Whole milk sales up 4.5% from a year ago

The “Mielke” Market Weekly

U.S. butter stocks fell seasonally in September but remained above those of a year ago. The U.S. Department of Agriculture’s latest cold storage report shows the Sept. 30 butter inventory at 295.7 million pounds, down 15.7 million pounds or 5.0% from August but up 41.8 million or 16.5% from September 2025. The August total was revised up 4.3 million pounds.

American-type cheese stocks fell to 792.2 million pounds, down 14.5 million or 1.8% from the August level — which was revised down 8.8 million pounds — and were down 12.6 million pounds or 1.6% from a year ago.

The “other” cheese category saw inventory climb to 613.5 million pounds, up 1.9 million or 0.3% from August’s mark — which was revised up 7.2 million pounds — and was up 43.8 million pounds or 7.7% from a year ago.

Cheese stocks in September totaled 1.428 billion pounds, down 13.6 million or 0.9% from August but up 32.9 million pounds or 2.4% from a year ago.

Analysts viewed the report as neutral to the market. The Oct. 23 Daily Dairy Report stated, “While there’s plenty of cheese stashed in cold storage warehouses, much of it is aged. Supplies of 4- to 30-day-old cheddar suitable for delivery at the CME (Chicago Mercantile Exchange) spot market remain tight, and that has spurred the recent spike in spot cheese values.”

Meanwhile, August fluid milk sales mirrored those of a year ago, according to the USDA’s latest data. Packaged sales totaled 3.5 billion pounds, unchanged from August 2025, and followed a 0.2% rise in July.

Conventional product sales hit 3.2 billion pounds, down 0.1% from a year ago. Organic sales, at 242 million, were up 2.4% from a year ago and represented a typical 6.9% of total milk sales in the month.

Whole milk sales totaled 1.32 billion pounds, up 4.5% from a year ago and up 3.6% for the 8-month period. Whole milk represented 37.9% of total sales for the month. Skim milk sales, at 127 million pounds, were down 26.1% from a year ago and down 15.0% year to date.

Packaged fluid sales, January to August, totaled just under 28 billion pounds, up 0.1% from 2025. Conventional product sales totaled 26.0 billion pounds, up 0.1% from a year ago. Organic products, at just under 2 billion pounds, were off 0.3% and represented 7.1% of total milk sales for the year so far. The figures represent consumption in Federal Milk Marketing Orders, which account for about 92% of total fluid sales in the U.S. About 7.5% of those fluid sales are consumed in schools.

CME block cheddar hit $1.7450 per pound Wednesday, the highest since Oct. 31, 2025, but it closed the week and the month by plunging to $1.5975, 13.75 cents lower on the week, up 29.50 cents on the month but 17 cents below a year ago. The barrels reached $1.7250 Wednesday, the highest since Nov. 3, 2025, and finished there Friday, a half-cent higher on the week, 27.25 cents above their Oct. 1 print but 8 cents below a year ago. There were 15 sales of block on the week and 103 for the month of October, down from 113 in September. There were no barrel sales on the week or on the month, compared to 11 in September.

Central region milk supplies are steady to increasing, according to Dairy Market News. Seasonal weather was having a positive impact on cow comfort. Milk components are increasing, providing better milk solids to cheese manufacturers. Spot milk was more available this week, but Class I and IV facilities continue to take large amounts. Spot prices at mid-week were flat-class to $3.00 over. Cheese manufacturers are operating busy schedules, particularly for barrels and curds. Some contacts expect a potential decrease in production as the holidays approach. Spot load purchases of cheese are strong, and contacts anticipate this trend will continue in the coming weeks. Retail demand is firm, while food service demand is steady, according to DMN.

Milk supplies are balanced and cream availability is mixed across the West. Cheese manufacturers report steady demand for Class III milk. A greater share of production is directed toward cream cheese to meet seasonal fall demand. Cheese production remains steady, says DMN, and plants are operating at strong capacity. However, some reported unplanned downtime, which temporarily increased milk availability in parts of the region. A health and safety recall was affecting select products from an artisanal cheese manufacturer in the West. Domestic retail demand was stable to slightly improved from the previous week.

Cheese remains the leading dairy feature in grocery store advertising, both nationally and across the West, according to DMN. The 6- to 8-ounce block category remains the most advertised cheese format, while promotions for 6- to 8-ounce shredded cheese have increased sharply. Advertisements in the northwest for 6- to 8-ounce block cheese were more than double those in the Southwest, compared to the previous week. Food service demand remains soft, while demand from international buyers is moderate to strong. Spot cheese prices rebounded from recent lows, but contacts say the recovery was partly tied to a temporary shortage of exchange-eligible young cheddar, according to DMN.

Butter dropped to $1.2850 per pound Wednesday, the lowest CME price since Feb. 10, 2021, but it closed Friday at $1.3575, 1.75 cents higher on the week, 1.75 cents higher on the month but 25.25 cents below a year ago. Sales totaled 46 loads on the week and 173 for the month, down from 347 in September.

