Thursday Closing Dairy Market Update - Butter, Cheese Production Exceed a Year Ago

GENERAL OVERVIEW:

Class IV futures closed mostly lower despite the increase in butter and nonfat dry milk prices. Class III futures closed higher for the week. The February Dairy Products report showed an increase in the production of butter and cheese from February 2025.

MILK:

Class III futures closed higher for the week while Class IV futures closed lower. The outlook for Class III milk prices has improved significantly, with some contracts moving to new highs. However, caution needs to be exercised as increasing milk production may limit the upside price potential. But even with increasing cow numbers and milk output significantly higher than a year ago, prices are trending higher. The improved outlook will keep farmers pushing for higher milk production and increasing cow numbers. Beef-on-dairy calves continue to bring exceptional prices and are expected to continue to do so. Minnesota's largest dairy farm has applied to build the largest operation in the state. The application is for a feedlot and a dairy with a capacity for 18,855 milking cows. Of course, this expansion creates concerns about the environmental impact it may have.

AVERAGE CLASS III PRICES:

3 Month:	$18.13
6 Month:	$18.57
9 Month:	$18.63
12 Month:	$18.14

CHEESE:

For the week, blocks increased 9.00 cents with 15 loads traded. The weekly average price is $1.6306. Barrels increased 2.75 cents with no loads traded. The weekly average price is $1.5856. Dry whey slipped 0.25 cent with no loads traded. The weekly average price is 68.88 cents. The February Dairy Products report showed American cheese production totaling 451 million pounds, up 1.9% from February 2025. Italian-type cheese production totaled 506 million pounds, up 6.8% from a year ago. Total cheese output reached 1.16 billion pounds, up 3.9% from a year earlier. Dry whey output reached 67.3 million pounds, up 12.0%.

BUTTER:

For the week, butter declined 3.50 cents with 55 loads traded. The weekly average price is $1.7856. Grade A nonfat dry milk gained 5.00 cents with 5 loads traded. The weekly average price is $1.9450. Butter production in February totaled 221 million pounds. This was 9.1% above February 2025. Nonfat dry milk output reached 159 million pounds, up 8.7%. Skim milk powder output totaled 28.2 million pounds, down 8.3% from a year earlier.

OUTSIDE MARKETS SUMMARY:

May corn closed down 2.00 cents per bushel at $4.5225, May soybeans closed down 5.00 cents at $11.6350, and May soybean meal closed down $3.00 per ton at $315.20. May Chicago wheat closed up .75 cent at $5.9825. June live cattle closed up $1.98 at $246.33. May crude oil is up $11.63 per barrel at $111.75. The Dow Jones Industrial Average is down 61 points at 46,505, with the NASDAQ up 38 points at 21,879.

Wyoming Direct Hay Report

Fluid Milk and Cream - Western U.S. Report 14

Milk production is steady and cow comfort is stable in California. Central Valley manufacturers indicate milk output is pushing against processing capacities. Stakeholders indicate spot loads are available. 

Farm level milk output in Arizona is steady. Most stakeholders report being at the peak of spring production volumes, while some manufacturers have open processing capacities and are bringing in spot milk loads. 

Milk production is steady in New Mexico. 

Handlers in the Pacific Northwest report good cow comfort, spring weather, and stable milk production. Manufacturers note milk intakes are at anticipated levels, and some open processing is available. 

Milk production in the mountain states of Idaho, Utah, and Colorado varies from steady to stronger. 

According to the latest milk production report by the National Agricultural Statistics Service (NASS), the number of milk cows has increased for Arizona, California, Colorado, Idaho, Oregon, and Utah, while decreases are shown for New Mexico and Washington. 

Demands for Class I, II, III, and IV varies from lighter to steady throughout the region with the holiday weekend approaching. 

Cream loads are available to meet demands. Cream demand is mixed. Some stakeholders note increased delivery costs are slowing demand. Cream multiples increased this week. Condensed skim milk availability and demand are steady.

Thursday Midday Dairy Market Summary - Nonfat Dry Milk Moves to a New High

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	3 Lower
SOYBEAN MEAL:	$3.70 Lower
LIVE CATTLE:	$1.70 Higher
DOW JONES:	127 Points Lower
NASDAQ:	16 Points Lower
CRUDE OIL:	$10.83 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 3.50 cents to close at $1.6725 with three loads traded. The barrel cheese price remained unchanged at $1,5925 with no loads traded. The dry whey price remained unchanged at 68.75 with no loads traded. Class III futures are 3-19 cents higher. The butter price increased 3.75 cents, closing at $1.7900 with 21 loads traded. Grade A nonfat dry milk increased 3.50 cents to close at $1.9725 with two loads traded. Class IV futures are 13 cents lower to 12 cents higher. Butter futures are 0.35 to 2.92 cents higher. Dry whey futures are unchanged to 0.50 cent lower. Cheese futures are 0.70 to 2.40 cents higher. Trading will close at 1.55 p.m. CDT today. The USDA will release the February Dairy Products report this afternoon.

Thursday Morning Dairy Market Update - Light Trading Volume Expected

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	2 to 3 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	8 to 10 Higher

MILK:

Traders were not interested in conducting business in the overnight session. It was one of those rare nights where no activity took place. Some of the reasons may be that it will be a shorter trading day, with the dairy markets closing at 1:55 p.m. Central time. This may reduce trading volatility and reduce the chances of scalping the market for a quick profit. Of course, the movement in the spot market may change that. USDA will release the February Dairy Products report Thursday afternoon and it will show the volume of dairy product production for the month. Output is expected to be higher than in February 2025.

