Cheese Price Analysis - May 2025
Summary
Key Findings: Cheese prices in the United States reached $5.908 in May 2025, representing a significant 6.4% annual increase and a 2.9% monthly rise. The market is experiencing strong upward momentum driven by robust export demand, limited milk supply, and structural changes in the dairy industry.
Current Price Trends
The latest BLS data shows cheese prices at $5.908 per unit in May 2025, marking several important trends:
- Monthly Growth: +2.9% increase from April 2025 ($5.743)
- Quarterly Growth: +6.7% increase over the past 3 months
- Annual Growth: +6.4% increase compared to May 2024 ($5.551)
- Six-Month Growth: +4.1% increase since November 2024
Recent Price Volatility
The data reveals significant month-to-month volatility in 2025:
- January: $5.698 (+1.4% monthly)
- February: $5.536 (-2.8% monthly decline)
- March: $5.737 (+3.6% monthly surge)
- April: $5.743 (+0.1% modest increase)
- May: $5.908 (+2.9% strong growth)
Key Market Factors
Export Demand Strength
U.S. cheese exports enjoyed another strong month in January, with volumes rising to 46,680 MT, up 22% from last year and posting the strongest result ever recorded for the month. Shipments of cheese have now bested prior-year levels for 13 consecutive months, providing critical support for domestic prices.
Export Market Diversification:
- Mexico remains the single-largest market for U.S. cheese with exports in January rising to a monthly record of 12,829 MT
- Surging cheddar demand also drove gains in cheese exports to MENA where volumes jumped by 93% (+1,743 MT) in January
- Strong performance in Central America and the Caribbean (+14%, +1,037 MT) and Oceania (+21%, +587 MT)
Supply-Side Constraints
Milk Production Challenges:
- U.S. milk supply response has been dampened by a couple of factors, including Highly Pathogenic Avian Influenza (HPAI) and tight heifer supplies. To date, HPAI has been confirmed in cattle in 16 states
- The year-over-year change in cow numbers shows a decrease of 40,000 head for August 2024 compared to August 2023
High Cattle Costs:
- As of July 2024, the price of U.S. dairy cows has risen to approximately $2,500 per head, reflecting a notable increase compared to the July 2023 price of around $1,900 per head. This $600 rise over the year shows the upward trend in the market for milk cows
Consumer Demand Patterns
After setting an all-time record in 2022, cheese consumption edged up again in 2023. Americans ate about 42.3lb (19.1kg) of cheese per capita, with increases in both American cheese and cottage cheese consumption.
Premium Market Growth:
- The $68.1 billion cheese category has been bolstered by strengthened per capita income, enabling consumers to "trade up" for more artisanal premium cheese
Policy and Regulatory Impacts
Federal Milk Marketing Order Updates
Federal Milk Marketing Order (FMMO) modernization is being voted on at the time of this writing. Assuming it passes, the changes will be implemented during 2025. Key modifications include increasing make allowances which had not been increased since 2008 and increasing Class I price differentials across the country.
Trade Policy Uncertainties
The incoming presidential administration presents unknowns related to tariffs and immigration. Mexico and China are the most important destinations for U.S. dairy exports, and both have been subjects of recent tariff threats.
Market Outlook and Projections
Price Forecasts
Wholesale dairy product prices and milk prices are also revised upward, with the all-milk price forecast at $21.60 per hundredweight (cwt), a $0.50 increase from the previous forecast.
As of year-end 2024, Class III and IV milk prices are projected to be steady to a bit lower by the second half of 2025. Feed costs are similarly consistent, with the resulting margin trending lower but remaining above historic average.
Supply and Demand Balance
Production Capacity:
- The sector anticipates new processing capacity coming online in 2025 and beyond, uncertainty remains regarding how this will affect the overall supply of dairy products
Global Competition:
- At the current time, US milk prices are below the EU but above New Zealand. Thus, we expect US producers to compete well with the EU for cheese markets this year but may struggle in direct competition with New Zealand
Historical Context
Long-Term Price Trajectory
Comparing current prices to historical data reveals significant appreciation:
- 2020 Average: ~$5.50
- 2022 Peak: $6.084 (September)
- 2023 Decline: Prices fell to $5.545 (December)
- 2024 Recovery: Gradual increase throughout the year
- 2025 Acceleration: Strong upward momentum continuing
Cyclical Patterns
The data shows typical seasonal patterns with:
- Spring price increases (March-May)
- Summer volatility
- Fall adjustments
- Winter stabilization
Risk Factors and Considerations
Potential Headwinds
- Disease Outbreaks: HPAI continues to threaten milk production
- Trade Tensions: Potential tariff impacts on key export markets
- Feed Cost Volatility: Corn and soy price fluctuations
- Weather Events: Climate impacts on both feed and milk production
Supporting Factors
- Strong Export Demand: Diversified international markets
- Premium Consumer Trends: Trading up to higher-value products
- Limited Supply Growth: Constrained cow numbers and production capacity
- Policy Support: Updated milk marketing orders
Conclusion
The cheese market in May 2025 reflects a complex interplay of strong demand fundamentals and supply constraints. The 6.4% annual price increase to $5.908 demonstrates robust market conditions supported by record export performance and limited domestic supply growth. While policy uncertainties and disease pressures present risks, the underlying demand strength from both domestic premium trends and international market diversification suggests continued price support in the near term.
Market participants should monitor export demand trends, HPAI developments, and the implementation of updated Federal Milk Marketing Orders as key factors influencing future price direction.