Monday Morning Dairy Market Update - Traders Search For Fundamental Direction

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	12 to 13 Higher
Soybean Futures:	28 to 32 Higher
Soybean Meal Futures:	$6 to $7 Higher
Wheat Futures:	3 to 9 Higher

MILK:

There is not much fundamental change expected in the near-term. The forecast for hot weather resurfacing later this week in the Corn Belt has significantly impacted grain futures overnight, as corn will soon enter into the pollination stage. The hot weather will impact milk production and components in those areas. That could trigger a psychological boost to milk futures and possibly increase buying interest in the spot market. However, the overall milk production may not be impacted sufficiently to tighten supply. Milk production is expected to remain above a year ago throughout the rest of this year.

CHEESE:

The end users of cheese have not been concerned about supply. This has left them unaggressive in the spot market. Manufacturers have continued to offer cheese on the spot market to limit building inventory. Cheese demand has been good with buyers able to purchase sufficient supplies. Some buyers have increased ownership in preparation of later demand.

BUTTER:

Buyers may turn more aggressive in butter as hot weather will reduce milk components and tighten cream supplies. However, it is not expected to tighten the butter supply to the extent of causing concern. However, buyers may step up in an effort to be proactive rather than reactive.

Thursday Closing Dairy Market Update - American Cheese Production Declined From May 2025

GENERAL OVERVIEW:

It certainly was not an exciting close to the holiday-shortened week. Class IV futures have lost nearly all of their gains of last week, with Class III futures again making new contract lows. The May Dairy Products report showed production gains in butter and cheese except for American cheese.

MILK:

Class III milk futures continue to eliminate the price premium contracts have maintained as traders see little reason to keep prices higher. Subsequent contracts continue to roll down as they move in line with the underlying cash. Even though milk production has passed its peak and has been decreasing, overall output remains higher than a year ago. This keeps sufficient milk available for bottling and processing needs. The summer weather is expected to have an impact on milk production as it usually does, but the impact may not be sufficient to cause any supply shortage. It may reduce the level of spot milk that is available and raise the price of spot milk, but it may not raise the farm milk price.

AVERAGE CLASS III PRICES:

3 Month:	$16.16
6 Month:	$16.80
9 Month:	$16.98
12 Month:	$17.07

CHEESE:

For the week, block increased 1.25 cents with 36 loads traded. The weekly average price is $1.4288. Barrels decreased 0.50 cent with no loads traded. The weekly average price is $1.4763. Dry whey remained unchanged with no loads traded. The weekly average price is 68.50 cents. Cheese is having difficulty finding any upward price momentum. Manufacturers continue to move supplies to the market to limit the buildup of inventory. Buyers are not concerned over the supply tightening anytime soon. This keeps them less aggressive in the spot market. The May Dairy Products report showed American cheese production down 2.6 percent from May 2025, totaling 499 million pounds. Italian type cheese production totaled 560 million pounds, up 6.5 percent from the previous year. Total cheese production was 1.28 billion pounds, up 2.0 percent. Dry whey output totaled 82.6 million pounds up 12.2 percent.

BUTTER:

For the week, butter decreased 1.25 cents with 71 loads traded. The weekly average price is $1.6788. Grade A nonfat dry milk decreased 9.25 cents with 73 loads traded. This is the first time that the volume of nonfat dry milk exceeded the volume of butter traded in a single week. The weekly average price is $1.5919. Butter production in May totaled 224 million pounds, up 3.5 percent from May 2025. Nonfat dry milk production totaled 173 million pounds, up 10.2 percent.

OUTSIDE MARKETS SUMMARY:

December corn closed down 0.75 cent per bushel at $4.4150, November soybeans closed down 1.50 cents at $11.4775, and December soybean meal closed down $.30 per ton at $304.40. September Chicago wheat closed down 0.25 cent at $5.9975. August live cattle closed down $2.60 at $239.23. August crude oil is down $0.08 per barrel at $68.50. The Dow Jones Industrial Average is up 595 points at 52,900, with the NASDAQ down 207 points at 25,833.

Fluid Milk and Cream - Western U.S. Report 27

California milk production is lighter. Handlers report June 2026 milk output is down from May 2026 but remained up year-over-year. Spot milk loads are available. Among manufacturers in the state, some scattered downtime is planned during Q3. 

Farm level milk output in Arizona is lighter. Spot load availability is looser as some facility equipment issues are causing unplanned downtime. 

Milk production in New Mexico and the Pacific Northwest is seeing some seasonal decreases, but manufacturers indicate volumes are sufficient for their production needs. 

Handlers in the mountain states report temperatures are rising after a slower than expected pace to seasonal increases, especially with nighttime temperatures. Week-to-week milk production is lighter. Idaho and Utah stakeholders note spot load availability is tighter. 

No changes in Class I, II, III, or IV demands are reported this week. 

Cream loads are available. Demand varies from somewhat lighter to somewhat stronger. Cream multiples are stable. Some stakeholders note condensed skim milk availability is tighter than it was at this time last year. 

Condensed skim milk demand is steady.