Thursday Closing Dairy Market Update - Class III Milk Prices Fall

GENERAL OVERVIEW:

Buying interest ran its course in block cheese, with the price falling back today. Milk production remains strong, and the potential for higher milk prices may increase that strength as producers will try to capitalize on higher prices. The USDA will release the Agricultural Prices report tomorrow.

MILK:

Milk futures have increased substantially from the lows in January, improving the outlook for milk prices significantly. Class III futures came under pressure today due to weakness in the block cheese price. Even with this weakness, it is unlikely the market will drop back very much unless the recent strength was the result of emotion and what-if scenarios rather than fundamentals. Milk production is strong and continues to run ahead of last year. The percentage of gain this year may not be as dramatic as last year, as this year is being compared to the substantially higher milk production of 2024. Milk production in 2025 was 231.4 billion pounds, up 5.6 billion pounds from 2024. The USDA currently estimates milk production in 2026 to average 234.5 billion pounds, up 3.0 billion pounds from 2025. An increase of that magnitude will add substantially to the available milk supply. The USDA will release the January Agricultural Prices report on Friday, providing most of the prices used in the calculation of income over feed for the Dairy Margin Coverage program.

AVERAGE CLASS III PRICES:

3 Month:	$16.31
6 Month:	$17.16
9 Month:	$17.52
12 Month:	$17.55

CHEESE:

More milk is moving to cheese manufacturing as milk output increases seasonally. Even with increasing milk receipts, manufacturers are looking for spot milk due to increased manufacturing capacity in some areas. Milk components continue at record values, improving cheese yields.

BUTTER:

The butter price continues to find support and is in a better position with lower inventory than last year. The lower supplies may provide greater support as demand remains strong despite increased butter production.

OUTSIDE MARKETS SUMMARY:

May corn closed up 1.50 cents per bushel at $4.4350, May soybeans closed down 1.50 cents at $11.6350, and May soybean meal closed down $.90 per ton at $320.90. May Chicago wheat closed up 4.75 cents at $5.7450. April live cattle closed down $3.38 at $236.90. April crude oil is down $0.21 per barrel at $65.21. The Dow Jones Industrial Average is up 17 points at 49,499, with NASDAQ is down 274 points at 22,878.

Fluid Milk and Cream - Western U.S. Report 9

Milk production in California is strengthening. Spot loads are available and open processing time is tight. Handlers indicate milder winter weather in the state this season and cow comfort is good. Manufacturers remain busy working through milk intakes. 

Milk production in Arizona is strengthening as well. In New Mexico, farm level milk output is reported as steady. 

In the Pacific Northwest milk production is stronger. Handlers indicate milder winter weather conditions are contributing to improved cow comfort, but the lighter snowpack may bring some water resource stress in the summer months. Some manufacturers convey milk intakes are higher than anticipated volumes. 

Farm level milk output in the mountain states of Idaho, Utah, and Colorado, varies from steady to stronger. Stakeholders indicate spot milk loads are generally more available in the northern parts of the mountain state area. Colorado handlers convey snowpack has been lighter this winter, improving cow comfort in some cases. Class I demand is steady, Class II and III demands are stronger, and Class IV demand varies from steady to stronger throughout the region. 

Milk production is providing plenty of cream volume. Cream multiples are higher at the top end of both ranges this week. Demand varies from steady to stronger. Condensed skim milk availability is stable and demand is somewhat stronger.

Thursday Midday Dairy Market Summary - Block Cheese Price Falls Back

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	6 Lower
SOYBEAN MEAL:	$2.30 Lower
LIVE CATTLE:	$3.52 Lower
DOW JONES:	159 Points Lower
NASDAQ:	439 Points Lower
CRUDE OIL:	$0.08 Lower

MIDDAY MARKET UPDATE:

The block cheese price fell 7.25 cents, closing at $1.53 as sellers stepped up to the plate aggressively in an attempt to take advantage of the higher price. There were no unfilled bids and five uncovered offers remaining at the close of spot trading. The barrel cheese price remained unchanged at $1.56 with no loads traded. The dry whey price remained unchanged at 63.75 with no loads traded. Class IV futures are 8-63 cents lower, with April posting the greatest loss. The butter price increased 2.50 cents, closing at $1.86 with 10 loads traded. There were 15 unfilled bids and four uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk increased 3.75 cents to close at $1.71 with three loads traded. This is the highest price since July 13, 2022. Class IV futures are 15 cents lower to 10 cents higher. Butter futures are steady to 3.00 cents lower. Dry whey futures are steady to 2.00 cents higher. Cheese futures are 0.80-7.50 cents lower.