Friday Closing Dairy Market Update - August Cheese Inventory Increased

GENERAL OVERVIEW:

Milk futures were mostly higher to close the day. Class IV futures had a strong week, closing substantially higher. Class III futures were the opposite, as the weakness in the block cheese price kept the trend lower. Dry whey was unable to offset the decline. The August Cold Storage report is neutral to bearish.

MILK:

It was not a good week for Class III milk futures, with prices closing lower than a week ago. The October and November contracts made new lows again today. October and November are below $16.00, with the December through February contracts below $17.00. The continued pressure on cheese prices does not provide an indication of a change in trend anytime soon. Class IV futures are the opposite, with the October through February contracts closing at new highs to end the week. The September Federal Order class prices will be announced on September 30.

AVERAGE CLASS III PRICES:

3 Month:	$15.75
6 Month:	$16.11
9 Month:	$16.44
12 Month:	$16.69

CHEESE:

For the week, blocks declined 4.25 cents with 16 loads traded. The weekly average price is $1.3445. Barrels remained unchanged with no loads traded. The weekly average price is $1.4525. Dry whey gained 2.50 cents with 2 loads traded. The weekly average price is 79.50 cents. American cheese inventory increased 2.4 million pounds in August according to the cold storage report released today, totaling 815.5 million pounds. This is about even with August 2025. Swiss cheese inventory decreased by 749,000 pounds, with inventory 10 percent above a year ago. Other cheese inventory increased by 2.8 million pounds, totaling 604.4 million pounds. This is 5 percent higher than a year ago. Total cheese inventory increased 4.4 million pounds, totaling 1.443 billion pounds, up 2 percent over a year ago. Cheese inventory usually declines at this time of year.

BUTTER:

For the week, butter increased 3.00 cents with 82 loads traded. The weekly average price is $1.3645. Grade A nonfat dry milk increased 9.00 cents with 18 loads traded. The weekly average price is $2.1415. Butter inventory decreased by 16.7 million pounds, totaling 315.7 million pounds. The increase was seasonal, but the amount of the decrease was less than usual. Butter inventory was 10% above August 2025. To put it in perspective, inventory in July was 3 percent below that of a year ago.

OUTSIDE MARKETS SUMMARY:

December corn closed up .75 cent per bushel at $5.2825, November soybeans closed up 1.50 cents at $13.1900 and December soybean meal closed down $1.40 per ton at $371.00. December Chicago wheat closed down 3.75 cents at $7.0325. December live cattle closed up $1.05 at $222.15. November crude oil is down $2.27 per barrel at $92.34. The Dow Jones Industrial Average is up 211 points at 51,561, with the NASDAQ up 129 points at 27,069.

Friday Midday Dairy Market Summary - Nonfat Dry Milk Holds Steady

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	3 Higher
SOYBEAN MEAL:	$1.50 Lower
LIVE CATTLE:	$0.22 Lower
DOW JONES:	418 Points Higher
NASDAQ:	147 Points Higher
CRUDE OIL:	$2.31 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 2.00 cents to close at $1.3075 with three loads traded. There were seven unfilled bids and no uncovered offers remaining at the close of spot trading. The barrel cheese price remained unchanged at $1.4525 with no loads traded. The dry whey price remained unchanged at 80.50 cents with no loads traded. Class III futures are 10 cents lower to 8 cents higher. The butter price increased 4.25 cents to close at $1.40 with 21 loads traded. There were 14 unfilled bids and 53 uncovered offers remaining, indicating the upside price potential will be limited. Grade A nonfat dry milk remained unchanged at $2.1700 with no loads traded. Class IV futures are mixed, ranging from 3 cents lower to 18 cents higher. Butter futures are 5.47 cents lower to 3.50 cents higher. The weaknes is taking place in the second half of 2027 contracts. Dry whey futures are 1.00 to 1.35 cents higher. Cheese futures are 1.10 cents lower to 0.80 cent higher. Nonfat dry milk futures are 0.20 to 1.25 cents higher. The August Cold Storage report will be released today.

Friday Morning Dairy Market Update - Butter and Cheese Buyers Remain Complacent

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	9 to 10 Lower
Soybean Futures:	11 to 12 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	14 to 16 Lower

MILK:

Fortunately, dry whey prices are strong; otherwise, Class III prices would be significantly lower. The price is at the highest level since February 23, 2022. The nonfat dry milk price is at the highest level since June, but continues to provide substantial support to Class IV futures. The milk supply is sufficient for demand, but not burdensome. Spot milk prices are flat, close to $2.00 above. The August Milk Production report showed milk production will continue to remain higher than a year ago, making it difficult for milk prices to increase unless demand improves and exceeds a year ago.

CHEESE:

The block cheese price may revisit the low of the year before buyers may turn more aggressive to take advantage of the low price. The price is only 4.50 cents above the low of Jan. 12. Blocks have been in a freefall since mid-August. The August Cold Storage report will be released this afternoon. I think the report will show a decrease in inventory from a year ago, but the decrease may be less than usual, resulting in inventory remaining above a year ago.

BUTTER:

Butter may follow the same pattern as block cheese and may revisit the low of the year before support may be found. The current price is 5.675 cents above the low. Retail butter demand is variable, with food service demand showing gains.