Monday Closing Dairy Market Update - Milk Futures Were Unable to Find Support

GENERAL OVERVIEW:

It was not a good day for Class III futures. Premium continues to be removed from contracts. Class IV futures did not respond to the increase in nonfat dry milk due to the weakness in butter.

MILK:

Class III milk futures continue to erode further weakness seen as traders see little upside potential for cheese prices in the foreseeable future. Price weakness seen at this time of year is usual, and weakness of this magnitude is not seen. It is not a matter of demand being very slow, but more the fact that milk production is higher than a year ago and continues to increase. Both the interest and high prices of beef on dairy calves and the increased manufacturing capacity have allowed farms to add cows and increase milk production even though milk prices are low. Class IV milk prices are very strong, with better blend prices depending on the utilization percentage of Class IV in the Federal Order. The price spread between Class III and Class IV continues to widen, with a spread price of around $5.15.

AVERAGE CLASS III PRICES:

3 Month:	$15.55
6 Month:	$15.89
9 Month:	$16.25
12 Month:	$16.53

CHEESE:

The block cheese price was steady, but not necessarily because it found support, but likely because no buyers or sellers showed up to accomplish business. No buyers or sellers showed up during spot trading. Increased cheese production is the result of increased milk production. The result is that production outpaced demand in August. It is uncertain whether the same will be seen in September and the rest of the year.

BUTTER:

The butter price remains choppy but in an overall downtrend. It is uncertain whether the price will retest the low of $1.30 established on January 13. Retail butter demand has shown signs of improving, but whether the increase will be sufficient to tighten the market is uncertain. Buyers have not seen the need to be aggressive in the spot market as manufacturers continue to offer loads of butter on the spot market.

OUTSIDE MARKETS SUMMARY:

December corn closed down 5.25 cents per bushel at $5.2300, November soybeans closed down 30.75 cents at $12.8825, and December soybean meal closed down $11.60 per ton at $359.40. December Chicago wheat closed down 14.50 cents at $6.8875. December live cattle closed down $1.35 at $220.80. November crude oil is up $0.90 per barrel at $93.31. The Dow Jones Industrial Average is down 347 points at 51,482, with the NASDAQ down 248 points at 26,820.

Monday Midday Dairy Market Summary - Milk Futures Show Substantial Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	31 Lower
SOYBEAN MEAL:	$11.20 Lower
LIVE CATTLE:	$0.47 Lower
DOW JONES:	87 Points Lower
NASDAQ:	140 Points Lower
CRUDE OIL:	$0.17 Higher

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.3075 and $1.4525 respectively, with no loads traded. The dry whey price remained unchanged at 80.50 cents, with no loads traded. Class III futures are 1-41 cents lower, with the November contracts showing the greatest weakness. There has been substantial trading activity, with the November contract showing over 1,100 contracts traded. The butter price declined 3.00 cents to close at $1.3700 with 19 loads traded. Grade A nonfat dry milk increased a penny to close at $2.18, to another new high and the highest level since May 20th. Class IV ranged from 5 cents lower to 1 cent higher. Butter futures are 0.32 -- 4.80 cents lower. Dry whey futures have not yet traded. Cheese futures are 4.10 cents lower to 0.30 cents higher. Nonfat dry milk futures are 0.25 cent lower to 0.75 cent higher.

Monday Morning Dairy Market Update - Milk Futures Show Further Weakness

OPENING CALLS:

Class III Milk Futures:	4 to 6 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	6 to 8 Lower
Soybean Futures:	21 to 24 Lower
Soybean Meal Futures:	$6 to $8 Lower
Wheat Futures:	7 to 8 Lower

MILK:

It does not appear to be a very strong start to the week, with overnight trading activity showing weakness. The October Class III contract is nearing the $15.00 level. Buyer interest in the spot cheese market remains lackluster as cheese remains available for demand. The August Cold Storage report was somewhat bearish to the market. This report, added to the milk production report, shows that milk production will remain above a year ago and the supply of butter and cheese will be sufficient for demand. Higher fuel prices are a concern as they may reduce demand as consumers try to balance their food budgets. Restaurant traffic may decrease, impacting demand from food service.

CHEESE:

Unfortunately, the block cheese price may revisit the low of the year established in early January. The price has been in a steep downtrend since mid-August and shows no sign of support. The fact that cheese inventory in August increased from July and is higher than in August 2025 does not bode well for the market. Milk production continues to increase, keeping cheese production strong.

BUTTER:

Butter has been showing weakness similar to block cheese, but the price decline has been more gradual and has taken place over a longer period of time. As with cheese, the butter price is not far from the low for the year set back in early January. The August Cold Storage report showed a decline in inventory, but the decline was less than usual, resulting in inventory being 10 percent above a year ago.