Monday Closing Dairy Market Update - Milk Production Raised to 234.3 Billion Pounds

GENERAL OVERVIEW:

Class III futures were mixed with contracts through mid-year lower. Futures held up well despite the weakness in underlying cash. The USDA increased expected milk production for this year, with milk and dairy product prices mixed.

MILK:

The movement of spot cheese prices was bearish, but Class III futures did not see the pressure one would have expected, given the weakness of cash. Some of it had been factored in, and some might have been the reluctance of traders to press the market lower due to the already substantial price decline. However, there seems to be little to change the market direction anytime soon. USDA released the World Agricultural Supply and Demand Estimates report. It raised the estimate for milk production for this year to 232.3 billion pounds, up 200 million pounds from the December estimate. This would be 2.9 billion pounds higher than in 2025, and another record milk output. USDA decreased the estimate for Class III 2025 production to $18.02 per cwt, down $0.09 from December. It lowered the milk estimate for this year to $16.35, down $0.70. The Class IV average price for 2025 was lowered by $0.02 to $17.38, while the average price for this year was raised by $0.05 to $14.45. The All-milk price estimate for 2025 was raised by $0.15 to $21.25, while the average price was reduced by $0.50 for this year to $18.25. The average November soybean meal price was finally released, completing what was needed for the calculation of the income over feed for the Dairy Margin Coverage program. The income over feed price for November was $10.04.

AVERAGE CLASS III PRICES:

3 Month:	$15.05
6 Month:	$15.68
9 Month:	$16.29
12 Month:	$16.61

CHEESE:

USDA reduced its 2025 estimate for the cheese price slightly to $1.7878 per pound. The average price this year was reduced $0.09 per pound to $1.5850. The dry whey price increased slightly to 59.56 per pound for 2025 and by 3.50 cents per pound for this year to 67.00 cents.

BUTTER:

The average butter price for 2025 was reduced slightly to $2.2202 per pound and was lowered by 6.50 cents next year to $1.61 per pound. What a difference a year makes! Increased milk production with record butterfat resulted in plentiful cream supplies.

OUTSIDE MARKETS SUMMARY:

March corn closed down 24.25 cents per bushel at $4.2150, March soybeans closed down 13.50 cents at $10.4900, and March soybean meal closed down $5.40 per ton at $298.30. March Chicago wheat closed down 6.00 cents at $5.1125. February live cattle closed up $1.53 at $235.25. February crude oil is up $0.67 per barrel at $59.79. The Dow Jones Industrial Average is up 86 points at 49,590, with the NASDAQ up 63 points at 23,734.

Monday Midday Dairy Market Summary - Blocks Fall to Lowest Price Since 2020

OUTSIDE MARKETS SUMMARY:

CORN:	25 Lower
SOYBEANS:	14 Lower
SOYBEAN MEAL:	$4.20 Lower
LIVE CATTLE:	$1.32 Higher
DOW JONES:	35 Points Higher
NASDAQ:	101 Points Higher
CRUDE OIL:	$0.03 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 3.25 cents to close at $1.2825 with three loads traded. There were four unfilled bids and one uncovered offer remaining. This is the lowest price since May 5, 2020. The barrel cheese price declined 4.00 cents with no loads traded. There was an uncovered offer at the close of spot trading. The dry whey price remained unchanged at 70.00 cents with no loads traded. Class III futures are holding up well, with prices from 9 cents lower to 1 cent higher. The butter price remained unchanged at $1.30 with no loads traded. No buyers or sellers showed up to do any business. Grade A nonfat dry milk slipped 0.50 cent to close at $1.26 with four loads traded. Class IV futures have only traded in October at 13 cents higher. Butter futures are 3.00 cents lower to 0.10 cent higher. Dry whey futures are 0.62 cent lower to 0.10 cent higher. Cheese futures are 0.60 cent lower to 1.10 cents higher. USDA raised its estimate for milk production to 234.3 billion pounds, up 200 million pounds from the December report.

Monday Morning Dairy Market Update - Positive Fundamentals Remain Elusive

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	3 to 4 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	4 to 6 Higher

MILK:

Not much change is expected in the market to begin the week. Fundamentals remain the same as last week, with little reason to believe anything will change the market significantly for a time. Each time it seems as if the market may be finding support, further weakness takes place in the cash market as sellers continue to offer loads for sale. Milk production is not slowing down and will remain strong. The gains may not be as large this year as compared to last year, but are expected to be higher. The World Agricultural Supply and Demand report will be released Monday and will show USDA's estimates for milk production, milk prices, and dairy product prices for the year. It is expected they may leave milk production unchanged, but will reduce milk and product prices.

CHEESE:

There is not much anticipation of strength in cheese prices for Monday or in the near futures for that matter. Manufacturers intend to move supply to the market as quickly as possible to limit the buildup of plant inventories. Strong cheese production keeps the market supplied with product, limiting the need for buyers to be aggressive.

BUTTER:

Lower butter prices should stimulate demand -- and they have to some extent. However, weekly retail prices are not much different from what they were a year ago, according to the weekly promotional ad report. Prices should be much lower than a year ago, and if they were, demand would be higher, and greater butter consumption would be seen. The price may see further pressure this week.