Friday Closing Dairy Market Update - USDA Increased Milk Production and Lower Milk Prices

GENERAL OVERVIEW:

Class III milk futures closed lower in most traded contracts. The weakness of blocks triggered selling as traders liquidated their recent long positions. USDA increased its estimates for milk production this year and 2027 and reduced the estimate for milk prices.

MILK:

Class III milk futures closed lower in most traded contracts. The weakness of blocks triggered selling as traders liquidated their recent long positions. Traders continue to trade short-term to scalp the market for a profit if possible, and the increase on Thursday was quickly sold when weakness surfaced. Cheese prices were significantly higher for the week, which should not have triggered the selling seen today. Class IV futures only showed trading in the September contract as traders found little reason to trade. The USDA released the World Agricultural Supply and Demand Estimates report today. It increased the estimate for milk production this year by 200 million pounds to 236.6 billion pounds. It raised the estimate for 2027 by 1.1 billion pounds to 238.1 billion pounds. This is another unusually large increase following the 1.0-billion-pound increase last month. As a result, milk prices were reduced. The average Class III price was reduced by $0.45 to $16.15. The average price for 2027 was reduced by $0.50 to $17.05. The Class IV price was reduced by $0.95 to average $18.40, with the price reduced by $1.20 next year. The All-milk price was lowered by $0.70 to $20.00, with the average price for 2027 reduced to $19.85, down $1.05.

AVERAGE CLASS III PRICES:

3 Month:	$16.48
6 Month:	$17.07
9 Month:	$17.16
12 Month:	$17.22

CHEESE:

For the week, blocks increased 11.50 cents with 21 loads traded. The weekly average price is $1.5150. Barrels increased 8.50 cents with 5 loads traded. The weekly average price is $1.5270. Dry whey increased 0.50 cent with one load traded. The weekly average price is 67.90 cents. USDA decreased the average cheese price this year to $1.57, down 4.00 cents from the June report. The 2027 price was reduced by 4.50 cents to $1.6650. The dry whey price remained unchanged this year at 66.00 cents, with next year unchanged at 65.00 cents.

BUTTER:

For the week, butter increased 1.25 cents with 36 loads traded. The weekly average price was $1.6500. Grade A nonfat dry milk increased 5.00 cents with 70 loads traded. The weekly average price is $1.5160. The average butter price this year was lowered 5.00 cents to $1.6900. The price was lowered by 7.00 cents next year to $1.7500. The nonfat dry milk price was reduced 8.50 cents to $1.6150 for this year and reduced 9.50 cents next year to $1.4700.

OUTSIDE MARKETS SUMMARY:

December corn closed up 9.00 cents per bushel at $4.6100, November soybeans closed up 9.25 cents at $11.9075 and December soybean meal closed up $3.30 per ton at $318.70. September Chicago wheat closed up 20.50 cents at $6.4025. August live cattle closed down $0.05 at $235.20. August crude oil is down $0.67 per barrel at $71.41. The Dow Jones Industrial Average is up 150 points at 52,637, with the NASDAQ up 75 points at 26,282.

Friday Midday Dairy Market Summary - Spot Prices Provide Little Direction

OUTSIDE MARKETS SUMMARY:

CORN:	9 Higher
SOYBEANS:	17 Higher
SOYBEAN MEAL:	$6.30 Higher
LIVE CATTLE:	$0.40 Lower
DOW JONES:	163 Points Higher
NASDAQ:	70 Points Higher
CRUDE OIL:	$0.84 Lower

MIDDAY MARKET UPDATE:

The block cheese price retraced today with a decline of 1.75 cents to close at $1.5475, with one load traded. The barrel cheese price increased a penny to close at $1.5600 with 2 loads traded. The dry whey price increased 0.50 cent to close at 69.00 cents with one load traded. The decrease in the block price quickly turned Class III futures mostly lower, reversing the earlier double-digit gains. The butter price remained unchanged at $1.6500 with no loads traded. There was one unfilled bid and 28 uncovered offers remaining with no one willing to change to accomplish business. Grade A nonfat dry milk increased 0.50 cent to close at $1.5550 with 12 loads traded. Class IV futures have not yet traded. Butter futures are 0.02 cent lower to 1.50 cents higher in very light trade. Dry whey futures are 0.22 cent lower to 1.55 cents higher. Cheese futures are 1.30 cents lower to 0.50 cent higher. Nonfat dry milk futures are 0.75 cent lower to 2.17 cents higher. USDA raised milk production this year to 236.6 billion pounds and next year to 238.1 billion pounds.

Friday Morning Dairy Market Update - Further Strength in Spot Prices

OPENING CALLS:

Class III Milk Futures:	8 to 14 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 4 Lower
Soybean Futures:	3 to 4 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	3 to 5 Lower

MILK:

The strength in Class III milk futures continued into overnight trading, with some contracts posting double-digit gains. There has not been a fundamental change, but cheese buyers may be more aggressive as they look ahead and prepare for later demand. Spot prices are low, and it makes sense to increase ownership and purchase ahead for later demand rather than wait and end up paying more later. Milk production is being impacted by increasing temperatures, but output is expected to remain higher than a year ago. The USDA will release the World Agricultural Supply and Demand report Friday at 11 a.m. CDT. The report will include their estimates for milk production, milk prices, and dairy product prices for this year and next year.

CHEESE:

The strength in cheese prices may continue Friday as the increase on Thursday may bring more buyers into the market with the desire to purchase supplies ahead of further price strength. However, buyers may be cautious as milk supplies are plentiful and cheese output strong. This may limit the upside potential.

BUTTER:

The butter price held steady the past three days, but is expected to increase Friday. There is little reason for the price to fall back as buyer interest is expected to increase. Both domestic and international demand is strong and is expected to remain strong. Churning is slowing as higher temperatures impact milk components and reduce the cream supply.