Thursday Closing Dairy Market Update - Class III Futures Showed Further Losses

GENERAL OVERVIEW:

Class III milk futures lost further ground today as the weakness in block cheese pressured futures. Class IV futures showed limited price movement and activity. The July Milk Production report will be released on Friday afternoon.

MILK:

Class I demand continues to increase as schools reopen for the year. Demand from manufacturing remains steady in recent weeks. More milk is moving from the Central region to the Southeast to satisfy the need for fluid milk. After the hot weather period ended, milk production has been improving but not to the level it was before the hot weather. Class III futures continue to struggle, with the September contract falling below $17.00 again. The September Class III contract is now about $2.00 below the September Class IV contract. The Class I price for September was announced at $17.04, down $1.72 from August and down $1.66 from September 2025. USDA will release the July Milk Production report on Friday afternoon. I estimate July milk production to be 1.8% above July 2025. I estimate cow numbers to show an increase of 5,000 head from June.

AVERAGE CLASS III PRICES:

3 Month:	$16.87
6 Month:	$17.12
9 Month:	$17.22
12 Month:	$17.34

CHEESE:

The block cheese price has nearly retraced back to the low of $1.5200 on Aug. 5. Buyers may step in more aggressively near that level again unless supply remains plentiful, giving buyers the confidence to remain complacent. Cheese production remains steady with previous weeks, even though more milk is moving to bottling.

BUTTER:

Butter production remains mostly steady. Some plants are increasing output as cream supplies slowly increase. Ice cream production is slowing, allowing for more cream to be available for other products. Domestic demand remains steady but is expected to improve in the coming weeks.

OUTSIDE MARKETS SUMMARY:

December corn closed up 5.50 cents per bushel at $5.0350, November soybeans closed down o.75 cent at $12.3650, and December soybean meal closed down $1.80 per ton at $323.80. December Chicago wheat closed up 2.50 cents at $7.0000. October live cattle closed up $0.78 at $218.00. October crude oil is up $1.86 per barrel at $86.25. The Dow Jones Industrial Average is down 704 points at 52,759, with the NASDAQ down 264 points at 26,067. 

Fluid Milk and Cream - Western U.S. Report 34

Overall, milk production in the West is seasonally low but sufficient to meet current demands. California contacts indicate milk volumes have dropped with the heat but remain fairly available. The start of the school year is also causing milk volumes to be drawn away from manufacturing use, though contacts report supplies are balanced for manufacturing needs. 

New Mexico and Arizona milk volumes are seasonally low, with milk being brought in from California to meet supply needs. 

The Mountain States - Idaho, Utah, and Colorado - report a continued decrease in milk volumes due to ongoing smoke, haze, and high heat, with a noticeable drop in milkfat levels. 

Pacific Northwest milk volumes show no change. Class I demand is increasing as schools reopen. Class II and Class III demand remain steady, while Class IV demand is firm, with prices trending higher but not significantly so. 

Cream multiples remain the same week over week. Contacts report cream is tighter, but they also note it is still easily purchased when needed, and availability is not affecting cream multiples. Condensed skim availability is similar to last week, with a small increase in demand from ice cream manufacturers.

Thursday Midday Dairy Market Summary - Block Cheese Exhibits Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	6 Higher
SOYBEANS:	2 Lower
SOYBEAN MEAL:	$2.60 Lower
LIVE CATTLE:	$0.10 Higher
DOW JONES:	548 Points Lower
NASDAQ:	249 Points Lower
CRUDE OIL:	$2.28 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 4.25 cents to close at $1.5325 with eight loads traded. There were 3 unfilled bids and 13 uncovered offers remaining at the close of spot trading. The barrel cheese price remained unchanged at $1.5650 with no loads traded. The dry whey price gained 1.00 cent to close at 70.25 cents with one load traded. Class III futures are 28 cents lower to 13 cents higher with the August contract showing the only gain as it adjusted to the weekly AMS prices. The butter price remained unchanged at $1.4300 with no loads traded. No buyers showed up in the market with 26 uncovered offers remaining at the close. Grade A nonfat dry milk gained 1.00 cent to close at $1.8200 with 12 loads traded. Class IV futures are 3 -- 7 cents lower. Butter futures are 1.00 cent lower to 1.42 cents higher. Dry whey futures are 0.25 cent higher. Cheese futures are 2.70 cents lower to 1.00 cent higher with the August contract showing ht only gain. Nonfat dry milk futures are 1.22 cents lower to 2.35 cents higher.