Thursday Closing Dairy Market Update - Butter Leads the Charge

GENERAL OVERVIEW:

Butter had another positive day in the cash market, trading up 3.25 cents. Futures followed along as well, with some mixed news released from the Dairy Products Report this afternoon.

MILK:

Class III Milk ended up mixed by the afternoon, with conflicting directions from components. Class IV, however, ended up lower on the day. Nonfat Dry Milk traded 2.2 cents to 3.625 cents lower. Dry Whey also fell 0.35 to 1.35 cents lower. On the Dairy Products Report released this afternoon, ice cream was down slightly from production in 2025, Sherbet saw a 13.4% reduction since last year and frozen yogurt increased 1.5%. For dry milk products, skim milk powder was down 50.3% from last year and nonfat dry milk for human consumption was 26.6% higher. Whey products were mixed, with dry whey production up 17.3% and why protein concentrates down 2.2%.

AVERAGE CLASS III PRICES:

3 Month:	$16.66
6 Month:	$16.90
9 Month:	$17.09
12 Month:	$17.25

CHEESE:

Cheese had some small gains in the futures market by the close, trading up 0.2 to 1.3 cents higher. On the Dairy Products Report, total cheese output was 1.26 billion pounds, which is 2.1% above last year and 2.3% above last month. Italian type cheese production totaled 551 million pounds, which was an increase of 5.5% above last month and 4.1% above July 2025. American type cheese production came in at 480 million pounds, 1.1% below July 2025 and 0.6% below June 2026.

BUTTER:

Butter production for July was at 189 million pounds. While that is 5.5% higher than last year, it was a major cut of 9% below last month. With the cash and futures market stronger over the last couple of days, these are mixed results going forward to close out the week. On one hand, production is higher than last year, as it should be with the availability of cream, however a drop of 9% from June is a notable change. The market assumes there is plenty of butter available, especially since the spot market has been saturated with offers, however buyers may see this drop in production and assume the bottom is in for nearby price structure.

OUTSIDE MARKETS SUMMARY:

December corn closed down 2.75 cents per bushel at $5.4075, November soybeans closed up 6.00 cents at $13.1625 and December soybean meal closed up $5.90 per ton at $355.50. December Chicago wheat closed down 19.75 cents at $7.5425. October live cattle closed up $4.13 at $214.30. October crude oil is up .29 per barrel at $91.30. The Dow Jones Industrial Average is up 624 points at 53,686 and the NASDAQ is up 366 points at 26,584.

Fluid Milk and Cream - Western U.S. Report 36

Milk and cream volumes have returned to seasonal norms now that peak heat has passed. Class I bottling remains focused on school demand and is expected to return to normal after Labor Day. California producers report milk output is down 6-8 percent from peak levels but expect recovery. This aligns with the National Milk Production report released August 21, 2026, which shows a 0.8-percent year-over-year decrease in California milk production. The report also notes fewer cows in the state but higher production per cow. 

In the Northwest, both cow numbers and milk per cow have increased, except in Oregon, where both metrics declined. Contacts note planned herd expansion to meet demand and support new and expanded manufacturing capacity in the region. 

The Southwest also reports year-over-year increases in cow numbers and milk per cow, though rising freight costs remain a concern. Class II cream and production alignment fluctuated last week. 

Cream loads remain mostly available across the region, though Utah reports long cream, and an Idaho plant is down for unplanned repairs. Condensed skim milk is in overabundance, requiring volume adjustments for a California manufacturer. 

Class III spot and contractual milk volumes are arriving as expected. Class IV milk and cream remain consistent, with improved milk-fat components. Contacts note planned downtime for some facilities, but report cream will be redirected to other locations , and no reduction in total cream intake is expected.

Thursday Midday Dairy Market Summary - Butter Keeps Climbing

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	4 Higher
SOYBEAN MEAL:	$0.49 Higher
LIVE CATTLE:	$4.40 Higher
DOW JONES:	615 Points Higher
NASDAQ:	358 Points Higher
CRUDE OIL:	$0.47 Higher

MIDDAY MARKET UPDATE:

The block cheese price traded 0.25 cents higher today, closing at $1.4775 with 4 loads traded. The barrel cheese price also went unchanged at $1.5325 with no loads traded. The dry whey price climbed 1 cent, closing at 75 cents with 1 load traded. Class III futures are 5 cents lower to 3 cents higher here at the midday point. The butter price was up 3.25 cents to close at $1.44 with 18 loads traded. There were 19 unfilled offers and 1 uncovered bid remaining at the close. Grade A nonfat dry milk was unchanged at $1.88 with 5 loads traded. Class IV futures are mixed from 14 cents higher to 3 cents lower. Butter futures are 2.75 to 3.025 cents higher. Dry whey futures are trading 1.7 to 0.35 cents lower. Cheese futures are 0.01 to 0.04 cents higher. Nonfat dry milk futures are 0.775 to 2.125 cents lower.