Friday Morning Dairy Market Update - Milk Production Report Today

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	3 to 4 Lower

MILK:

Not much change is expected in milk futures. Some volatility may surface after spot trading, but cash prices are not expected to change much. Traders are having a difficult time scalping the market for small profits as it remains choppy. The only category trend higher is nonfat dry milk, and that is expected to reach a threshold soon. USDA will release the July Milk Production report Friday afternoon at 2:00 p.m. CDT. I estimate July milk production to be 1.8% above July 2025. I estimate cow numbers to increase by 5,000 head from June. The hot weather experienced in July should have impacted milk output. However, more cow numbers will offset some of the decline in production.

CHEESE:

The block cheese price is 1.25 cents from the low on Aug. 5. The price is expected to decline to that level or possibly lower before buyers become aggressive. Cheese is readily available for demand, leaving buyers complacent and purchasing as needed while slowly building inventory for later demand.

BUTTER:

The butter price was steady Thursday, but that may not indicate the market has found support. Manufacturers continue to offer supplies on the daily spot market with a substantial amount of uncovered offers remaining at the close of trading. This will continue to limit the upside price potential.

Thursday Closing Dairy Market Update - Class III Futures Showed Further Losses

GENERAL OVERVIEW:

Class III milk futures lost further ground today as the weakness in block cheese pressured futures. Class IV futures showed limited price movement and activity. The July Milk Production report will be released on Friday afternoon.

MILK:

Class I demand continues to increase as schools reopen for the year. Demand from manufacturing remains steady in recent weeks. More milk is moving from the Central region to the Southeast to satisfy the need for fluid milk. After the hot weather period ended, milk production has been improving but not to the level it was before the hot weather. Class III futures continue to struggle, with the September contract falling below $17.00 again. The September Class III contract is now about $2.00 below the September Class IV contract. The Class I price for September was announced at $17.04, down $1.72 from August and down $1.66 from September 2025. USDA will release the July Milk Production report on Friday afternoon. I estimate July milk production to be 1.8% above July 2025. I estimate cow numbers to show an increase of 5,000 head from June.

AVERAGE CLASS III PRICES:

3 Month:	$16.87
6 Month:	$17.12
9 Month:	$17.22
12 Month:	$17.34

CHEESE:

The block cheese price has nearly retraced back to the low of $1.5200 on Aug. 5. Buyers may step in more aggressively near that level again unless supply remains plentiful, giving buyers the confidence to remain complacent. Cheese production remains steady with previous weeks, even though more milk is moving to bottling.

BUTTER:

Butter production remains mostly steady. Some plants are increasing output as cream supplies slowly increase. Ice cream production is slowing, allowing for more cream to be available for other products. Domestic demand remains steady but is expected to improve in the coming weeks.

OUTSIDE MARKETS SUMMARY:

December corn closed up 5.50 cents per bushel at $5.0350, November soybeans closed down o.75 cent at $12.3650, and December soybean meal closed down $1.80 per ton at $323.80. December Chicago wheat closed up 2.50 cents at $7.0000. October live cattle closed up $0.78 at $218.00. October crude oil is up $1.86 per barrel at $86.25. The Dow Jones Industrial Average is down 704 points at 52,759, with the NASDAQ down 264 points at 26,067. 

Fluid Milk and Cream - Western U.S. Report 34

Overall, milk production in the West is seasonally low but sufficient to meet current demands. California contacts indicate milk volumes have dropped with the heat but remain fairly available. The start of the school year is also causing milk volumes to be drawn away from manufacturing use, though contacts report supplies are balanced for manufacturing needs. 

New Mexico and Arizona milk volumes are seasonally low, with milk being brought in from California to meet supply needs. 

The Mountain States - Idaho, Utah, and Colorado - report a continued decrease in milk volumes due to ongoing smoke, haze, and high heat, with a noticeable drop in milkfat levels. 

Pacific Northwest milk volumes show no change. Class I demand is increasing as schools reopen. Class II and Class III demand remain steady, while Class IV demand is firm, with prices trending higher but not significantly so. 

Cream multiples remain the same week over week. Contacts report cream is tighter, but they also note it is still easily purchased when needed, and availability is not affecting cream multiples. Condensed skim availability is similar to last week, with a small increase in demand from ice cream manufacturers.