Thursday Closing Dairy Market Update - Steady Block Cheese Price Raises Caution

GENERAL OVERVIEW:

Nearby Class III futures took a beating despite no change in the block cheese price. Class IV futures did not decline as much as would have been expected in response to the decline in butter and nonfat dry milk. Dairy manufacturers are spending $11 billion on new and expanding dairy manufacturing projects.

MILK:

Class IV milk futures cannot catch a break with further weakness in butter and nonfat dry milk. Milk production is decreasing, leaving less extra milk available for bottling and manufacturing. Milk production seasonally decreases during this time of year, leaving this as no surprise. However, less milk output results in less milk being available on the spot market. Spot milk prices in the Central region are flat to $5.00 over Class. Some plants have opted to reduce production schedules rather than pay the higher price for spot milk to keep plants running full. The bearish implications of the June Milk Production Report may limit the upside potential for prices. Even though production has declined due to increased temperatures, milk output is expected to remain above a year ago. The June report showed only two of the top 24 states with reduced milk production in June compared to a year ago. Virginia declined 0.9 percent, and Washington declined 0.4 percent. I think this is the first time I have seen only two states posting declines. The state with the largest increase was Kansas, up 16.7 percent. The second-largest percentage gain was Oregon, with an increase of 8.1 percent. Georgia increased 5.8 percent, South Dakota increased 5.6 percent, and Colorado increased 5.1 percent. The rest of the top 24 states showed increases of less than 5.0 percent.

AVERAGE CLASS III PRICES:

3 Month:	$17.02
6 Month:	$17.39
9 Month:	$17.43
12 Month:	$17.47

CHEESE:

The inability of the block cheese price to increase today increased the caution of traders. Buyers may not be willing to continue to bid aggressively to purchase supplies, seeing that milk production remains strong. Higher milk production provides confidence that supplies will be available during the higher-demand period. Once buyers' needs are satisfied, they may pull back to purchase less aggressively and at lower prices.

BUTTER:

The butter price has moved to the bottom end of the trading range. Cream supplies have decreased but are sufficient to maintain the demand from manufacturing plants. Some plants are focusing on unsalted butter production to prepare for the increase in demand for baking during the fall and holiday season. The June Cold Storage Report will be released tomorrow. Butter stocks are expected to be lower than the previous year, indicating good demand.

OUTSIDE MARKETS SUMMARY:

December corn closed up 2.75 cents per bushel at $4.8750, November soybeans closed up 4.75 cents at $12.4375, and December soybean meal closed down $1.00 per ton at $331.90. September Chicago wheat closed down 9.50 cents at $6.9625. October live cattle closed up $2.18 at $221.38. September crude oil is up $5.40 per barrel at $92.23. The Dow Jones Industrial Average is down 507 points at 51,712, with the NASDAQ down 553 points at 25,138.

Fluid Milk and Cream - Western U.S. Report 30

Milk production in California is lighter this week. Manufacturers report they are receiving contracted milk. Spot milk loads remain available. In the Central Valley, open capacity continues to be tight. 

Farm level milk output in Arizona and New Mexico is lightening as well. Spot loads are more available due to unforeseen pauses in production schedules. A few manufacturers note selling condensed skim milk loads due to inventories building from processing equipment issues. 

Milk production in the Pacific Northwest varies from steady to lighter. Spot milk loads are generally tighter. According to the newest milk production report from the National Agricultural Statistics Service, the number of milk cows again increased in Oregon and decreased in Washington in June 2026 compared to the same month last year. The report also shows an 8.1 percent milk production increase in Oregon. 

Temperatures remain hotter, reducing cow comfort and lightening farm level milk output in the mountain states of Idaho, Utah, and Colorado. Idaho handlers note 2026 milk output as stronger than 2025 milk output thus far, but also that milk volumes are manageable. Demand for all Classes is steady throughout the region. 

Spot cream loads are somewhat tighter. Multiples moved higher across both ranges this week. Cream demand is steady. Stakeholders indicate condensed skim milk loads are generally available throughout the region. Condensed skim milk demand is steady.

Thursday Midday Dairy Market Update - Butter Falls Further

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	7 Higher
SOYBEAN MEAL:	$0.30 Lower
LIVE CATTLE:	$1.92 Higher
DOW JONES:	577 Points Higher
NASDAQ:	555 Points Lower
CRUDE OIL:	$6.29 Higher

MIDDAY MARKET UPDATE:

The block cheese price remained unchanged at $1.6700 with 5 loads traded. The price was both higher and lower during the trading period, finally settling unchanged. The barrel cheese price increased 0.25 cent to close at $1.6300 with no loads traded. The dry whey price decreased 1.00 cent to close at 69 cents with 1 load traded. Class III futures are 41 cents lower to 5 cents higher, with the August through December contracts posting significant losses. The butter price decreased 3.00 cents to close at $1.5100 with 16 loads traded. The price initially decreased to $1.50 before bouncing from that level. This moved butter to the bottom end of the trading range. Grade A nonfat dry milk decreased 1.00 cent to close at $1.4000. Class IV futures are 2 to 9 cents lower. Butter futures are steady to 2.50 cents lower. Dry whey futures are steady to 0.25 cent higher. Cheese futures are steady to 3.30 cents lower. Nonfat dry milk futures are 1.85 cents lower to 0.17 cent higher.