Central region Class II and III production facilities continue to demand larger volumes of cream, says DMN, keeping multiples elevated. Manufacturers indicate production is increasing to meet seasonal demand. Spot sales of butter are steady for both 80% and 82% butterfat butter. Cold storage volumes are slowly decreasing, and overall market tone is steady to strong.

Cream demand in the West has increased from Class II users, although churn schedules remain full. Cream availability varies across the region, with tighter supplies reported in Arizona and parts of the Southwest, improved availability in California and readier availability in the Mountain States. Churns are operating at full capacity. Export demand remains strong, although some contacts describe buyers as price sensitive. Domestic butter demand continues to improve, supported by firmer retail and food service sales. Contacts report strong butter movement during the middle of the month, although purchasing sentiment remains cautious. This aligns with the latest old storage report, which showed butter inventories declining 9% from the beginning of the month. Loads of 80% butter remain available, according to DMN.

Grade A nonfat dry milk dipped to $2.04 per pound Wednesday, the lowest since Sept. 15, but it saw its Friday finish at $2.1125, 1,75 cents higher on the week, down 9.25 cents for the month but 98 cents above a year ago. There were seven sales for the week and 78 for all of October, down from 92 in September.

The Oct. 28 Daily Dairy Report says, “U.S. milk powder production has been falling the last five years as U.S. manufacturers route skim solids toward different uses. This dynamic accelerated this year as insatiable protein demand has pulled more skim solids into other uses, such as ultra-filtered milk, yogurt and cottage cheese. While production has been under pressure, domestic demand for nonfat dry milk has been remarkably robust.”

Mexico is the biggest customer for U.S. nonfat dry milk, although purchases this year are at a 4-year low due to high U.S. prices. Adding to the woe, the DDR says that, over the past eight weeks, the Mexican peso has plunged 9.4% relative to the U.S. dollar, reducing its purchasing power.

Dry whey fell to 81 cents per pound Wednesday, the lowest since Sept. 29, but it closed the week and month at 84 cents per pound, down a quarter-cent on the week, up 2.50 cents on the month and 13 cents above a year ago. There were three sales posted for the week and 10 for the month, down from 15 in September.

In other news of interest, the Federal Reserve voted 10 to 2 this week to leave interest rates unchanged. Class III milk futures showed some improvement due to rising cheese and whey values, but finances are stretched on the farm, particularly for diesel. Thursday’s Class III settlements had the October price at $15.19 per hundredweight; November, $17.93; December, $16.79; January, $16.73; February, $16.83; and March, $17.02. Falling butter and powder prices will weigh heavily on upcoming Class IV prices.

The USDA’s latest crop progress report shows 60% of U.S. corn had been harvested as of the week ending Oct. 25, up from 44% the previous week but 6% behind the 5-year average. Fifty-six percent was considered good to excellent, unchanged from the previous week. The soybean harvest was 79% completed, up from 64% the previous week and 2% ahead of the average.

USDA’s latest weekly slaughter data showed 52,400 dairy cows sent to slaughter the week ending Oct. 17, the same as that of a year ago. Year to date 2,184,200 cows had been culled, up 80,600 head or 3.8% from a year ago.

In politics, USDA announced that it will purchase up to $472.5 million in American-grown and American-raised agricultural commodities to distribute to the charitable food network and other nutrition assistance programs. So-called Section 32 purchases will include milk, cheese, lentils, almonds, rice, catfish and more, according to Agriculture Secretary Brook Rollins.

The National Milk Producers Federation praised the announcement, of which $165.5 million will go toward dairy purchases, which will “Help strengthen demand during a difficult stretch for milk prices, while putting nutritious dairy foods in the hands of families served by federal nutrition assistance programs.”

Rollins also announced that processors in 40 states are expected to receive $57 million to expand their capacity and create new and better markets through the USDA Meat and Poultry Processing Expansion Program.

The announcement to provide investments in small and medium-sized meat processors “Builds on President Trump’s executive order Promoting Fair Competition in Livestock Markets and Expanding Market Access for American Meat Producers,” Rollins said. “We are focused on rebuilding the Great American Cattle Herd and providing more local processing opportunities will continue to give confidence to our ranchers to help us fulfill this goal.”

Construction of a locally owned, USDA‑inspected beef processing facility in Dimmitt, Texas, was also announced, backed by a $24.6 million commercial loan. It will process approximately 400 head of cattle per day and is expected to create 220 new jobs, according to a USDA press release.

“The project was initiated by 36 local investors who are involved in raising cattle throughout the Texas Panhandle. Their goal is to develop an alternative to major national meat‑processing companies and support more competitive beef prices. The new facility will provide jobs with an average wage of $30 per hour, strengthening the regional economy and supporting producers,” says USDA.

This week’s Global Dairy Trade Pulse saw 7.9 million pounds of product sold, up from 7.8 million Oct. 13. The price on anhydrous milkfat continued to head lower, as did butter, but skim milk and whole milk powder continued to rise.