The September Federal order Class III milk price was announced by the USDA at $16.04 per hundredweight, down 60 cents from August and $1.55 below September 2025. The nine-month average stands at $15.96, down from $18.46 at this time a year ago, and compares to $18.37 in 2024.

Wednesday’s Class III futures settlements portend an October price at $14.94; November, $15.50; December, $15.83; January, $16.11; February, $16.61; and March at $16.89.

The September Class IV price is $18.94, up $1.58 from August and $2.77 above a year ago. Its nine-month average stands at $18.55, up from $18.53 a year ago, and compares to $20.69 in 2024.

Checking the cupboard, U.S. butter stocks fell in August but were up from a year ago, according to the USDA’s latest Cold Storage report. The Aug. 31 butter inventory slipped to 315.7 million pounds, down 16.7 million pounds or 5.0 percent from July, but were up 29.5 million or 10.3 percent from August 2025. July’s total was revised up 11 million pounds.

With milk production growth slowing in August, StoneX believes the larger butter inventories were driven by weaker demand. “Exports might have slipped a little more than forecast, but this probably represents weak domestic demand more than weak exports.”

American type cheese stocks grew to 815.5 million pounds, up 2.4 million or 0.3 percent from the July level, which was revised up 1.6 million pounds, and were up 4 million pounds or 0.5 percent from a year ago.

The “other” cheese category inventory climbed to 604.4 million pounds, up 2.8 million or 0.5 percent from July’s mark, which was revised up 3.6 million pounds, and up 26.3 million pounds or 4.5 percent from a year ago.

Total cheese stocks came in at 1.443 billion pounds, up 4.4 million or 0.3 percent from July, and up 32.4 million or 2.3 percent from a year ago. Revisions added 5.2 million pounds to the July total. The gains came despite record-breaking exports.

Cheesemakers, wanting to capture the high returns from the whey stream, are keeping their vats working. StoneX says the Cold Storage data explains the weakness in prices.

The 40-pound Cheddar blocks fell to $1.27 per pound Wednesday, lowest CME price since May 5, 2020 when COVID captured the headlines. It regained some ground Thursday, jumping 3.25 cents to $1.3025, but that’s 48.75 cents below a year ago. This would be the seventh week in a row that cheese prices have declined. The blocks closed Friday at $1.3075.

The barrels were holding at $1.4525 per pound Thursday, where they have been since Sept. 16, and 31.75 cents below a year ago. Block sales totaled 12 loads so far for the week and 113 for the month of September, up from 85 in August.

The Sept. 30 Daily Dairy Report stated: “Over the past five Septembers, Cheddar blocks have averaged about $1.90 per pound, illustrating the weakness of September 2026’s average price of $1.3990. Cheese futures through first quarter 2027 are now under $1.60 per pound, and Class III contracts are below $17 per cwt. A 10 cent move in cheese prices equates to a move of a little over $1 per cwt. in Class III prices,” according to the DDR.

The DDR’s Sarina Sharp wrote in the Sept. 25 Milk Producers Council newsletter: “Buyers are wary of bidding on cheese in Chicago, lest they unwittingly commit to hauling cheese from destinations far from the heartland. CME spot market specifications require buyers to pay the freight, less a hauling adjustment. That adjustment is set on a sliding scale based on the sellers’ distance from Green Bay, Wisconsin. But the maximum freight allowance of 4.93 cents per pound is far higher than the cost to haul cheese from the West Coast. With diesel prices at all-time highs, would-be buyers at the CME spot market assume that they’re going to be on the hook for at least 10 cents of additional freight, so they back their bids down accordingly.”

Milk supply in the Central region loosened slightly this week, according to Dairy Market News. Contacts reported minimal changes in overall milk movement and continue to point to ongoing distribution challenges attributed to elevated fuel prices. Midwest spot load availability remains limited. Similar conditions are reported in the Southwest. Class III spot prices at mid-week were between 50 cents-over to $3.50-over. Cheese makers in the region note steady production, supported by strong orders. Retail cheese demand remains firm, though food service interest continues to trend below anticipated levels.

Overall milk and cheese supplies in the West are heavy, says DMN. Cheese manufacturers continue to receive contracted milk loads, although Class III spot milk is tighter. Cheese production remains active with many plants running seven days a week. Plenty of cheese is available, including an abundant supply of color Cheddar. Export demand is strong while domestic markets continue to feel “weak and sloppy.” Freight challenges continue to affect cheese distribution. Rates have increased roughly 50 percent year over year, complicating long distance hauling and influencing regional market spreads, according to DMN.

Cash butter fell to $1.3175 per pound Tuesday, lowest since January 15, but it was trading Thursday at $1.34, 41 cents below a year ago. It closed Friday at $1.40 CME sales so far this week totaled 99 loads and 347 for September, down from 386 in August.

Cream supplies remain steady in the Midwest, says DMN. Butter manufacturers note active churning. Retail butter demand continues to improve. Inventories of 80 percent butterfat butter remain ample, with tight availability for 82 percent product.

Grade A nonfat dry milk continues its climb and closed Thursday at $2.2050 per pound, highest since May 20, and $1.0450 above a year ago. It closed Friday at $2.17. Sales totaled 11 loads for the week so far and 92 for all of September, down from 132 in August.

Dry whey continues to climb as well and hit 81.50 cents per pound Wednesday, highest since Feb. 14, 2022. It stayed there Thursday, 18.5 cents above a year ago, after closing Friday at 80.50 cents per pound. There have been two sales on the week so far and 15 for September, up from seven in August.

Higher feed prices and another drop in the All Milk price, pulled the August milk-feed ratio lower. The USDA’s Ag Prices report showed the August ratio at 2.00, down from 2.12 in July, and down from 2.47 in August 2025. The index is based on the current milk price in relationship to feed prices for a ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. One pound of milk would purchase just 2.0 pounds of dairy feed of that blend.

The All Milk Price averaged $19.80 per cwt., with a 4.20 percent butterfat test, down 50 cents from July’s $20.30, which had a 4.19 percent test. 

The grain markets, and many others, hoped to hear more news from President Donald Trump’s meeting with China’s President Xi but there weren’t any major announcements other than some tariff cuts on various imports from each other. U.S. corn and dairy was among them but not soybeans.