Thursday Closing Dairy Market Update - August Income Over Feed Was $9.34

GENERAL OVERVIEW:

Class III futures finally showed strength. Traders covered their short positions, but it may be short-lived unless the block cheese price increases further. Class IV futures extended gains due to the increase in nonfat dry milk. August income over feed was $9.34.

MILK:

Class III milk futures finally saw strong gains. The November contract moved above $16.00 at one point today, with March back above $17.00. The question is whether this will hold as the overall fundamentals of the market remain bearish. It is difficult to say whether seasonal buying interest will continue, as there is sufficient cheese for demand. Traders focused on the minor increase in nonfat dry milk rather than the weakness in butter in Class IV futures. The average prices for the August income over feed were released. The average corn price was $4.45, up $0.19 per bushel from July. The premium/supreme alfalfa hay price was $243.00 per ton, up $1.00 per ton from July. The soybean meal price was $320.30 per ton, down $17.66 per ton from July. The all-milk price was $19.80, down $0.50 from July. The result is an income over feed price of $9.34. This is the lowest price since February.

AVERAGE CLASS III PRICES:

3 Month:	$15.78
6 Month:	$16.33
9 Month:	$16.62
12 Month:	$16.85

CHEESE:

The bounce in the block cheese price was welcomed, but it may be short-lived. That is the pattern we have seen for quite some time, and the fundamentals do not suggest otherwise. Strong cheese production keeps sufficient milk available for demand and then some.

BUTTER:

It seemed buying interest was increasing earlier in the week as quite a few infilled bids remained at the close of spot trading. However, that changed today as there were a lot of uncovered offers remaining at the close. It was the largest number of uncovered offers that were ever seen remaining at the close of butter trading. Seasonal buying may not be sufficient to lift prices.

OUTSIDE MARKETS SUMMARY:

December corn closed up 1.50 cents per bushel at $5.0225, November soybeans closed down 9.00 cents at $12.8400, and December soybean meal closed down $3.60 per ton at $353.30. December Chicago wheat closed up 7.00 cents at $6.8275. December live cattle closed up $0.48 at $223.18. November crude oil is up $2.45 per barrel at $92.87. The Dow Jones Industrial Average is up 21 points at 50,927, with the NASDAQ up 11 points at 26,872.

Fluid Milk and Cream - Western U.S. Report 40

Milk production in the West region is generally steady. Seasonal weather changes are not yet bringing major upticks in milk output. Many handlers indicate 2026 milk production is up. 

In California, spot milk loads are neither loose nor tight. Stakeholders note some spot loads are traveling to neighboring states. 

In Arizona, milk volumes are tight. Manufacturers report bringing in both spot loads of milk and condensed skim milk. 

In the Pacific Northwest this week, industry sources describe milk production as balanced with processing capacities. 

In Idaho, spot milk loads are somewhat available. 2026 dairy commodity production investments by some manufacturers in the state are putting further draws on farm level milk output this year. Spot loads are not abundant in the lower areas of the mountain states, but industry sources also note spot milk demand in Colorado is light. 

According to the latest National Agricultural Statistics Service (NASS) milk production report, August milk production was higher year-over-year for Colorado, Idaho, and Oregon. It also shows milk production milk production was down for Arizona, California, New Mexico, Utah, and Washington when comparing August 2026 to August 2025. 

Class I and II demands are stronger, while Class III and IV demands are steady. Stakeholders indicate increasing hauling rates are presenting more challenges. Cream demand is moderate, while plenty of spot load availability is reported. Cream multiples, along with condensed skim milk availability and demand are unchanged this week.

Thursday Midday Dairy Market Summary - Block Cheese Bounces

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	15 Lower
SOYBEAN MEAL:	$9.10 Lower
LIVE CATTLE:	$0.32 Higher
DOW JONES:	28 Points Lower
NASDAQ:	44 Points Higher
CRUDE OIL:	$1.35 Higher

MIDDAY MARKET UPDATE:

Block cheese increased 3.25 cents to close at $1.3025 with 3 loads traded. There were 5 unfilled bids and 24 uncovered offers remaining at the close of spot trading. Barrels remained unchanged at $1.4525 with no loads traded. The dry whey price remained unchanged at 81.50 cents with no loads traded. Class III futures reacted significantly, with futures ranging from 1 to 49 cents higher. The December contract shows the greatest gain. The butter price decreased 2.00 cents to close at $1.3400 with 33 loads traded. There were 12 unfiled bids and 103 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk increased 0.50 cent to close at $2.2050 with 4 loads traded. Class IV futures are 5--21 cents higher. Butter futures are 0.70 -- 6.00 cents lower. Cheese futures are 0.30 cent lower to 1.50 cents higher.