Thursday Closing Dairy Market Update - Milk Moves to Top of the Food Pyramid; Little Impact on Market Expected

GENERAL OVERVIEW:

Class III milk futures closed under pressure in most contracts due to the decline of the block cheese price. Class IV futures posted double-digit gains in most contracts despite the decline in the butter price as traders focused on the gain in nonfat dry milk. October fluid milk sales were slightly below a year ago.

MILK:

There is nothing to support the milk market. The new dietary guidelines released by the White House put meat, dairy, fruit and vegetables at the top of the new Food Pyramid. There have been questions as to how much impact this may have on dairy prices. I guess the answer to that was seen in the spot market today. It is unlikely to have much, if any, impact on the market under the current fundamentals. It is not that dairy was not a part of the dietary guidelines, and now it suddenly is. Dairy has always been a part of the Food Pyramid. Some increase in consumption may be realized, but it may not be sufficient to change the supply and demand balance. This may have about the same impact as putting whole milk and 2% milk back in schools, which had no impact. Strong cheese and butter exports have had little impact on the market as they have failed to tighten the supply. Colombia has dropped its investigation into U.S. milk powder imports after no evidence of unfair subsidies or harm to its domestic dairy industry. This ensures that American dairy exports will continue entering the Colombian market tariff-free under the current trade agreement.

AVERAGE CLASS III PRICES:

3 Month:	$15.11
6 Month:	$15.71
9 Month:	$16.30
12 Month:	$16.60

CHEESE:

The availability of spot loads of milk varies across the country, with some reports of good demand for spot milk over and above regular supplies. Other reports indicate limited interest in demand for extra spot loads of milk. It depended on the location and the variety of cheese produced. The bottom line is that strong cheese production is keeping cheese available for demand.

BUTTER:

Churning remains active with plants operating seven days a week. This level of production meets demand and then some. Plants continue to bring loads to sell on the spot market and are willing to lower the price to move it. There is no indication of a bottom.

OUTSIDE MARKETS SUMMARY:

March corn closed down .75 cent per bushel at $4.4600, March soybeans closed down 5.75 cents at $10.6125 and March soybean meal closed down $1.80 per ton at $303.60. March Chicago wheat closed steady at $5.1800. February live cattle closed up $0.75 at $235.28. February crude oil is up $2.41 per barrel at $58.40. The Dow Jones Industrial Average is up 270 points at 49,266, with the NASDAQ down 104 points at 12,480.

Fluid Milk and Cream - Western U.S. Report 2

California stakeholders indicate farm level milk output and component levels are strong in the starting weeks of 2026. Manufacturers convey open processing time is extremely tight. This, along with some production facility closure, is freeing more loads up for spot buyers to secure. According to the California Department of Water Resource, as of January 6, 2026, the state has received 5.24 inches of precipitation above the historical mean of 9.13 inches during the current 2025-2026 water year, which is strengthening water resources for dairy farmers to utilize. 

For Arizona and New Mexico, stakeholders note steady milk production and convey spot loads are being secured at below Class prices. 

Handlers in the Pacific Northwest indicate milk production is steadier this week. Milk intakes at newer production facilities in the area continue to increase and inch closer towards volume capacities. 

Farm level milk output in the mountain states of Idaho, Utah, and Colorado vary from steady to stronger. Stakeholders indicate milk output is generally balanced with processing capacities in Colorado. Class I demand is stronger throughout the region with educational institutions generally starting sessions again this week. Class II demands are steady. Class III demands vary from steady to lighter. Class IV demands vary from steady to stronger. 

Cream is readily available and demand is mixed. Cream multiples are higher for the bottom end of both ranges this week. Condensed skim milk loads are available. Demand varies from steady to light.

Thursday Midday Dairy Market Summary - Butter and Cheese Continue Lower

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	3 Lower
SOYBEAN MEAL:	$0.50 Higher
LIVE CATTLE:	$0.35 Lower
DOW JONES:	295 Points Higher
NASDAQ:	128 Points Lower
CRUDE OIL:	$1.40 Higher

MIDDAY MARKET UPDATE:

The block cheese price fell 3.50 cents, closing at $1.33 with seven loads traded. The barrel cheese price remained unchanged at $1.40 with no loads traded. The unchanged barrel price was not surprising, but the decline of blocks was a surprise. This moves the block price back to the lowest level since June 29, 2023. If the price falls more than 2 cents, the price will be the lowest since May 2020. The dry whey price remained unchanged at 70.00 cents with no loads traded. Class III futures are 32 cents lower to 1 cent higher. The butter price declined 2.00 cents, closing at $1.3025 with 12 loads traded. By contrast, the Grade A nonfat dry milk price gained 3.00 cents to close at $1.2475 with six loads traded. This is the highest price since Sept. 9, 2025. Class IV futures have not yet been traded. Butter futures are 0.02-2.75 cents lower. Dry whey futures are 0.65 cent lower to 0.20 cent higher. Cheese futures are steady to 2.80 cents lower.