Friday Morning Dairy Market Update - Increasing Cow Numbers and Higher Milk Production

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	2 to 3 Higher
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	1 to 2 Higher

MILK:

Milk output continues to remain significantly higher than a year ago. Cow numbers continue to increase despite the average slaughter of dairy cattle. Cow numbers in March were 187,000 head more than in March 2025. Kansas had the highest increase, with cow numbers up 51,000 head from a year ago. Texas showed an increase of 34,000 head, with Wisconsin up 28,000 head. Other states in the top 24 showed lower increases or declines. The trend for increased milk production and cow numbers is expected to continue throughout this year. USDA will release the March Cold Storage report Friday afternoon.

CHEESE:

The increase in the barrel cheese price was bound to happen as the price had remained unchanged for a time. The minor increase in blocks may indicate the price may have difficulty increasing much further, as increased cheese production keeps sufficient supplies available to the market.

BUTTER:

The weakness of butter has been surprising. Sellers keep offering it to the market to keep inventory from building at the plant level. Butter inventory being significantly below a year ago has had no impact on buyers as they continue to purchase supplies at lower prices. The U.S. price is about $0.95 per pound below the world price, which will keep international interest strong. 

Thursday Closing Dairy Market Update - Cattle Slaughter Increased

GENERAL OVERVIEW:

Milk futures did not respond as was anticipated in reaction to the movement of underlying cash. The increase in cheese and nonfat dry milk supported futures but did not propel them higher. March dairy cattle slaughter increased from a year ago.

MILK:

Class III futures were mixed but mostly higher with gains confined to single digits. The slight increase in the block cheese price provided the support. The gain in the barrel cheese price has no impact on the Class III price calculation and provides no direct support. Indirectly, it may have some influence, as an increase in the barrel price may mean an increase in demand. March dairy cattle slaughter totaled 239,200 head, an increase of 1,900 head from February and 21,300 head less than March 2025. This stands to reason, as February had three fewer days than March. This should be positive for the market, but the nation's cow numbers have increased by 187,000 head over March 2025. The advanced Class I price for May is $20.15 per cwt. This is up $1.49 from April and $1.78 higher than May 2025.

AVERAGE CLASS III PRICES:

3 Month:	$17.39
6 Month:	$18.14
9 Month:	$18.34
12 Month:	$16.15

CHEESE:

The milk supply is sufficient for demand, but reports from the Midwest region indicate that there are fewer spot loads available on the market. However, at the same time, cheese manufacturers are not purchasing large volumes from the spot market as they have sufficient milk from patrons and regular suppliers. Spot milk prices have increased slightly from a week ago, with prices now $5.00 under class to class.

BUTTER:

Even though there is increased demand from Class II product production, butter manufacturers have not been purchasing much cream from the spot market, as they have sufficient from regular suppliers. Retail demand is reported as steady, while food service demand has slowed.

OUTSIDE MARKETS SUMMARY:

May corn closed up 1.25 cents per bushel at $4.5550, May soybeans closed down 4.75 cents at $11.5975, and July soybean meal closed up $.20 per ton at $316.50. July Chicago wheat closed up 13.25 cents at $6.2025. June live cattle closed up $0.43 at $243.50. June crude oil is up $2.89 per barrel at $95.85. The Dow Jones Industrial Average is down 180 points at 49,310, with the NASDAQ down 219 points at 24,439.

Fluid Milk and Cream - Western U.S. Report 17

In California, milk production is generally steady. Handlers report marginal differences in milk output for weeks 16 or 15 compared to week 14. April milk production is up slightly compared to the prior month. Handlers convey this year's peak spring volumes are lasting longer. Some manufacturers note milk intakes at their processing facilities are above anticipated volumes. 2026 year over year milk production remains up. Processors describe milk volumes as balanced compared to processing capacities. 

In Arizona, farm level milk output is steady. Some manufacturers continue to secure spot milk loads for open processing capacity. 

In New Mexico, milk production is lighter. Stakeholders note New Mexico milk output trends are somewhat ahead of Colorado milk output trends in week 17. 

Pacific Northwest milk production varies from somewhat lighter to somewhat stronger. Spot milk loads are tight. 

Farm level milk outputs in the Mountain States of Idaho, Utah, and Colorado are mixed. Manufacturers indicate milk volumes are more balanced to processing capacities this week. Class I, III, and IV demands are steady, while Class II demand is stronger. 

Spot cream loads are available. Demand is stronger, but sellers don't always receive interest at a price point for making a transaction. Cream multiples are unchanged for week 17. Condensed skim milk loads are available. Condensed skim milk demand is mixed. Some stakeholders note it is down from last year.