Monday Closing Dairy Market Update - More Heifers Than a Year Ago

GENERAL OVERVIEW:

Milk futures closed lower again in response to the weakness of dry whey, butter, and block cheese. Class III futures are not far from eliminating all of the gains since July 6. Class IV futures have moved back to the levels last seen in January. The Cattle Inventory report showed more heifers.

MILK:

After the milk production report last week, there is no real reason for milk futures to remain higher or carry much extra premium. Milk production remains above a year ago with cow numbers increasing. The biannual Cattle Inventory report showed dairy cow numbers as of July 1 at 9.650 million head. This was 2% higher than July 2025. Replacement heifers totaled 3.600 million head, up 3% from July 2025. The percentage of replacement heifers to milk cows is 37.3&. This is historically low, but slightly higher than July 2025 and July 2023. Even though more cattle are bred with beef on dairy, sufficient heifers are being produced to maintain and grow the dairy herd. Cows are increasing in longevity as improved genetics and management practices are increasing productivity.

AVERAGE CLASS III PRICES:

3 Month:	$16.56
6 Month:	$17.03
9 Month:	$17.17
12 Month:	$17.28

CHEESE:

Buyers of cheese may hold back after immediate demand has been filled, milk production remains strong, and inventory remains stable. The concern that had developed due to the impact of hot weather seems to have been digested, and determined that milk supplies will not tighten. The concern is that cheese prices may follow the pattern of the last time prices were at these levels. Prices fell back significantly as buyers became less aggressive.

BUTTER:

The butter price has now bypassed the low of June 23rd and declined to the lowest level since January 22nd. Surprisingly, buyers have not increased their desire to build inventory at the low level. The cold storage report showed inventory in June was 7% below a year ago. Seasonal buying should increase at some point.

OUTSIDE MARKETS SUMMARY:

December corn closed down 13.50 cents per bushel at $4.7400, November soybeans closed down 39.75 cents at $12.1375 and December soybean meal closed down $11.10 per ton at $324.10. September Chicago wheat closed down 18.00 cents at $6.6000.

October live cattle closed down $3.73 at $218.78. September crude oil is down $7.49 per barrel at $81.82. The Dow Jones Industrial Average is up 263 points at 52,210, with the NASDAQ down 44 points at 24,932.

Monday Midday Dairy Market Summary - Butter Falls Further

OUTSIDE MARKETS SUMMARY:

CORN:	14 Lower
SOYBEANS:	42 Lower
SOYBEAN MEAL:	$11.30 Lower
LIVE CATTLE:	$2.57 Lower
DOW JONES:	200 Points Higher
NASDAQ:	157 Points Lower
CRUDE OIL:	$6.77 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 1.25 cents to close at $1.5950 with no loads traded. The buyers stepped back with only sellers offering 4 loads during the spot trading period. The barrel cheese price remained unchanged at $1.6300 with no loads traded. The dry whey price remained unchanged at 68.00 cents with no loads traded. Class III futures are steady to 32 cents lower. The butter price continued its weakness, with the price declining 3.75 cents to close at $1.4700 with 17 loads traded. There were 19 unfilled bids and 52 uncovered offers remaining at the close. Sellers continue to have butter to sell, which will keep pressure on the market. Grade A nonfat dry milk declined 0.25 cent to close at $1.40 with 17 loads traded. Class IV futures are 16 cents lower to 4 cents higher. Butter futures are steady to 4.77 cents lower. Dry whey futures are 0.20 cent lower to 0.50 cent higher. Cheese futures are 3.30 cent lower to 0.10 cent higher. Nonfat dry milk futures are 0.50 cent lower to 1.10 cent higher.

Monday Morning Dairy Market Update - Traders May Wait for Cash Direction

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	13 to 14 Lower
Soybean Futures:	31 to 34 Lower
Soybean Meal Futures:	$7 to $9 Lower
Wheat Futures:	7 to 8 Lower

MILK:

Milk futures closed the week on a sour note. Class III futures came under pressure after the June Milk Production report was released and showed continued higher milk output and a substantial increase in cow numbers. The June Cold Storage report showed about what was expected. The positive aspect of the Cold Storage report was that cheese inventory was nearly steady with June 2025 and butter inventory remained below a year ago. This indicates demand has remained strong as increased cheese and butter production has been absorbed. Traders are not expected to be aggressive ahead of spot trading.

CHEESE:

The decline in block cheese on Friday may cause buyers to step back to see how aggressive sellers will be. Cheese buyers may have purchased what they needed for the time being and may remain sidelined. Demand has remained steady, and with a higher output of cheese may keep pace with an increase in demand.

BUTTER:

Now that the block cheese price has declined, maybe the butter price will increase. During the increase in cheese prices, butter remained under pressure. This is just sprecuation as there is no specific reason that this would happen. It would seem butter price is low enough to entice buyers to step up more aggressively to build inventory as they look ahead to fall and holiday demand.