Friday Morning Dairy Market Update - February Milk Production Report Will Be Released This Afternoon

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 3 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	1 to 2 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	7 to 8 Lower

MILK:

Milk futures continue to chop around with traders scalping the market and creating market movement that sometimes is contrary to the underlying cash. Traders seem to think the upside potential for block cheese is limited. The USDA will release the February Milk Production report Friday afternoon. The report is expected to show higher milk production than a year ago. I estimate milk production to be 3.5% higher than in February 2025, with cow numbers unchanged from January.

CHEESE:

Cheese production is increasing as more milk moves to the vat. This will keep sufficient cheese available to the market and may limit the upside price potential. However, buyers are aggressively purchasing cheese in the spot market to increase their ownership and to meet the current demand for fresh cheese that is 30 days old or less. Some cheese is moving to the retail market while some is being put into aging programs.

BUTTER:

The buying interest in butter that limited the losses in the spot market on Thursday may indicate the market has found support. However, it is not likely a price rebound would regain the recent losses anytime soon. Buyers have been able to purchase a significant amount of butter to put into storage for later use.

Thursday Closing Dairy Market Update - April Class I Price is $18.66

GENERAL OVERVIEW:

Most milk futures contracts close lower despite the spot prices suggesting otherwise. The block cheese price moved above the previous high, keeping the overall uptrend intact. The nonfat dry milk price is moving close to the high of 2022.

MILK:

Milk and dairy product movement moved back to normal after the winter storm that caused travel difficulties in numerous states. There has been no indication of milk being dumped, as roads were not impassable for very long, and power outages were minimal in the impact areas. Milk production has been and will continue to increase seasonally as the spring flush begins. The level of the increase in production is uncertain, as milk production has been strong up to this point. The increased milk receipts from farms will increase dairy product production, with most of the extra milk moving to the cheese vat. Spot milk prices strengthened a bit this week, with prices ranging from $3.00 under class to the class price. The Class I price for April is $18.66, up $3.19 from March, but $0.91 below April 2025. The USDA will release the February Milk Production report on Friday. The report is expected to show higher milk output than a year ago. I estimate milk production to be 3.5% higher than in February 2025, with cow numbers unchanged from January.

AVERAGE CLASS III PRICES:

3 Month:	$16.92
6 Month:	$17.57
9 Month:	$17.85
12 Month:	$17.76

CHEESE:

The block cheese price moved above the previous high, keeping the uptrend intact. Traders were cautious and did not buy into the strength. The focus may turn to the February Milk Production report that will be released at 2 p.m. CDT Friday. Traders are uncertain whether there is much more upside potential remaining for the price. The supply of cheese is sufficient for demand, which may limit the aggressiveness of traders.

BUTTER:

The butter price may have finally found support as the spot price bounced from the low during trading today. The price certainly is low enough that it should generate more aggressive buying interest. Sellers have been aggressive as they moved butter to the market rather than holding onto it.

OUTSIDE MARKETS SUMMARY:

May corn closed up 6.50 cents per bushel at $4.6975, May soybeans closed up 6.75 cents at $11.6850, and May soybean meal closed up $10.80 per ton at $332.50. May Chicago wheat closed up 3.75 cents at $6.0800. April live cattle closed down $2.13 at $233.28. May crude oil is up $0.09 per barrel at $95.55. The Dow Jones Industrial Average is down 204 points at 46,021, with the NASDAQ down 62 points at 22,091.

Fluid Milk and Cream - Western U.S. Report 12

In the West region, some contacts indicate spring flush is beginning in some states. California milk production is strong with year over year growth from March 2025. California is heavy on milk with excess milk going to condensing plants. 

New Mexico and Arizona report steady milk production. 

Washington is experiencing a drop in milk volumes. Recent inclement weather has negatively affected cow comfort. 

Idaho milk supplies are tightening but contacts indicate the flush is coming soon. Colorado production is steady. Class I production is steady with no significant changes in demand. Class II demand is strengthening in the region. 

Demand for heavy whipping cream and ice cream are contributing to increased activity of spot purchases of cream. Class III demand is steady. Spot volumes of milk and condensed skim are available for Class III use. Class IV demand is strong. Butter makers are not taking in spot loads of cream but churns are operating at or near capacity. Dryers are prioritizing nonfat dry milk due to the increased demand. Condensed skim volumes are growing in the region. Some condensed skim is moving to animal feed operations to offload excess volumes.