Monday Closing Dairy Market Update - USDA Raises Milk Production and Prices This Year

MILK:

Milk futures had a positive Monday with Class III futures outpacing Class IV futures. This seemed the opposite of what should have taken place. The weakness of block cheese and the steady barrel and dry whey prices should have put some pressure on the market. The increase in butter and nonfat milk should have added a greater premium than they did to Class IV futures. Class III futures likely were overdone to the downside, resulting in prices moving closer to the underlying cash. The change in attitude evident last week may have also influenced stronger prices. The May through September Class III futures are above Class IV prices. USDA released the World Agricultural Supply and Demand report today. The estimate for milk production this year was raised to 227.3 billion pounds, up 400 million pounds from the April estimate. The initial estimate for 2026 was released with this report at 227.9 million pounds. This is an unusually low increase from year-to-year, as the usual increase for the first estimate is about 2.0 million pounds. The Class III price estimated was raised by $1.10 from April to $18.70. The Class IV price estimate was raised to $18.45, up $0.25 from the previous estimate. The All-milk price was raised to $21.60, up $0.50 from the April estimate.

AVERAGE CLASS III PRICES:

3 Month:	$18.63
6 Month:	$18.83
9 Month:	$18.70
12 Month:	$18.53

CHEESE:

The estimate for the average cheese price for this year was raised by $0.05 to $1.84 per pound. The initial estimate for 2026 was released at $1.80 per pound. The average dry whey price this year was raised to 53.50 cents, up 2.50 cents from the previous estimate. The initial estimate was released at 47.00 cents per pound.

BUTTER:

USDA raised the average butter price for this year by only 1.50 cents to $2.46 per pound. The initial estimate for 2026 is $2.45 per pound. The Grade A nonfat dry milk price was raised 2 cents to $1.24 per pound, with the initial estimate for 2026 at $1.2150 per pound.

OUTSIDE MARKETS SUMMARY:

July corn closed down 1.75 cents per bushel at $4.4800, July soybeans closed up 19.50 cents at $10.7125 and July soybean meal closed up $4.00 per ton at $298.10. July Chicago wheat closed down 6.50 cents at $5.1525. June live cattle closed up $2.15 at $216.83. June crude oil is up $0.97 per barrel at $61.99. The Dow Jones Industrial Average is up 1,161 points at 42,410, with the NASDAQ up 779 points at 18,708.