Cheese Price Analysis - December 2025
Summary
Key Findings: Cheese prices in December 2025 showed mixed signals with a 2.7% monthly increase to $5.789, but remained 3.0% higher year-over-year. Despite recent volatility, global oversupply conditions and competitive U.S. export pricing continue to influence market dynamics.
Current Price Trends
December 2025 Performance:
- Current price: $5.789 per unit
- Monthly change: +2.7% (+$0.153)
- Year-over-year change: +3.0% (+$0.168)
- 6-month trend: -3.5% (-$0.210)
The December price represents a recovery from November's $5.636, marking the highest level since September 2025. However, the price for 40-pound blocks of Cheddar cheese, butter, and nonfat dry milk (NDM) decreased in recent wholesale market reports, indicating potential downward pressure ahead.
Market Dynamics and External Factors
Global Supply-Demand Imbalance
Milk supply continues to exceed demand globally at the end of 2025, putting pressure on prices. This fundamental imbalance has created several key market conditions:
- Oversupply Impact: Global milk supplies continue to run ahead of demand. In the US, robust milk and component production have weighed on cheese and butter prices, as consumption has been unable to absorb the current volume of output
- Production Outlook: Milk prices have declined in the US but total dairy farmer income likely remains higher than the cost of production for most farmers, meaning there has not yet been a strong enough price signal to tell farmers to cull cows or cut production
Export Market Performance
Record Export Volumes: U.S. cheese exports hit it out of the park in 2025 with record volumes shipped, driven by competitive pricing advantages.
- Price Competitiveness: U.S. cheese prices heading into 2025 and for most of the year have been sitting at a discount of 25 cents or more, keeping global buyers knocking at our door
- Market Share Gains: That ultimately gave U.S. cheese exports a huge boost and led to some reshuffling of suppliers into contested markets in 2025 – including places like South Korea, Japan, Australia and Latin America (outside of Mexico)
Wholesale Market Indicators
Recent wholesale pricing data shows mixed signals:
- CME Pricing: For the trading week ending December 5th at the Chicago Mercantile Exchange (CME), the spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $1.4645 and $1.4095 per pound, respectively
- Weekly Trends: For trading concluding on December 12, the Chicago Mercantile Exchange 40-pound blocks averaged $1.3490
Key Factors Influencing Prices
Production and Supply Chain
Milk Production: The size of the U.S. dairy cow herd is expected to peak in the fourth quarter of 2025 at 9.575 million head and then gradually decline through the subsequent quarters of 2026
Processing Flexibility: Others would simply process the excess milk into higher-value commodities... We will see larger processers flex to other product mix, for example cheese/whey or whole milk powder
Demand Patterns
- Protein Demand: Dry whey remains a notable bright spot, with strong consumer demand for high-protein products shifting more milk into higher-value whey streams, tightening commodity-style dry whey supplies
- Fluid Milk Decline: 3.6 billion pounds of packaged fluid milk products were shipped by milk handlers in November 2025. This was 1.8 percent lower than a year earlier
Historical Context
| Period | Price | Monthly Change | Annual Change |
|---|---|---|---|
| Dec 2025 | $5.789 | +2.7% | +3.0% |
| Nov 2025 | $5.636 | -8.0% | -0.7% |
| Sep 2025 | $6.049 | -1.2% | +5.5% |
| Dec 2024 | $5.621 | -1.0% | +1.4% |
The current price level represents a 3.0% increase from December 2024, showing moderate year-over-year growth despite significant monthly volatility throughout 2025.
Outlook and Implications
Short-term Pressures
Even so, broader supply pressures have kept both Class III and Class IV prices trending lower, suggesting continued downward pressure on cheese prices despite December's recovery.
Global Market Dynamics
The Global Dairy Trade price index fell 4.3% at the latest event as bearish sentiment continues to guide market direction. With mostly WMP and SMP sold at the latest auction – which is considered a barometer of global sentiment – most product categories saw price declines
Regional Variations
But it estimates that the EU will slip into contraction next year, lessening the current oversupply situation. Regardless of how each regions shakes out, it will be important that demand is as strong as possible to absorb the additional growth the world in sum will see into 2026
Note: Data unavailable for October 2025 due to government appropriations lapse, which may have contributed to market uncertainty during that period.