GENERAL OVERVIEW:
Class III futures closed mostly lower, while Class IV futures were mostly higher. This followed the direction of the underlying cash. Dairy cattle slaughter in August was lower than July, but higher than August 2025.
MILK:
Trading activity was moderate today despite limited volatility. Class III futures continue to erode, with new contract lows again in the October and November contracts. These contracts continue to move deeper into the $15.00 range. Some of the October contract is priced, but it still has about three weeks left to price. There could be further price erosion. Class IV futures continue to find support from the nonfat dry milk prices. The spread between October Class III and Class IV contracts is $5.01. The August Livestock Slaughter report was released today. Dairy cattle slaughter in August totaled 221,100 head. This was 6,500 less than July but up 3,700 head from August 2025. Historically, dairy cattle slaughter increases in August compared to July. This year followed the same pattern as last year when slaughter decreased. USDA will release the August Cold Storage report on Friday.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.75 |
| 6 Month: | $16.08 |
| 9 Month: | $16.41 |
| 12 Month: | $16.65 |
CHEESE:
The concerning news is that bulk cheese demand in the Northeastern region is termed as weak. Some bulk cheese is being sold below the price levels seen in the CME. That does not bode well for the strength of prices throughout the rest of the year. Demand in the Central region is termed as steady. Demand in the Western region is reported as strong. However, with spot loads of cheese readily available, there is little reason for buyers to be aggressive.
BUTTER:
Cream supplies are steady with sufficient supply available for churning. Cream supply is expected to increase over time as butterfat improves in milk and ice cream production winds down. Some plants have increased schedules to six-day weeks as they prepare for holiday demand. The concern is that the price may not see much strength as buyers have been able to purchase substantial butter supplies without having to bid higher.
OUTSIDE MARKETS SUMMARY:
December corn closed down 1.50 cents per bushel at $5.2750, November soybeans closed down 0.50 cent at $13.1750, and December soybean meal closed up $1.80 per ton at $372.40. December Chicago wheat closed down 1.50 cents at $7.0700. December live cattle closed down $1.25 at $221.10. November crude oil is up $2.45 per barrel at $94.61. The Dow Jones Industrial Average is down 162 points at 51,350, with the NASDAQ up 3 points at 26,939.
