Friday Closing Dairy Market Update - January Milk Production Was Up 3.2%

GENERAL OVERVIEW:

Class III futures were lower but rebounded somewhat from the lows. Class IV futures retained their strength. January milk production was 3.2% above January 2025.

MILK:

Milk futures diverged with Class III futures lower following the block cheese and dry whey price weakness. Class IV futures showed substantial gains following the strength of butter and nonfat dry milk. It will be interesting to see where we go from here next week. The January Milk Production report was released on Friday and showed milk production in the top 24 states up 3.4%. Milk production per cow averaged 2,082 pounds, up 24 pounds from a year ago. Cow numbers increased by 15,000 head from December and up 200,000 head from January 2025. U.S milk production was 3.2% above January 2025, with milk per cow totaling 2,068 pounds, up 24 pounds above a year ago. Cow numbers increased by 14,000 head from December. U.S. cow numbers totaled 9.580 million head, up 189,000 from a year ago. Annual milk production was 2.6% higher than in 2024. Production per cow averaged 24,390 pounds, 218 pounds higher than in 2024. The annual average number of cows was 9.05 million head, up 153,000 head from 2024. There were four of the top 24 states that showed lower milk production in January. Washington was down 6.1%; New Mexico declined 3.8%; Pennsylvania declined 3.0%; and Illinois declined 1.4%. Kansas showed the largest gain of 26.1%, with South Dakota up 10.9%.

AVERAGE CLASS III PRICES:

3 Month:	$16.28
6 Month:	$17.06
9 Month:	$17.40
12 Month:	$17.45

CHEESE:

For the week, blocks increased 11 cents with 14 loads traded. The weekly average price is $1.4894. Barrels increased 5 cents with one load traded. The weekly average price is $1.4700. Dry whey decreased by 4 cents with no loads traded. The weekly average price is 72.50 cents. USDA will release the January Cold Storage report on Tuesday.

BUTTER:

For the week, butter increased 16.50 cents with 38 loads traded. This is the highest price since Sept. 11, 2025. The weekly average price is $1.7650. Grade A nonfat dry milk increased 8.50 cents with 10 loads traded. The weekly average price is $1.6238.

OUTSIDE MARKETS SUMMARY:

March corn closed up 1.75 cents per bushel at $4.2750, March soybeans closed down 3.50 cents at $11.3750, and March soybean meal closed up $5 per ton at $309.80. May Chicago wheat closed up 13.50 cents at $5.8025. April live cattle closed down $1.43 at $242.00. April crude oil is up $0.08 per barrel at $66.48. The Dow Jones Industrial Average is up 231 points at 49,626, with the NASDAQ up 203 points at 22,886.

Friday Midday Dairy Market Summary - Butter Jumps

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$4.60 Higher
LIVE CATTLE:	$.45 Lower
DOW JONES:	71 Points Higher
NASDAQ:	167 Points Higher
CRUDE OIL:	$0.05 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.25 cents, closing at $1.4975 with five loads traded. The barrel cheese price increased 2.00 cents, closing at $1.49 with no loads traded. The increase in the barrel price has no impact on Class III futures as it has no bearing on the price calculation. The bid disappointment came from dry whey, with the price declining 6.00 cents to close at 68.00 cents, with no loads traded. Class III futures are 5 cents higher to 51 cents lower, with November showing the only gain. The butter price jumped 9.00 cents, closing at $1.87 with 17 loads traded. There were 17 unfilled bids and seven uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk jumped 6.25 cents to close at $1.6850 with six loads traded. Class IV futures are 5-61 cents higher. Butter futures are 0.75-7.50 cents higher. Dry whey futures are 1.00 cents lower to 0.50 cent higher. Cheese futures are 0.50-2.50 cents lower. USDA will release the January Milk Production report this afternoon. I estimate milk production to be 4.2% higher than a year ago and cow numbers to be 4,000 head more than December.

Friday Morning Dairy Market Update - USDA to Purchase $148 Million of Dairy Products For Food Banks

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 3 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

The strength in milk futures on Thursday improved the outlook for milk prices immensely, but prices remain low historically. The strength has been attributed to the announcement USDA plans to purchase $148 milion worth of dairy products for food banks. It is difficult to say spot butter and block cheese prices were higher because of it, or if the higher prices were from continued buying interest because of low prices. Of the $148 million, $75 million is butter, $32.5 million is cheddar cheese, $10 milion is Swiss cheese, $20.5 million is fluid milk, and $10 million is for ultra-high temperature milk. To put it in perspective, if butter is purchased at $2.00 per pound, it would be 37.5 million pounds. Cheddar cheese at $2.00 per pound would be 16.3 million pounds. Fluid milk at $3.00 per gallon would be 6.8 million gallons. The prices at which these will be purchased are not known at this point, so amounts may be different. The January Milk Production report will be released Friday afternoon. I estimate milk production at 4.2% above a year ago. I estimate cow numbers to be 4,000 head above December.

CHEESE:

It is difficult to anticipate the movement of cheese prices, as the pattern would suggest the price could retrace. The block cheese price has increased for three consecutive days and may be ready for a correction, with sellers becoming aggressive.

BUTTER:

The spot price has been trending higher since mid-January as buyers have been purchasing to increase ownership. There is no concern over supply tightness, but buyers wanted to build inventory as a hedge against the potential for higher prices as the year progresses.