OVERVIEW:
Class III futures closed higher in contracts through the rest of this year but were steady to lower in 2026. The September contract was just short of $19.00. Class IV futures were lower across the board.
MILK:
The divergence of milk futures was the result of the divergence in spot cheese and butter prices. The September and October Class III contracts are now above Class IV in those months. The spread between blocks and barrels continues to narrow. Higher Class III futures and still good Class IV futures will keep milk production strong as farmers want to improve cash flow. There has been less need to cull cows due to the very strong prices received for beef on dairy calves. There is a level at which increasing cow numbers will slow as barns are full and expansions fill. The desire to expand among some farms remains strong even at the high prices being paid for cows and replacement heifers. The USDA will release the World Agricultural Supply and Demand Estimates report on Tuesday. The report will show USDA's estimates for milk production, milk prices and dairy product prices for this year and 2026. It will contain the estimates for grain production and prices and is expected to show an increase from the previous report. World production and stocks will also be on the report.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.32 |
| 6 Month: | $18.26 |
| 9 Month: | $18.12 |
| 12 Month: | $18.08 |
CHEESE:
The block cheese price has increased in eight of the past nine consecutive days, with the price back to the highest level since June 11. It is unlikely prices will continue higher without a price correction, but there may be further upside price potential before a threshold is reached. Buyers are concerned about further gains over the next few months and have turned aggressive to purchase at the lowest prices possible.
BUTTER:
Butter remains in a downtrend with no solid support seen. Price is now down to the lowest level since May 15. The supply of butter remains sufficient for demand and shows signs of continuing to increase. The price may continue to move sideways to lower in the near term.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.25 cents per bushel at $4.0775, November soybeans closed up 23.75 cents at $10.1125 and December soybean meal closed up $5.00 per ton at $290.20. September Chicago wheat closed up .50 cent at $5.1500. October live cattle closed up $0.13 at $226.10. September crude oil is up $0.13 per barrel at $64.01. The Dow Jones Industrial Average is down 201 points at 43,975, with the NASDAQ down 65 points at 21,385.
