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Rising output from the EU, US and New Zealand are putting downward pressure on commodity prices and creating market uncertainty, according to an August 2025 report.

Global dairy commodity prices are under increasing pressure as milk output rises across key producing regions, according to an August 2025 report by Maxum Foods. This dynamic is weakening market fundamentals and product values, creating a challenging environment for producers and processors. While the dairy agribusiness sector saw some price strength earlier in the year, the current trend indicates a shift toward a more bearish market sentiment driven by expanding supply.

The report highlights specific regional trends contributing to the global surplus. In the European Union, earlier supply constraints are now easing, even as a hot, dry summer threatens future feed availability. Meanwhile, the United States is seeing strong milk and cheese production that is outpacing weak domestic demand and an inadequate export growth rate. This combination is leading to a buildup of inventories and eroding values.

New Zealand, a pivotal player in the international dairy trade, is also experiencing favorable production conditions ahead of its new season. Its milk output is projected to grow slightly above last year’s already strong results. This increased supply, alongside the output from the EU and the US, is a primary factor in the global market’s shift. The report notes that while global trade continues to expand, there’s growing pushback against high prices, as evidenced by New Zealand’s export trends.

The situation in Australia provides a stark contrast, where the milk sector faces its own unique challenges. Despite improved rainfall prospects in some eastern areas, southern regions are dealing with ongoing feed shortages. This has pushed hay prices to nearly double what they were in May. As a result, culling activity has reached its highest level in over three years, and the forecast for Australian milk solids production is a 2% decline for the 2025/26 season, a critical detail for dairy economics analysts.

The complex interplay of these regional developments, combined with lingering geopolitical agendas and shifts in US fiscal policy, continues to impact commodity markets. The report concludes that while there are still unknowns, the overall trend points to a market where expanding supply is likely to outstrip demand, posing a significant challenge for the entire international dairy community in the second half of the year.

Cheese prices break $1.70, boosting nearby milk futures, but the slide in 2026 contracts signals future uncertainty.

The recent surge in cheese prices has been a topic of close scrutiny among market watchers. Breaking the crucial $1.70 per pound mark, cheese prices are infusing optimism into milk futures contracts for the coming months. This rally represents a strong signal for the dairy sector, with nearby Class III futures experiencing significant boosts as September contracts rose by more than 40 cents from the week’s low.

However, while short-term cheese markets are thriving, 2026 futures contracts do not paint the same rosy picture. They have dipped, with January to June contracts falling six cents to a low of $17.78 per hundredweight, showing the lowest levels since April. This trend underlines the mixed sentiments within the dairy industry, with concerns about the longer-term outlook.

Market Highlights:

• CME cheese markets saw a resurgence over $1.70 per pound, with spot blocks closing at $1.7050 per pound and barrels at $1.7100 per pound.
• The butter market faced a slight downturn to $2.4450 per pound, while spot dry whey prices rallied up to $0.5500 per pound.
• Latest labor statistics indicate a soft job market, with only 73,000 new jobs added in July, and unemployment rising to 4.2%.

The dichotomy in cheese price trends between various futures contracts and spot markets captures the existing uncertainty within the dairy industry as it navigates the fluctuating economic landscape.

A new product from Country Crock labeled as “dairy-free butter” has sparked growing concern within the dairy industry.

The dairy industry urges FDA action against ‘dairy-free butter’ labeling, citing federal standard violations and consumer confusion.

The dairy industry is mounting a strong pushback against the use of traditional dairy terms, particularly the word “butter,” on plant-based alternatives. The American Butter Institute (ABI) has formally requested the U.S. Food and Drug Administration (FDA) to take decisive action against products like Country Crock’s “dairy-free butter.” The ABI argues that such labeling is misleading and violates federal standards, which define butter as a product made exclusively from milk or cream.

This intensifies the ongoing struggle within the agribusiness sector to control the narrative around butter labeling. Christopher Galen, executive director of the ABI, contends that plant-based manufacturers are attempting to “leverage the premium perception of real dairy butter.” He labels the term “butter” for plant-based products as a “total oxymoron,” which could undermine the integrity of food labeling. The dairy industry’s argument hinges on federal identity standards, which legally define butter as a milk-derived product.

By allowing “fake butters” to use the term, they argue, the regulations are breached, and it potentially misleads consumers within the dairy product market. This debate is not new. The National Milk Producers Federation raised similar objections in 2019 regarding plant-based butter labeling. The dairy industry maintains that only milk-origin products should use dairy-specific terms.

The outcome of the FDA’s decision on this matter could greatly affect the competitive dynamics between dairy and non-dairy markets, highlighting the growing regulatory challenges faced by both traditional dairy producers and plant-based innovators.

Galen emphasized that labeling a non-dairy item as butter is a direct violation of federal standards. Galen remains hopeful that the Trump administration will give the complaint careful consideration and respond with greater sympathy to their concerns.