Thursday Closing Dairy Market Update - August Cattle Slaughter Was Higher Than a Year Ago

GENERAL OVERVIEW:

Class III futures closed mostly lower, while Class IV futures were mostly higher. This followed the direction of the underlying cash. Dairy cattle slaughter in August was lower than July, but higher than August 2025.

MILK:

Trading activity was moderate today despite limited volatility. Class III futures continue to erode, with new contract lows again in the October and November contracts. These contracts continue to move deeper into the $15.00 range. Some of the October contract is priced, but it still has about three weeks left to price. There could be further price erosion. Class IV futures continue to find support from the nonfat dry milk prices. The spread between October Class III and Class IV contracts is $5.01. The August Livestock Slaughter report was released today. Dairy cattle slaughter in August totaled 221,100 head. This was 6,500 less than July but up 3,700 head from August 2025. Historically, dairy cattle slaughter increases in August compared to July. This year followed the same pattern as last year when slaughter decreased. USDA will release the August Cold Storage report on Friday.

AVERAGE CLASS III PRICES:

3 Month:	$15.75
6 Month:	$16.08
9 Month:	$16.41
12 Month:	$16.65

CHEESE:

The concerning news is that bulk cheese demand in the Northeastern region is termed as weak. Some bulk cheese is being sold below the price levels seen in the CME. That does not bode well for the strength of prices throughout the rest of the year. Demand in the Central region is termed as steady. Demand in the Western region is reported as strong. However, with spot loads of cheese readily available, there is little reason for buyers to be aggressive.

BUTTER:

Cream supplies are steady with sufficient supply available for churning. Cream supply is expected to increase over time as butterfat improves in milk and ice cream production winds down. Some plants have increased schedules to six-day weeks as they prepare for holiday demand. The concern is that the price may not see much strength as buyers have been able to purchase substantial butter supplies without having to bid higher.

OUTSIDE MARKETS SUMMARY:

December corn closed down 1.50 cents per bushel at $5.2750, November soybeans closed down 0.50 cent at $13.1750, and December soybean meal closed up $1.80 per ton at $372.40. December Chicago wheat closed down 1.50 cents at $7.0700. December live cattle closed down $1.25 at $221.10. November crude oil is up $2.45 per barrel at $94.61. The Dow Jones Industrial Average is down 162 points at 51,350, with the NASDAQ up 3 points at 26,939.

Fluid Milk and Cream - Western U.S. Report 39

Farm-level milk output in the West is reported as steady, with only minimal increases over last month's volumes. In California, milk availability has loosened due to unplanned downtime at several plants, diverging from the rest of the Western region, where milk supplies remain tight. The Pacific Northwest and Mountain States report tight milk availability is pushing manufacturers to seek spot purchases to meet production needs, but they are finding very little milk available. The Southwest reports no change this week in milk volumes or demand. 

Class I demand is increasing and continues to grow progressively week over week. Class II demand is also up with pressure from some facility improvements that have taken place in the Western Region. Class III and Class IV demand remain stable. Transportation costs for all fluid milk have increased measurably week over week, with haulers reporting losses due to contracted rates no longer covering actual hauling costs. 

Cream shows a mixed tone. Cream is heavy in the Mountain States, with loads available across the region. In contrast, availability in California has tightened, and some contacts report having to purchase more spot loads than they preferred. Condensed skim milk availability remains tight, with production reported as steady. Multiple sources across all Western regions note a marked increase in demand.

Thursday Midday Dairy Market Summary - Block Cheese Shows Continued Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	3 Lower
SOYBEAN MEAL:	$4.40 Higher
LIVE CATTLE:	$1.30 Lower
DOW JONES:	244 Points Lower
NASDAQ:	79 Points Lower
CRUDE OIL:	$3.36 Higher

MIDDAY MARKET UPDATE:

The block cheese price fell 3.00 cents to close at $1.3275 with 2 loads traded. There were no unfilled bids, with 3 uncovered offers remaining at the close. The barrel cheese price remained unchanged at $1.4225 with no loads traded. The dry whey price increased 0.75 cent to close at 80.50 with no loads traded. Class III futures are 22 cents lower to 2 cents higher. The butter price slipped 0.75 cent to close at $1.3575 with 14 loads traded. There were 25 unfilled bids and 4 uncovered offers. This is the second day in which there were more bids than offers remaining at the close of spot trading. Grade A nonfat dry milk increased 2.00 cents to close at $2.1700 with 6 loads traded. Class IV futures are 12-23 cents higher. Butter futures are 0.75 cent lower to 0.55 cent higher. Dry whey futures are 0.50 cent lower to 0.25 cent higher. Cheese futures are steady to 1.90 cents lower. Nonfat dry milk futures are 0.72 – 2.37 cents higher. The August Livestock Slaughter report will be released this afternoon, indicating the volume of dairy cattle slaughtered during the month.