Thursday Closing Dairy Market Update - May Inventory Increased Less Than Usual

GENERAL OVERVIEW:

Class III futures closed mixed while Class IV futures showed strong gains. Milk futures moved in line with cash and made more sense than they did on Wednesday. The May Cold Storage report was about as expected. May dairy cattle slaughter was less than expected.

MILK:

The trading volume was significantly lower than on Wednesday. Steady cheese prices did not provide much incentive for traders. Some areas see milk output over the spring flush peak, while others have seen milk production declining steadily, yet output remains higher than a year ago. Hotter weather is expected in many areas of the country shortly, which will impact milk production and component levels. Whether this could eventually tighten supplies remains to be seen. Higher cow numbers and increased milk production may minimize the impact on the overall supply. For the near term, expect the market to remain bearish. The May Livestock Slaughter report was released, showing dairy cattle slaughter totaling 191,700 head. This was 23,400 less than April and 5,100 head less than in May 2025. This was the lowest May slaughter since 2007. It was also the lowest monthly slaughter since June 2024.

AVERAGE CLASS III PRICES:

3 Month:	$16.06
6 Month:	$16.67
9 Month:	$16.88
12 Month:	$16.95

CHEESE:

The May Cold Storage report showed American cheese inventory increasing by 3.3 million pounds from April, totaling 816.9 million pounds. This is 2% below a year ago. Swiss cheese stocks increased 1.2% from April, totaling 24.9 million pounds, up 10% from a year earlier. Other cheese stocks increased 7.8%, totaling 581.2 million pounds and nearly the same level as a year ago. Total cheese inventory increased 12.3% to a level of 1.423 billion pounds. This was 1% below April 2025.

BUTTER:

Butter futures showed substantial gains in response to the higher spot price on Wednesday and today. Strong buying interest could continue on Friday if buyers who did not accomplish business today turn more aggressive. Butter inventory during May increased 27.7%, totaling 335.6 million pounds. This was 8% below May 2025.

OUTSIDE MARKETS SUMMARY:

July corn closed up 7.75 cents per bushel at $4.1475, November soybeans closed up 22.00 cents at $11.5700, and July soybean meal closed up $4.60 per ton at $308.20. September Chicago wheat closed up 5.50 cents at $6.0150. August live cattle closed up $0.70 at $247.23. August crude oil is up $1.10 per barrel at $71.44. The Dow Jones Industrial Average is up 72 points at 51,921, with the NASDAQ down 118 points at 25,359.

Fluid Milk and Cream - Western U.S. Report 26

Overall, milk production in the West is seasonally low but sufficient to meet current production demands. California contacts indicate milk volumes are better than anticipated. 

New Mexico and Arizona milk volumes are holding steady. 

The mountain states of Idaho, Utah and Colorado have more than enough milk to meet production needs. Contacts indicate spot volumes of milk are available. 

Pacific Northwest milk volumes are good and meeting manufacturing needs. 

Class I production is light with more milk designated for Class II and IV use. Class II demand is strong and some manufacturers are taking in spot volumes of milk and cream to keep busy production schedules. Class III demand is steady. Class IV demand is steady to strong. 

Contacts mention a surplus of cream in some states, but they are able to move the cream to both Class II and Class IV facilities within the region. Cream multiples moved lower at the bottom of the range and stayed the same at the top. Condensed skim demand is stronger than previous weeks. Some buyers are having difficulty securing loads for Class II and Class III use.

Thursday Midday Dairy Market Summary - Butter Price Pushes Higher

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	14 Higher
SOYBEAN MEAL:	$2.80 Higher
LIVE CATTLE:	$1.20 Higher
DOW JONES:	158 Points Higher
NASDAQ:	127 Points Lower
CRUDE OIL:	$1.32 Higher

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.4400 and $1.4775 respectively. There were no loads traded in either category. There were 4 unfilled bids and 4 uncovered offers remaining for blocks at the close of spot trading. There was no interest in buying or selling in barrels. The dry whey price decreased 1.50 cents to close at 67.00 cents with no loads traded. This is the lowest dry whey price since June 8. Class III futures are 6 cents lower to 7 cents higher. The butter price increased 3.00 cents to close at $1.5550 with 21 loads traded. There were 21 unfilled bids remaining with 5 uncovered offers, suggesting further upside price potential. Grade A nonfat dry milk increased 0.50 cent to close at $1.5800 with 7 loads traded. Class IV futures are 3 cents lower to 38 cents higher. Butter futures are steady to 6.05 cents higher. Dry whey futures are 0.50 cent lower to 0.40 cent higher. Cheese futures are 0.30 cent lower to 1.00 cent higher. Nonfat dry milk futures are 0.75 - 3.30 cents higher. USDA will release the May Cold Storage and the May Livestock Slaughter report this afternoon.