Fluid Milk and Cream - Western U.S. Report 40

Milk production in the West region is generally steady. Seasonal weather changes are not yet bringing major upticks in milk output. Many handlers indicate 2026 milk production is up. 

In California, spot milk loads are neither loose nor tight. Stakeholders note some spot loads are traveling to neighboring states. 

In Arizona, milk volumes are tight. Manufacturers report bringing in both spot loads of milk and condensed skim milk. 

In the Pacific Northwest this week, industry sources describe milk production as balanced with processing capacities. 

In Idaho, spot milk loads are somewhat available. 2026 dairy commodity production investments by some manufacturers in the state are putting further draws on farm level milk output this year. Spot loads are not abundant in the lower areas of the mountain states, but industry sources also note spot milk demand in Colorado is light. 

According to the latest National Agricultural Statistics Service (NASS) milk production report, August milk production was higher year-over-year for Colorado, Idaho, and Oregon. It also shows milk production milk production was down for Arizona, California, New Mexico, Utah, and Washington when comparing August 2026 to August 2025. 

Class I and II demands are stronger, while Class III and IV demands are steady. Stakeholders indicate increasing hauling rates are presenting more challenges. Cream demand is moderate, while plenty of spot load availability is reported. Cream multiples, along with condensed skim milk availability and demand are unchanged this week.

Thursday Midday Dairy Market Summary - Block Cheese Bounces

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	15 Lower
SOYBEAN MEAL:	$9.10 Lower
LIVE CATTLE:	$0.32 Higher
DOW JONES:	28 Points Lower
NASDAQ:	44 Points Higher
CRUDE OIL:	$1.35 Higher

MIDDAY MARKET UPDATE:

Block cheese increased 3.25 cents to close at $1.3025 with 3 loads traded. There were 5 unfilled bids and 24 uncovered offers remaining at the close of spot trading. Barrels remained unchanged at $1.4525 with no loads traded. The dry whey price remained unchanged at 81.50 cents with no loads traded. Class III futures reacted significantly, with futures ranging from 1 to 49 cents higher. The December contract shows the greatest gain. The butter price decreased 2.00 cents to close at $1.3400 with 33 loads traded. There were 12 unfiled bids and 103 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk increased 0.50 cent to close at $2.2050 with 4 loads traded. Class IV futures are 5--21 cents higher. Butter futures are 0.70 -- 6.00 cents lower. Cheese futures are 0.30 cent lower to 1.50 cents higher.

Thursday Morning Dairy Market Update - Butter and Cheese Prices Continue to Flounder

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 8 Higher
Butter Futures:	2 to 3 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Class III milk futures are not expected to show a change in direction. The block cheese price still has not yet found a bottom. Sufficient milk is available for processing as milk production remains higher than a year ago. According to the August Cold Storage report, cheese production is exceeding demand. The 2027 Dairy Margin Coverage program enrollment opens on Monday. The program will be expanded to 7 million pounds of milk under Tier 1 coverage. It will have a 25 percent premium reduction if coverage is secured through 2023.

CHEESE:

The continued strong cheese production is a reflection of increasing milk receipts at plants. The phenomenon we are seeing of increasing dry whey and nonfat dry milk prices may indicate that cheese and butter have moved into the realm of being a by-product rather than a main product as they historically have been. Cheese and butter are being produced to increase the output of dry whey and nonfat dry milk that is currently in strong demand.

BUTTER:

The bounce in the spot butter price was not reflected in butter futures, as traders are not convinced it has found a bottom. However, the fact that there were quite a few unfilled bids remaining at the close of spot trading the past two days may indicate buyers might become more aggressive.