Friday Morning Dairy Market Update - Lower Calf Prices Reduce Farm Income

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 15 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	5 to 6 Higher
Soybean Futures:	7 to 8 Higher
Soybean Meal Futures:	$0.50 to $1 Higher
Wheat Futures:	6 to 7 Higher

MILK:

There is not much to say about the milk market as fundamentals remain similar to what they have been for some time. The milk supply is sufficient and expected to increase as the summer winds down and cow comfort improves. The significant aspect that is a concern is declining calf prices and the impact it will have on cash flow. It is uncertain whether lower calf prices will be here to stay or whether this is a temporary weakness in the market. The beef cattle inventory remains at the lowest level in 75 years, and that will not change anytime soon. The government is opening up for more beef imports to reduce consumer prices. How much impact this will have, and the duration, are uncertain. This, on top of already low milk prices, will reduce farm income.

CHEESE:

Traders seem to realize cheese prices have little upside potential for the foreseeable future. With sufficient supplies available, buyers see no need to be aggressive. Buying may be increasing seasonally, but without fanfare. Increased production is satisfying increased demand.

BUTTER:

Butter supplies remain plentiful with sellers willing to sell on the spot market. The daily volume of offers on the spot market will keep the upside price potential limited.

Thursday Closing Dairy Market Update - Cattle Slaughter Increased

GENERAL OVERVIEW:

Milk futures closed higher with Class IV futures again outpacing Class III futures. Cheese and butter prices continue to struggle. Dairy cattle slaughter in July increased from a year ago.

MILK:

The September Class IV price is nearly $3.00 over the Class III price for the same month. The nonfat dry milk price is not finding price resistance, which is providing substantial support to the market. Dairy cattle slaughter in July totaled 227,600, up 19,500 from June. Slaughter in July usually is higher than June. Some of it is due to there being one more day in July, and some of it is due to calendar composition depending on actual days of slaughter. It was 1,800 head higher than July 2025. The higher slaughter level did not impact cow numbers, as the milk production report showed cow numbers did not decline from June. Dairy Farmers of America Inc. topped the list of the 2026 top dairy companies ranked by sales in 2025. Saputo Inc. ranked second. Lactalis USA was third. Nestle North America was number four. The Magnum Ice Cream Co. was ranked number five.

AVERAGE CLASS III PRICES:

3 Month:	$16.62
6 Month:	$16.95
9 Month:	$17.13
12 Month:	$17.27

CHEESE:

There is no shortage of milk for manufacturing. There had been some anticipation that more milk moving to bottling would tighten the market to some extent, but that has not yet happened and likely may not. The reopening of schools has provided an increase in food service demand, but not enough to tighten supply. The block cheese price has declined to the lowest level since July 6.

BUTTER:

The butter price has been unable to find consistent support. Buyers have not had any difficulty finding supplies for immediate needs as well as building inventory for later demand. Sufficient supplies are expected to remain available through the end of the year.

OUTSIDE MARKETS SUMMARY:

December corn closed down 3.00 cents per bushel at $5.3350, November soybeans closed up 2.00 cents at $12.6800, and December soybean meal closed up $1.60 per ton at $340.90. December Chicago wheat closed up 12.50 cents at $7.6075. October live cattle closed up $2.15 at $212.93. October crude oil is up $1.30 per barrel at $83.53. The Dow Jones Industrial Average is up 106 points at 53,569, with the NASDAQ up 411 points at 26,541.

Fluid Milk and Cream - Western U.S. Report 35

Milk volumes continue to recover and improve week over week in the West. Improved weather conditions in California have made milk more available, and contacts report plants are able to secure the volumes they need. 

Arizona and New Mexico remain tight on milk, relying on spot availability from neighboring states to fill gaps. 

Milk volume in the Pacific Northwest and Mountain states is balanced; weather conditions continue to improve, increasing cow comfort. Across the region, contacts report decreases in milk fat components. Class I production is focused on filling school demands. Class II demand is strong, and some manufacturers are taking in spot volumes of milk and cream to maintain busy production schedules. Class III and Class IV demand is steady. 

Cream multiples have increased at the bottom end of both range. Cream spot loads are tighter. Condensed skim milk (CSM) availability continues to be tight in the West. Lower milk fat components following a period of hot weather and poor conditions, along with limited availability, are causing prices to increase week over week for CSM. Demand is improving while some production is becoming more limited, partly due to production facility downtime.