Wednesday Closing Dairy Market Update - December Class III Price is $15.86

GENERAL OVERVIEW:

Milk futures took a hit due to the inability of the block cheese price to continue higher. The December Federal Order class prices were lower in all categories. The butterfat test for November was 0.07% higher than a year ago.

MILK:

Milk futures closed the last trading day of the year on a sour note. The weakness in block cheese and butter triggered liquidation. The markets will be closed on Thursday, giving traders some time to think about the potential for price direction on Friday. The fundamentals will not change as the New Year begins. Traders will likely continue to see a choppy market for some time to come. The USDA announced the Federal Order class prices for December. The Class II price is $14.41, down $0.13 from November and down $6.87 from December 2024. The Class III price is $15.86, down $1.32 from November and down $2.76 from a year ago. The Class IV price is $13.64, down $0.25 from November and down $7.10 from December 2024. The November Agricultural Prices report was released today. The average corn price was $3.98 per bushel, up $0.05 from October, but down $0.09 per bushel from November 2024. The supreme/premium hay price was $216.00 per ton, down $7 per ton from October and down $19 per ton from a year ago. The All-milk price was $19.70, down $0.30 per cwt and down $4.50 per cwt from November 2024. The average soybean meal price needs to be posted before the calculation can be made for income over feed for the Dairy Margin Coverage program. There were other prices of interest. The alfalfa price for November was $151 per ton, down $8 per ton from October and down $8 per ton from a year ago. The soybean price was $10.50 per bushel, up $0.79 per bushel from October and up $0.66 per bushel from a year ago. The average butterfat test was 4.46% compared to 4.35% in October and 4.39% in November 2024.

AVERAGE CLASS III PRICES:

3 Month:	$15.49
6 Month:	$16.08
9 Month:	$16.58
12 Month:	$16.82

CHEESE:

The weakness of blocks after two days of strength may indicate that buyers have purchased sufficient supplies and may now hold back and purchase on price weakness. The block cheese price has been moving sideways in a tight price range for nearly a month.

BUTTER:

The price closed just 1.50 cents above the low of the year. That does not paint a very positive picture to begin 2026. Large cream supplies and strong butter production will keep a sufficient supply available to the market.

OUTSIDE MARKETS SUMMARY:

March corn closed down 0.25 cent per bushel at $4.4025, March soybeans closed down 14.75 cents at $10.4750, and March soybean meal closed down $2.90 per ton at $299.40. March Chicago wheat closed down 3.75 cents at $5.0700. February live cattle closed up $1.13 at $231.60. February crude oil is down $0.54 per barrel at $57.41. The Dow Jones Industrial Average is down 304 points at 48,063, with the NASDAQ down 177 points at 23,242.

Wednesday Midday Dairy Market Summary - Block Cheese Shows Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	13 Lower
SOYBEAN MEAL:	$0.70 Lower
LIVE CATTLE:	$0.82 Higher
DOW JONES:	163 Points Lower
NASDAQ:	65 Points Lower
CRUDE OIL:	$0.31 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined a penny to close at $1.3750 with eight loads traded. To close the year, there were 27 loads traded over the past three days. The weakness in blocks and another day of a steady price for barrels were unable to support Class III futures. Futures contracts are 7 to 30 cents lower. The butter price slipped 0.50 cents, closing at $1.40 with seven loads traded. The price had been steady to higher for three consecutive days. Grade A nonfat dry milk remained steady at $1.1750 with three loads traded. Class IV futures have only traded in the June contract at a penny lower. Butter futures are 0.52 to 3.17 cents lower. Dry whey futures are 0.65 cent higher, with trading activity only in the February contract. Cheese futures are 0.20 to 2.20 cents lower. The November Federal Order class prices will be announced this afternoon. The November Agricultural Prices report will also be released, providing the average prices used in calculating income over feed for the Dairy Margin Coverage program. The report will not show the average price for soybean meal. This will not be released until Friday or Monday.

Wednesday Morning Dairy Market Update - Mixed Futures and Limited Trading Volume

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	2 to 4 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	1 to 2 Lower

MILK:

It is uncertain how trading volume will be Wednesday. Sometimes, trading activity will be limited on the final day of the year. This may depend on the strength or weakness of the underlying cash. The current market fundamentals suggest prices will remain lower for some time to come as milk production is expected to be strong. More milk will be moving to bottling again as schools reopen after the holidays. However, that will not change the market as there is sufficient milk available for both bottling and manufacturing. The January contract is the front month as December finished trading on Tuesday. The December Federal Order class prices will be announced Wednesday. The trade anticipates a Class III price of $15.88 and a Class IV price of $13.56. USDA will also release the November Agricultural Prices report, which provides the prices used in calculating income over feed for the DMC program.

CHEESE:

It will be surprising if the block cheese price moves higher Wednesday. It has increased in the past two days with 19 loads traded. This may have filled the immediate demand that had surfaced. Once the orders are filled, there may be little reason to remain aggressive buyers.

BUTTER:

The butter price may coast through the end of the year with buyers and sellers comfortable with the current price. Churns will resume full schedules next week as cream supplies remain plentiful.