Thursday Closing Dairy Market Update - Is the Herd Growing Only by Holding Cull Cows?

GENERAL OVERVIEW:

Class III futures closed mixed as traders digested the volatility of the past week. Later contracts found some strength to close the day, but not from any strength in cash prices. The December Agricultural Prices report will be released on Friday.

MILK:

The price swings in Class III futures were limited today. Market volatility settled down with movement confined to stabilizing where they should be relative to the underlying cash. The December Agricultural Prices report will be released on Friday, providing most of the prices used in calculating the income over feed price. The FSA will release the average soybean meal price on Monday unless the government shutdown impacts the release of that price. There has been much talk regarding holding onto cattle that normally would be culled to get a calf out of them that is worth money. This seems to revolve around the idea that it is the only reason cow numbers continue to increase. I think this may not be the only reason. I think cows are being managed better, resulting in healthier cows that are producing more milk over a longer duration. After all, slaughter increased significantly in December, and yet the number increased. Cow numbers might be increasing due to better cows that are producing more milk, with milk per cow increasing by 41 pounds in December. A large number of cull cows in the nation's herd do not produce that much milk. It seems that the dairy herd is growing due to good cows that are remaining in the herd longer and are able to supplement milk income by producing calves. The industry may be looking at this from the wrong angle.

AVERAGE CLASS III PRICES:

3 Month:	$15.33
6 Month:	$16.03
9 Month:	$16.55
12 Month:	$16.80

CHEESE:

Some areas have indicated cheese demand is strong, with manufacturers meeting their contracts with limited supplies left over. This does not seem to be widespread, or spot cheese price would have retained the recent gains and would be trending higher. There is sufficient cheese available, which is why sellers continue to bring it to the spot market.

BUTTER:

Butter futures did not follow the spot butter price lower today. They rebounded into the close as prices adjusted from being overdone to the downside. Added to that were the unfilled bids at the close of spot trading, possibly indicating the price may have reached a level where buyers will be more aggressive.

OUTSIDE MARKETS SUMMARY:

March corn closed up .75 cent per bushel at $4.3075, March soybeans closed down 2.75 cents at $10.7225, and March soybean meal closed down $1.80 per ton at $296.00. March Chicago wheat closed up 5.50 cents at $5.4150. April live cattle closed down $1.45 at $237.28. March crude oil is up $2.21 per barrel at $65.42. The Dow Jones Industrial Average is up 56 points at 49,072, with the NASDAQ down 172 points at 23,685.

Fluid Milk and Cream - Western U.S. Report 5

California milk production is currently strong. Manufacturers convey open processing time remains tight as milk volumes are generally pushing against processing capacities. Stakeholders note spot milk loads being offered at prices below the Federal milk marketing order blend price. According to the California Department of Water Resources, as of January 27, 2026, the state has received 14.55 inches of precipitation for the current 2025-26 Water Year, up 2.61 inches from the historical mean. This is increasing reservoir levels and water resources for dairy farmers. 

Farm level milk output in Arizona and New Mexico is steady. Spot loads are available. New Mexico handlers note road closures and some downtime at dairy processing facilities due to winter weather related impacts, which has resulted in some distressed milk volumes. 

Handlers in the Pacific Northwest note cow comfort has improved, and milk output is back within anticipated volumes. Despite this, some manufacturers are continuing to secure spot milk loads. 

Farm level milk output in the mountain states of Idaho and Utah is strong. Stakeholders indicate a few processors had decreased intakes for a portion of January but are now receiving typical volumes again. Spot loads remain available. Farm level milk output in Colorado is steady. Class I and II demand is steady, while Class III and IV demand is mixed throughout the region. 

Cream loads are widely available, and demand is mixed. Cream multiples moved higher at the bottom ends of both ranges.  Condensed skim milk availability and demand are steady. 

Thursday Midday Dairy Market Summary - Nonfat Dry Milk Moves to Multi-Year High

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$2.00 Lower
LIVE CATTLE:	$1.12 Lower
DOW JONES:	143 Points Lower
NASDAQ:	336 Points Lower
CRUDE OIL:	$0.79 Higher

MIDDAY MARKET UPDATE:

The block cheese price slipped 0.75 cent, closing at $1.3750 with no loads traded. The barrel cheese price remained unchanged at $1.41 with no loads traded. The dry whey price slipped 0.50 cent, closing at 74.50 cents with three loads traded. Class III futures are mixed with contracts ranging from 14 cents lower to 6 cents higher. The butter price declined 4.00 cents, closing at $1.4850 with 15 loads traded. The heavy volume of offers has diminished, with two uncovered offers remaining at the close and 14 unfilled bids. Hopefully, this may indicate that the selling pressure will subside. Grade A nonfat dry milk increased 3.75 cents to close at $1.4175 with no loads traded. There were seven unfilled bids and one uncovered offer remaining. This is the highest price since Nov. 22, 2022. This is providing support to the Class IV market. Class IV futures have traded steady so far today. Butter futures are 0.80 cent lower to 0.52 cent higher. Dry whey futures are 0.27 cent lower to 1.00 cents higher. Cheese futures are 1.90 cents lower to 0.60 cent higher.