Tuesday Morning Dairy Market Update - Cheese Prices May Be Nearing a Threshold

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	Mixed to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 4 Lower
Soybean Futures:	10 to 12 Lower
Soybean Meal Futures:	2 to 3 Lower
Wheat Futures:	5 to 6 Lower

MILK:

Class III milk futures have shown strength, pushing the September contract near the $19.00 level. This would be a vast improvement over the price that will be seen in August. The August contract is nearing pricing by the trade and will see limited movement until the August class prices are announced in early September. However, the September contract is wide open to the impact of underlying cash and could change significantly over the next month. USDA will release the World Agricultural Supply and Demand Estimates (WASDE) report today. It will show USDA's estimates for milk production, milk prices and dairy product prices for this year and next. It will also show estimates for supply, demand and prices for grains and livestock.

CHEESE:

There is concern that cheese prices may be near a threshold, and upside potential may be limited. If there is any weakness in the cash market, it could trigger significant selling of futures contracts. Cheese futures through the end of the year show no premium as there is little optimism for higher prices.

BUTTER:

It is uncertain where the butter price will find support. The market could see significant buying interest over the next two months as buyers prepare for the upcoming demand. However, with butter still being put into storage, the upside price potential may be limited. Exports have been very strong, but that has not been sufficient to support the market.

Monday Closing Dairy Market Update - Class IV Milk Futures Continue to Show Weakness

OVERVIEW:

Class III futures closed higher in contracts through the rest of this year but were steady to lower in 2026. The September contract was just short of $19.00. Class IV futures were lower across the board.

MILK:

The divergence of milk futures was the result of the divergence in spot cheese and butter prices. The September and October Class III contracts are now above Class IV in those months. The spread between blocks and barrels continues to narrow. Higher Class III futures and still good Class IV futures will keep milk production strong as farmers want to improve cash flow. There has been less need to cull cows due to the very strong prices received for beef on dairy calves. There is a level at which increasing cow numbers will slow as barns are full and expansions fill. The desire to expand among some farms remains strong even at the high prices being paid for cows and replacement heifers. The USDA will release the World Agricultural Supply and Demand Estimates report on Tuesday. The report will show USDA's estimates for milk production, milk prices and dairy product prices for this year and 2026. It will contain the estimates for grain production and prices and is expected to show an increase from the previous report. World production and stocks will also be on the report.

AVERAGE CLASS III PRICES:

3 Month:	$18.32
6 Month:	$18.26
9 Month:	$18.12
12 Month:	$18.08

CHEESE:

The block cheese price has increased in eight of the past nine consecutive days, with the price back to the highest level since June 11. It is unlikely prices will continue higher without a price correction, but there may be further upside price potential before a threshold is reached. Buyers are concerned about further gains over the next few months and have turned aggressive to purchase at the lowest prices possible.

BUTTER:

Butter remains in a downtrend with no solid support seen. Price is now down to the lowest level since May 15. The supply of butter remains sufficient for demand and shows signs of continuing to increase. The price may continue to move sideways to lower in the near term.

OUTSIDE MARKETS SUMMARY:

December corn closed up 2.25 cents per bushel at $4.0775, November soybeans closed up 23.75 cents at $10.1125 and December soybean meal closed up $5.00 per ton at $290.20. September Chicago wheat closed up .50 cent at $5.1500. October live cattle closed up $0.13 at $226.10. September crude oil is up $0.13 per barrel at $64.01. The Dow Jones Industrial Average is down 201 points at 43,975, with the NASDAQ down 65 points at 21,385.

Monday Midday Dairy Market Summary - Butter Continues Lower

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	24 Higher
SOYBEAN MEAL:	$5.00 Higher
LIVE CATTLE:	$0.65 Higher
DOW JONES:	153 Points Lower
NASDAQ:	27 Points Higher
CRUDE OIL:	$5.13 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased a penny, closing at $1.86 with five loads traded. The barrel cheese price increased 0.25 cent, closing at $1.80 with no load traded. No sellers showed up to do any business in barrels, leaving three unfilled bids. There were two unfilled bids remaining for blocks. The dry whey price increased 0.50 cent, closing at 58.50 cents with one load traded. Class III futures are 2 cents lower to 28 cents higher. The butter price decreased 1.50 cents, closing at $2.34 with 14 loads traded. There were two unfilled bids and four uncovered offers remaining at the close. Grade A nonfat dry milk decreased 0.75 cent, closing at $1.2575 with seven loads traded. Class IV futures have only traded in the September contract at 17 cents lower. Butter futures are 0.02 to 2.97 cents lower. Dry whey futures are steady. Cheese futures are 0.60 cent lower to 2.00 cents higher.