There is uncertainty about the direction of dairy prices for the year, with a focus on the first quarter. Some factors, such as a 2% decrease in American cheese inventory and strong exports, suggest the market may be strong.
However, there are also indicators pointing towards weakness, such as high levels of inventory and declining world prices.
Milk production has also been higher than the previous year for several consecutive months.
While there are reasons for the market to be strong, the current trend is bearish and many traders are expecting prices to remain stagnant or decrease. Some farmers have used option strategies or insurance to protect against loss while still being able to take advantage of potential price increases.