GENERAL OVERVIEW:
Butter and cheese found continued strength on Tuesday, following through from Friday's price action, while Class III milk lacks direction, trading higher in the front months and lower in the deferred month.
MILK:
With the influx of headlines last week ahead of the three-day weekend, traders struggled to find direction for Class III prices. On one hand, exports were strong in Thursday's report, and the news about adding whole milk options back to the school menu is positive. But neither gives short-term bullish news to the market to justify a rally. Futures were mixed for Class III to start the trading week off. The front months were higher, reflecting the short-term expectations of production issues due to the extreme cold hitting the Northern Plains. The deferred months experienced some selling, indicating no real change is anticipated from new policy or demand in the later part of 2026. While exports of dairy products are strong, it is not enough to outweigh the higher milk production compared to the demand we've seen over the last year.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.13 |
| 6 Month: | $15.64 |
| 9 Month: | $16.21 |
| 12 Month: | $16.54 |
CHEESE:
Cheese futures continued their upward climb from last week, trading 1.9 to 2.5 cents higher. Larger exports, both month over month and year over year, reflect world demand for U.S. products. While cheese has a glimmer of hope, it is hard to outweigh the abundant availability of milk in this country. Processors have no problem keeping up with demand currently, so the expectations of a strong rally are kept in check without a major shift in domestic demand.
BUTTER:
Butter futures found continued strength from last week, trading 3.775 to 3.925 cents higher in the nearby futures months. Extreme growth in export numbers is promising. What is throwing traders for a loop is the availability of spot loads in the market. The export demand is for 82% butterfat butter, while the domestic market has a surplus of 80% available. It is creating a divide in spot prices as one product has an abundance of supply, while the other is somewhat tighter. Retail butter domestically has the most demand, so the focus has been there rather than on bulk production.
OUTSIDE MARKETS SUMMARY:
March corn closed down 1 cent per bushel at $4.2375, March soybeans closed down 4.75 cents at $10.5300 and March soybean meal closed up $1.60 per ton at $291.60. March Chicago wheat closed down 7.75 cents at $5.1025. February live cattle closed up $0.23 at $232.38. March crude oil is up $0.14 per barrel at $59.48. The Dow Jones Industrial Average is down 870 points at 48,488, and the NASDAQ is down 561 points at 22,954.
