gains.
The buyers of cheese and butter see no need to be aggressive with prices increasing as orders need to be filled. Once the immediate needs are met, buyers become less aggressive and step back. As the buyers step back, sellers continue to bring loads to the spot market to sell as manufacturers want to limit building inventory at the plant level.
By Robin Schmahl
March 18, 2025
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