CHEESE:

Cheese prices continue to see support, with price weakness being short-lived. Cheese production has been increasing as milk receipts have been higher. Demand is reported to be steady. Buyers in the spot market have been active, but cautious.

BUTTER:

It is uncertain where the butter price might find support. Buying interest is strong, but they do not need to be aggressive, as sellers continue to offer supplies to the market at lower prices. Inventory being lower than a year ago is not having a positive impact on the market, as the current production level and available supply are sufficient, leaving market participants unconcerned. 

Wednesday Closing Dairy Market Update - March Class III Price Is $16.16

GENERAL OVERVIEW:

Class III and Class IV futures diverged for a second consecutive day, with Class III contracts higher and Class IV lower. The March Federal Order class prices were significantly higher than in February.

MILK:

Class III milk futures posted double-digit gains in numerous contracts today in response to the increase in the block cheese price. The October contract established a new high and nearly reached $19.00. Class IV contracts moved in the opposite direction due to further weakness in butter and nonfat dry milk. Milk production is seasonally strong, with most reporting they are experiencing a spring flush. The March Federal Order class price was released today, showing significant increases from February. The Class II price is $17.34, an increase of $2.00 from February. The Class III price is $16.16, up $1.22 from February. The Class IV price is $18.94, up $2.65 from February. USDA will release the February Dairy Products report on Thursday. The report provided the volume of dairy products produced for the month. It is expected to show increased production from February 2025.

AVERAGE CLASS III PRICES:

3 Month:	$17.93
6 Month:	$18.42
9 Month:	$18.49
12 Month:	$18.27

CHEESE:

Spot milk availability is increasing, with some cheese plants reporting that they are receiving additional offers for milk. Some plants are unable to utilize extra milk supplies as milk receipts from patrons are increasing. Some milk is being diverted due to facility maintenance. This has resulted in spot milk being priced from $2.00 to as much as $7.00 below class. Domestic cheese demand is reported as steady.

BUTTER:

Many butter churns are operating seven days a week but are not running at full capacity. Ice cream production is increasing, resulting in a little less volume of cream being available for churning. The supply of cream is not tight, but it is not as abundant as it has been. Butter supplies are sufficient for demand, with manufacturers moving any extra product as quickly as possible rather than building plant inventory.

OUTSIDE MARKETS SUMMARY:

May corn closed down 3.50 cents per bushel at $4.5425, May soybeans closed down 2.50 cents at $11.6850, and May soybean meal closed up $1.80 per ton at $318.20. May Chicago wheat closed down 18.75 cents at $5.9750. June live cattle closed up $1.08 at $244.35. May crude oil is down $2.06 per barrel at $99.32. The Dow Jones Industrial Average is up 224 points at 46,566, with the NASDAQ up 250 points at 21,841.

Wednesday Midday Dairy Market Summary - Block Cheese Shows Further Strength

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$1.70 Higher
LIVE CATTLE:	$0.60 Higher
DOW JONES:	437 Points Higher
NASDAQ:	389 Points Higher
CRUDE OIL:	$2.16 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 2.25 cents, closing at $1.6375 with 2 loads traded. The barrel cheese price remained unchanged at $1.5925 with no loads traded. There were 3 unfilled bids in blocks and 1 unfilled bid in barrels, with no remaining offers in either at the close of spot trading. The dry whey price slipped 0.25 cent to close at 68.75 cents with no loads traded. Class III futures are 3 cents lower to 27 cents higher. Butter showed further weakness, posting a decline of 2.25 cents to $1.7525 with 14 loads traded. Butter remains unable to find support as sellers continue to move supplies even at reduced prices. Grade A nonfat dry milk slipped 0.25 cent to close at $1.9375 with no loads traded. Class IV futures are 17 cents lower to 2 cents higher. Butter futures are 1.00-3.87 cents lower. Dry whey futures are 0.02 cent lower to 0.65 cent higher. Cheese futures are 0.30 cent lower to 2.40 cents higher. The March Federal Order class prices will be announced Wednesday afternoon.

Wednesday Morning Dairy Market Update - Overnight Trade Shows Renewed Optimism

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 5 Lower
Soybean Futures:	5 to 7 Lower
Soybean Meal Futures:	$0.50 to $1 Higher
Wheat Futures:	11 to 14 Lower

MILK:

The nearby Class III contracts remain choppy while later contracts continue to make new highs. The optimism over higher prices as the year progresses may be fueled by increased dairy product production and the inability to rebuild inventory. USDA will release the February Dairy Products report on Thursday. Milk production is increasing as the spring flush unfolds. However, no difficulty is expected handling the increased milk supply. The potential for higher milk prices, as indicated by milk futures, will keep milk production strong and cow numbers increasing.

CHEESE:

Cheese prices are maintaining an overall uptrend, with the price increase on Tuesday keeping the trend intact. Cheese output has been increasing, but demand has so far been keeping pace. This resulted in the February total cheese inventory being below that of a year ago. There is no concern of a supply tightness. Buyers are purchasing for immediate demand and to build inventory.

BUTTER:

It is uncertain as to where the level of support for the butter price will be. The weakness on Tuesday was surprising, as butter demand is strong, with support expected to have been reached last week. It certainly is a buyer's market as they can purchase a substantial amount of butter at lower prices. This may limit the upside price potential later this year.