Thursday Closing Dairy Market Update - USDA Raises Its Estimate for Milk Production

GENERAL OVERVIEW:

Class III futures were able to find some footing today, with most contracts closing higher. The bounce in the cheese price triggered some short covering. Very little trading activity took place in Class IV futures. USDA raises milk production for this year and for 2027.

MILK:

Class III milk futures finally showed some strength, but it was minimal relative to the increase in block cheese and dry whey. When spot prices increase, traders will remain cautious as price gains have been short-lived. Class IV futures were higher in some contracts despite the decrease in butter and nonfat dry milk. USDA raised its estimate for milk production for the year to 236.4 billion pounds, an increase of one billion pounds from the May estimate. The estimate for 2027 is 237.0 billion pounds, an increase of one billion pounds. This is the largest increase I have seen from the previous month. Their estimate for Class III milk this year was lowered by $0.40 per cwt to average $16.60 and remained at $17.55 for 2027. The Class IV futures were reduced by $0.60 per cwt to $19.35. The estimate for 2027 remains the same at $18.60. The All-milk price was lowered by $0.55 per cwt. To $20.70. The average All-milk price for 2027 was reduced by $0.05 per cwt to $20.90.

AVERAGE CLASS III PRICES:

3 Month:	$16.53
6 Month:	$17.26
9 Month:	$17.39
12 Month:	$17.42

CHEESE:

USDA reduced its estimate for cheese prices this year to $1.61 per pound on the World Agricultural Supply and Demand report, down 4 cents from the May estimate. The dry whey price was reduced by 0.50 cents to average 66.00 cents. The estimate for 2027 was raised by 1.0 cent to 65.00 cents.

BUTTER:

USDA reduced its butter estimate for this year by 1.50 cents to average $1.74, while the average price remained unchanged at $1.82. Nonfat dry milk was reduced by 7.00 cents to average $1.70. The estimated price for 2027 remained unchanged at $1.5750.

OUTSIDE MARKETS SUMMARY:

July corn closed down 7.25 cents per bushel at $4.1175, July soybeans closed down 8.00 cents at $11.1500 and July soybean meal closed down $.20 per ton at $301.70. July Chicago wheat closed down .75 cent at $5.8675. August live cattle closed up $1.18 at $242.68. July crude oil is down $3.62 per barrel at $86.41. The Dow Jones Industrial Average is up 936 points at 50,845, with the NASDAQ up 640 points at 25,810.

Fluid Milk and Cream - Western U.S. Report 24

California week-to-week milk production varies from steady to lighter. Manufacturers indicate milk output is meeting their needs. Spot loads are available. 

Arizona and New Mexico milk production is lighter. Spot load availability is tighter. 

Pacific Northwest week-to-week milk production is mixed. Manufacturers indicate spot loads are tight, but sufficient volumes of milk are being secured to meet their needs. 

In the mountain states of Idaho, Utah, and Colorado farm level milk output varies from steady to lighter. Spot loads are more available this week with downtime at some processing facilities. Stakeholders note Colorado received some heavy rain and hail, but milk production is not significantly impacted by the weather events. Class I demand remains seasonally lighter and Class II/IV demand is mixed, while Class III demand is steady throughout the region. 

According to Animal and Plant Health Inspection Service, new world screwworm has been detected in New Mexico, as well as Texas. 

Cream availability is meeting demands in the region. Cream multiples decreased for week 24. No changes in condensed skim milk availability or demand are noted.

Thursday Midday Dairy Market Summary - Blocks and Barrels Diverge

OUTSIDE MARKETS SUMMARY:

CORN:	7 Lower
SOYBEANS:	12 Lower
SOYBEAN MEAL:	$0.80 Higher
LIVE CATTLE:	$1.15 Higher
DOW JONES:	254 Points Higher
NASDAQ:	54 Points higher
CRUDE OIL:	$0.32 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 3.00 cents to close at $1.49 with 3 loads traded. The barrel cheese price decreased 5.00 cents to close at $1.42 with 3 loads traded. The weakness of barrels has no impact on the Class III price as it is not part of the price calculation. The dry whey price increased 0.25 cent to close at 68.00 cents with 4 loads traded. Class III futures are 9 cents lower to 15 cents higher. The butter price decreased 1.00 cents to close at $1.64 with 19 loads traded. The price initially increased to $1.6750 before selling became more aggressive. Grade A nonfat dry milk decreased 3.50 cents to close at $1.8150 with 10 loads traded. Surprisingly, butter had no unfilled bids or uncovered offers remaining at the close. In fact, none of the categories in the spot market had unfilled bids or uncovered offers remaining. Class IV futures are steady to 25 cents lower. Butter futures are 1.17 cents lower to 1.82 cents higher. Dry whey futures are steady to 0.62 cent lower. Cheese futures are 0.50 cent lower to 1.70 cents higher. USDA raised its estimate for milk production this year by 1.0 billion pounds and raised its estimate for 2027 by 1.0 billion pounds from the May report. This year is now projected at 236.4 billion pounds, and 2027 is projected at 237.0 billion pounds.