The Federal Reserve lowered its benchmark interest rate for a second time this year by a quarter point. The expected move will lead to lower interest costs for loans tied to the prime rate, such as some variable-rate credit cards, adjustable-rate mortgages, and home equity lines of credit.

The dairy industry and everyone else remain in a government shutdown cloud as October came to an end, appropriately on Halloween. The Senate failed for the 13th time Tuesday to reach the 60-vote margin to advance the continuing resolution to reopen. The shutdown reportedly will also impact the Fed’s future decisions on interest rates due to the lack of data it needs.

Pressure mounted as millions of Americans face the loss of their food assistance via the Supplemental Nutrition Assistance Program (SNAP) and prompted over 20 states to sue the Trump Administration to prevent that. Meanwhile, Federal workers, including air traffic controllers and the military will miss paychecks.

There weren’t as many regularly scheduled USDA reports missed this week, but next week’s Dairy Products report will be sorely missed. As I reported last week, there were no September Milk Production or Cold Storage reports.

StoneX stated, “We weren’t expecting any big shifts in cold storage numbers. Cheese stocks were up 1.7 percent year over year in August and we think they built a little more and were up 2.4 percent at the end of September. Butter was down 5.7 percent from last year in August and the forecast for September we have them down 6.0 percent.” Hopefully, these reports will soon resume.

The September Milk Production report is a quarterly one, says StoneX, “So it includes more rigorous methodology and in the last few years the USDA made downwards revisions to cow numbers. If that happens this year, it would likely result in a revision lower in milk production. We’re not counting on a revision, but history tells us it’s a possibility. We doubt much changed between August and September. We expect September headline milk production to be up 3.2 percent, which is the same growth as August. Dairy farmers likely continued to add cows to the herd between August and September and milk production per cow growth likely remained good as we lap over the early impact of bird flu in California in September last year.”

All eyes were on President Donald Trump’s latest trip out of country this week, with headline-making meetings with several world leaders including Japan’s new Prime Minister Sanae Takaichi, China’s President Xi Jinping, and possibly North Korea’s Kim Jong Un.

China announced a small purchase of U.S. soybeans prior to the meeting, but it fell far short of historic levels and what happens next remains to be seen. Trump called his meeting with Xi Jinping “a 12 on a scale of 1 to 10.”

The U.S. cattle market took a hit this week upon news from a couple fronts. As reported last week, the Agriculture Department announced steps to strengthen the beef industry and Trump announced an increase in Argentina’s tariff rate quota for beef from 20,000 to 80,000 metric tons (MT).

Mexico’s Agricultural Minister Julio Berdegué held a video conference with Agriculture Secretary Brooke Rollins this week to discuss reopening the border to live cattle imports, which have been suspended due to an outbreak of New World Screwworm. No date was set.

The National Milk Producers Federation and U.S. Dairy Export Council praised the announcement this week of new trade agreements with Malaysia and Cambodia plus new trade agreement frameworks with Thailand and Vietnam.

“With these new agreements, the administration has delivered big wins for America’s dairy farmers,” said Gregg Doud, president and CEO of NMPF. “Agreements like those struck with Malaysia and Cambodia will ensure we have fair access to Southeast Asia’s fast-growing markets.”

Checking prices at the CME, block Cheddar climbed to $1.8250 per pound Wednesday, highest since Aug. 20, 2025. It stayed there Thursday, following a Friday finish at $1.7775 and a year ago price at $1.8375.

The Cheddar barrels made it to $1.82 Tuesday, highest since Aug. 14. They finished Friday at $1.77 and a year ago at $1.8675.

Cheese production was steady to lighter in the Central region this week, according to Dairy Market News. Downtime was causing some plants to move milk to balancing plants or sell it to nearby cheesemakers. Spot trades remain light as Class I plants continue to pull on supply. Class III milk prices at mid-week ranged flat to $2-over class. Domestic cheese demand is steady. Contacts report exports to Mexico are steady, but interest from other countries remains light.

Milk production throughout the West is providing plenty of supply for cheese producers. Spot milk is generally available, and demand is not high as many cheese manufacturers are receiving adequate deliveries of contractual milk. Cheese production varies from steady to stronger but domestic demand is flat. Retail holiday promotions are not yet robust and food service activity continues to lag 2024 levels. Export demand is mixed, with global prices continuing to become more competitive. Spot cheese loads are widely available to somewhat tight depending on the variety according to DMN.

StoneX dairy broker Dave Kurzawski said in the Nov. 3 Dairy Radio Now broadcast that market sentiment is “bearish,” when looking at the sustainability of a $1.80 cheese price. “The market is focused on the supply of milk, and the number of cows out there, 9.5 million, the lack of demand, new cheese processing capacity, and the lack of exports. We had good cheese exports all year, he said, but prices globally have come down, specifically in Europe, and it’s becoming harder to export cheese, not being as competitive as we were.”

The flip side is butter, he said, where exports are record high but we’re not getting that news because the government is shut down. The butter price has fallen and we have the cheapest butter in the world, he said, but the market has “bearish blinders” on right now, evidenced with cheese currently at $1.82 while first quarter 2026 it’s at $1.63. He quickly added “We’re at the time of year when we tend to see domestic demand rise a little so we might see a stronger price in November and some kind of Christmas rally for dairy farmers.”

The brightest spot is whey and Kurzawski credits “the high value protein consumer who doesn’t seem to care about price as 2025 is the year of protein.” That’s helping to pull on the dry whey market, he concluded. “Those markets aren’t totally correlated very well but ultimately the demand for whey is there.”

Cash butter sunk to its lowest level since Feb. 26, 2021, on Wednesday, dipping to $1.5550 per pound, but regained some ground Thursday to close at $1.5725. It closed Friday at $1.6025 and a year ago at $2.67 per pound.

Milk output is steady in the Central region, and component levels are increasing. Cream production is strong. Demand is strengthening from cream cheese and other Class II processors. Spot cream sales to butter makers are light, as butter makers are utilizing cream from within their network rather than purchasing it.