OVERVIEW:
Class III futures could not hold the gains exhibited shortly after spot cheese prices increased. Class IV futures fell under the pressure of the lower butter price. USDA increased milk production for this year and 2026.
MILK:
It was surprising that Class III futures did not hold onto the gains that were realized when spot trading took place. The strength pushed the September contract to $19.20 before falling back to the low of $18.77. Traders were skeptical of the increase in cheese prices and will need to see further proof of sustained gains. Some influence may have come from the USDA increasing its estimates for milk production. The estimate for this year was raised by 900 million pounds from the July estimate to a total of 229.2 billion pounds. If realized, it would be an increase of 3.3 billion pounds over 2024. The estimate for 2026 milk output was raised by 1.3 billion pounds from July to reach 230.4 billion pounds. The average Class III milk price was left unchanged at $18.50 for this year and remained unchanged at $17.85 for 2026. The Class IV average price was reduced $0.10 from July to $18.95, while it was raised $0.25 for 2026 to an average of $18.85. The All-milk price remained unchanged at $22.00 this year and increased $0.25 for next year to $21.90.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.78 |
| 6 Month: | $18.43 |
| 9 Month: | $18.21 |
| 12 Month: | $18.14 |
CHEESE:
The barrel cheese price narrowed the gap to blocks to 2 cents. Sellers had no interest in selling any loads despite the higher price. This may indicate further strength is possible, but traders increased their caution. The USDA left its estimate for cheese price at $1.84 for this year and kept it unchanged at $1.81 for 2026. The dry whey price was left unchanged this year at 57.50 cents and unchanged next year at 51.50 cents.
BUTTER:
The butter prices continued to fall to the lowest level since April 30. There is no indication of a bottom as sellers continue to offer butter to the spot market. The USDA reduced its estimate by 4 cents to an average of $2.52 per pound this year and increased the average price for 2026 to $2.55 per pound. The nonfat dry milk price was raised to $1.2750, with the 2026 average price raised 2 cents to $.2550.
OUTSIDE MARKETS SUMMARY:
December corn closed down 13.25 cents per bushel at $3.9450, November soybeans closed up 21.50 cents at $10.3275 and December soybean meal closed up $1.70 per ton at $291.90. September Chicago wheat closed down 10.00 cents at $5.0500. October live cattle closed up $2.93 at $229.03. September crude oil is down $0.79 per barrel at $63.17. The Dow Jones Industrial Average is up 484 points at 44,459, with the NASDAQ up 297 points at 21,682.
