Friday Closing Dairy Market Update - Class III Milk Futures Close Higher

GENERAL OVERVIEW:

Class III futures showed nice gains, with February showing a significant increase in price. The movement was not the result of a large change in spot prices, but likely some positioning ahead of the weekend.

MILK:

The strength in Class III milk futures was a surprise, given the limited movement of the underlying cash. Much of it might have been some short-covering and positioning ahead of the weekend. Trading was moderate and higher than anticipated for the day after Christmas. The movement of spot prices did not support the strength. The increase in dry whey helped, but other prices remaining steady has increased the concern of lower prices next week. That has been the pattern for some time as new lows have occurred after a day of stability. Spot milk prices have shown further weakness at the bottom of the price range. Prices are as low as $9 under class, while the top of the range is $0.50 over class. Surprisingly, some spot milk is maintaining a positive price. The December Federal Order class prices will be announced next week and will be significantly lower than November.

AVERAGE CLASS III PRICES:

3 Month:	$15.65
6 Month:	$16.01
9 Month:	$16.48
12 Month:	$16.80

CHEESE:

For the week, blocks decreased 2.50 cents with 10 loads traded. Barrel decreased 2 cents with no loads traded. Dry whey gained 2.50 cents with two loads traded.

There is little to create much volatility or price direction for the market. That is expected to continue through the end of the year. There is concern that prices may decline further through the first part of 2026 as milk production is expected to remain strong. At some point, prices will find a bottom, but there is no indication as to where that level will be.

BUTTER:

For the week, butter decreased 1.25 cents with 36 loads traded. Grade A nonfat dry milk gained 2.25 cents with 12 loads traded. The holiday season is affecting butter production as plants vary their production schedules. Heavy cream supplies will keep a limit on the upside price potential of butter. International remains strong, but it is not enough to support the price.

OUTSIDE MARKETS SUMMARY:

March corn closed down 1 cent per bushel at $4.50, March soybeans closed down 4 cents at $10.7250 and March soybean meal closed down $0.70 per ton at $307.40. March Chicago wheat was down 2.75 cents at $5.1900. February live cattle was up $1.10 at $229.65. February crude oil is down $1.36 per barrel at $56.99. The Dow Jones Industrial Average is down 20 points at 48,711, with the NASDAQ down 20 points at 23,593.

Friday Midday Dairy Market Summary - Only Spot Dry Whey Shows Price Movement

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	4 Lower
SOYBEAN MEAL:	$0.10 Higher
LIVE CATTLE:	$1.05 Higher
DOW JONES:	98 Points Lower
NASDAQ:	1 Point Higher
CRUDE OIL:	$1.10 Lower

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.3350 and $1.40, respectively, with no loads traded. There was an unfilled bid and seven uncovered offers remaining in blocks. No one showed up to do any business in barrels. The dry whey price increased by 0.50 cent to close at 73.00 cents with one load traded. Class III futures are 1-28 cents higher. The butter price remained unchanged at $1.4025 with three loads traded. There were seven unfilled bids and one uncovered offer remaining at the close. Grade A nonfat dry milk remained unchanged at 1.18 with no loads traded. Class IV futures have not yet been traded. Butter futures are 1.05 cents lower to 0.50 cent higher. Dry whey futures are steady to 0.50 cent higher. Cheese futures are steady to 1.80 cents higher.

Fluid Milk and Cream - West U.S. Report 52

California week-over-week milk production is stronger. Although handlers convey December 2025 milk production is up from the prior month, some manufacturers note milk intakes this month are below anticipated volumes. Open processing capacity is tight this week, especially in the Central Valley, with some processors scheduling holiday downtime. Spot milk loads are available. 

Farm level milk output in Arizona and New Mexico varies from steady to stronger. 

Handlers convey heavy rains and flooding have negatively impacted cow comfort and lightened milk production for parts of the Pacific Northwest. Some stakeholders note the recent weather challenges have caused some transportation delays for haulers. Manufacturing facilities in the area that started receiving milk intakes this year continue to ramp up production paces. Processors indicate week-over-week downticks in milk production have not caused short milk volumes. 

arm level milk output in the mountain states of Idaho, Utah, and Colorado vary from steady to stronger. Spot loads are more available this week with some manufacturers planning downtime during the holiday. Class I demand is lighter, while all other Class demands are mixed, throughout the region. 

Cream volumes are readily available, and multiples are lower this week. Manufacturers requesting contracted condensed skim milk load deliveries are lighter, as expected for the holiday week. Stakeholders report lighter condensed skim milk demand in California, partly attributed to processing facilities permanently closing, but stronger demand outside of California. Condensed skim milk loads are more available this week.