Friday Morning Dairy Market Update - Short-Covering Expected Ahead of Weekend

OPENING CALLS:

Class III Milk Futures:	2 to 5 Higher
Class IV Milk Futures:	8 to 15 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	1 to 2 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	3 to 5 Lower

MILK:

USDA increased milk production again in the World Agricultural Supply and Demand report Thursday. They increased the estimated milk output to reach 235.3 billion pounds. This is an increase of 600 million pounds from their March estimate. If this comes to fruition, it will be an increase of 3.6 billion pounds above 2025. But even with this increase, the all-milk price was raised by $0.80 per cwt to average $20.50. This would be $0.67 per cwt below 2025. We know overall exports have been strong and are expected to remain that way, but domestic demand will need to improve to realize higher milk prices.

CHEESE:

Cheese prices may remain under pressure. The decline in the block cheese of $0.12 the past two days has changed market sentiment. The uptrend has been negated for now, and buyers have stepped back as sellers have become aggressive. This may result in further weakness and follow a similar pattern to butter.

BUTTER:

The slight increase in the butter price on Thursday does not indicate support has been found. Buyers were more aggressive as they wanted to take advantage of the lower price to increase ownership. Butter output remains strong, but slightly lower than it has been due to an increase in cream demand from other Class II products. The cream supply remains sufficient for demand.

Thursday Closing Dairy Market Update - February Exports Remained Strong

GENERAL OVERVIEW:

Class III futures were under pressure in contracts through September. Class IV futures exploded with the minor increase in butter and continued gains in Grade A nonfat dry milk. Dairy exports did well in February.

MILK:

Class III futures in contracts through September were lower in response to the weakness in cheese prices. Class IV futures exploded higher with the May contract reaching $0.79 higher and June $0.80 higher at one time during the day. The Grade A nonfat dry milk price continued to increase to another new high with no indication of price resistance.

Strong international demand continued to drive milk solids equivalent export volume 13% higher compared to February 2025. It was the ninth consecutive month of growth. In the first two months of 2026, export volume increased 12% compared to the first two months of 2025. The value of exports was 11% above February 2025, with year-to date export value up 8% compared to the same period a year ago.

AVERAGE CLASS III PRICES:

3 Month:	$17.24
6 Month:	$17.81
9 Month:	$18.03
12 Month:	$17.93

CHEESE:

The Western region indicates cheese production is steady to increasing. However, manufacturers indicate that cheese inventory is not building to any large extent. Domestic demand is steady to stronger as spring approaches. The Western region indicates milk production may be at its peak of the spring flush, while most of the rest of the country is seeing the early stages of it.

BUTTER:

The increase in the butter price today does not indicate that support has been achieved. The price was likely low enough to generate increased buyer interest, as it makes sense to buy butter at the low price. The Grade A nonfat dry milk price continued higher as buyer interest remains strong. There is no indication of price resistance. The market will find a level of resistance at some point where demand will slow down.

OUTSIDE MARKETS SUMMARY:

May corn closed down 3.25 cents per bushel at $4.4400, May soybeans closed up 3.25 cents at $11.6525, and May soybean meal closed up $3.50 per ton at $317.60. May Chicago wheat closed down 5.75 cents at $5.7450. June live cattle closed up $1.28 at $247.20. May crude oil is up $4.40 per barrel at $98.81. The Dow Jones Industrial Average is up 276 points at 48,186, with the NASDAQ up/down 187 points at 22,822. 

Fluid Milk and Cream - Western U.S. Report 16

California milk production is steady. Handlers report March 2026 milk production is up slightly from the prior month. Year over year milk production for March 2026 is up also. Processors are busily working through milk volumes. Central Valley manufacturers report milk volumes are more manageable and production is running well. 

Arizona farm level milk output is steady. Some manufacturers are bringing in spot milk to fill open processing capacity and run busier production schedules. 

Handlers in New Mexico report peak spring milk production is at hand. 

Pacific Northwest milk production varies from steady to stronger. Some manufacturers are bringing spot milk loads into their production facilities from sellers inside and outside of the Pacific Northwest. 

Farm level milk output in the Mountain States of Idaho, Utah, and Colorado is steady. Spot milk loads are readily available with some manufacturer downtime in the Mountain States. Stakeholders report that peak spring milk output volumes are good. Class I demand is stronger with many educational institution's spring breaks completed. Class II demand varies from lighter to steady. Class III and IV demands are steady. 

Cream loads are available to accommodate demands. Cream demand is steady. Cream multiples are unchanged this week. Condensed skim milk demand and availability is steady, however, some sellers report buyer interest is lower than the previous year due to available quantities of milk solids.