Wednesday, July 23, 2025

Wednesday Closing Dairy Market Update - Milk Futures Take A Beating

OVERVIEW:

It was a very difficult day for dairy futures contracts. Selling pressure was rampant as liquidation erupted due to the bearish implications of the milk production report. Steady cheese prices did nothing to stem the bearish sentiment.

MILK:

The August and September Class III futures contracts made new lows today. The low in August was $17.07 and did not close much higher than that level. Class IV contracts fell substantially through the mid-point of 2026 as traders are disillusioned with the potential for stronger butter prices. The milk production report was bearish as farmers continue to hold onto cows and push milk production. The number of dairy cows in the nation's herd in June totaled 9,469 million head. This is the highest number of cows since July 2021. The state with the largest production increase was Kansas, with an increase of 19.0% over June 2024. South Dakota followed with a gain of 11.5%. Lower milk prices have not been able to accomplish the task of reducing supply. The increase in cow numbers has been propelled by high heifer prices and the income received from beef on dairy calves. The semi-annual cattle inventory report will be released on Friday, showing the level of milk cows and milk replacement heifers on July1. This will provide the ratio of heifers to cows. The USDA will release the June Livestock Slaughter report on Thursday, which will show the number of dairy cattle slaughtered for the month.

AVERAGE CLASS III PRICES:

3 Month: $17.29
6 Month: $17.75
9 Month: $17.76
12 Month: $17.82

CHEESE:

June milk production was 3.3% higher than June 2024; however, that may change when July milk production is recorded. Milk production has been impacted by high temperatures during July, which has reduced milk receipts at the plant level. However, production will be compared to July 2024 when times of hot weather were also prevalent. Milk output is expected to remain above a year ago throughout the rest of the year.

BUTTER:

The butter price has fallen further than anticipated. Buyers continue to hold back on the weakness and are buying on the way down. Sellers continue to offer supply to the market rather than holding and building inventory. It seems ironic that international demand and prices are very strong with supply shortages in some countries, but the U.S. price continues to decline.

OUTSIDE MARKETS SUMMARY:

December corn closed down .50 cent per bushel at $4.1750, November soybeans closed down 2.75 cents at $10.2275 and December soybean meal closed down $1.20 per ton at $285.60. September Chicago wheat closed down 9.00 cents at $5.4050. August live cattle closed up $2.05 at $227.03. September crude oil is down $0.06 per barrel at $65.25. The Dow Jones Industrial Average is up 508 points at 45,010 with the NASDAQ up 127 points at 21,020.




Thursday Closing Dairy Market Update - June Dairy Cattle Slaughter Above a Year Ago

OVERVIEW: Class III futures closed mixed, while Class IV contracts showed no trading activity throughout the day. The June Livestock...