The USDA announced the August Federal order Class III milk price at $20.66 per hundredweight, up 87 cents from July, $3.47 above August 2023, and the highest Class III price since November 2022. It put the eight-month average at $17.75, up from $16.98 a year ago and compares to $22.54 in 2022.

Late Friday morning Class III futures portended a September price at $22.81; October, $23.06; November, $22.63; and December was at $21.79 per cwt.

The Class IV price is $21.58, up 27 cents from July, $2.67 above a year ago, and the highest Class IV since December 2022. Its average now stands at $20.49, up from $18.59 a year ago, and compares to $24.83 in 2022.

Adding fuel to the milk price fire – confirmation has been made on three Central Valley California dairies of the highly pathogenic avian influenza. Milk output was already struggling there, and generally milk output falls 10-25 percent in dairy cattle. The so-called bird flu has hampered milk output in at least 13 other states, with 17 cases reported in the last 30 days. Meanwhile, the USDA has authorized a field safety trial of a vaccine for bird flu in dairy cattle.

After jumping 17.25 cents the previous week, cash block Cheddar closed the holiday-shortened Labor Day Week at $2.27 per pound, up 6 cents on the week, highest since June 9, 2022, and 34.50 cents above a year ago, as traders awaited Friday afternoon’s July Dairy Products report. The barrels finished at $2.2750, 1.50 cents higher, 44.75 cents above a year ago, and just a half-cent above the blocks. There were seven CME sales of block on the week and five barrel.

Cheese contacts tell Dairy Market News that demand is steady to strong, depending on variety. Some processors have shifted back to barrels due to the bullish trend. Plant downtime, unrelated to the holiday weekend, continued to be reported by some Midwest contacts, but it has not necessarily prompted an influx in milk. Early in the week, Midwest cheesemakers reported that the holiday-related spot milk at flat Class had disappeared and by mid-week prices were starting above $1 above Class III. A number of cheesemakers said they were not even receiving spot milk offers. Cheesemakers continue to suggest that market price upticks have yet to deter customer interest, and some say it has actually spurred buyers to make deals to assure coverage.

Class III milk demand is generally strong from cheesemakers in the west, however, with most school institutions back in session by midweek, milk supplies were not abundant, says DMN, and butter price strength was giving incentive to allocate milk fats in that direction.

Manufacturers are running steady production and block capacity is increasing as new facilities come on-line. Domestic cheese demand is steady but is moderate from international buyers.

Butter fell to $3.1475 Wednesday but closed Friday at $3.1750, a half-cent higher on the week, and 49.50 cents above a year ago, with 22 sales on the week.

Butter churning shifted into high gear this week in the Central region, particularly the Midwest. Plants in the south have generally had more spot cream available throughout the summer than their Upper Midwest counterparts, says DMN, so the uptick in churning has been less dynamic there. Plant managers did not expect the availability of cream to last beyond the weekend. Butter demand is gathering its seasonal strength from both retail and food service customers.

Western manufacturers indicate retail churning is strong to steady, while bulk lines are at a much lighter pace. Butter inventories are “comfortable” for anticipated fourth quarter demand. The holiday weekend brought mixed cream demand with a few facilities enjoying some downtime. This contributed to looser cream supplies for parts of the region. Some believe lower temperatures recently should allow more requests for cream from the West into the Midwest to be accommodated. Butter demand varies from stronger to steady, says DMN.

Grade A nonfat dry milk closed Friday at $1.3650 per pound, up 3.50 cents on the week, highest since Dec. 8, 2022, and 26.50 cents above a year ago. There were 19 loads finding new homes on the week.

The whey closed Friday at 58.75 cents per pound, 2.75 cents higher, highest in four weeks, and 28.50 cents above a year ago, with 5 sales put on the board.

U.S. dairy exports remained strong in July, up 7.8 percent, according to HighGround Dairy’s Alyssa Badger in the Sept. 9 “Dairy Radio Now” broadcast. She pointed out that while exports to Mexico in June were down, month to month and year to year, they turned around in July and were up 21 percent from July 2023. Exports to China were also higher, she said, as well as to Southeast Asia, up 24 percent.

Cheese exports totaled 88.7 million pounds, up 9.6 percent, though Cheddar was down 28.9 percent. Badger noted that, when these cheese purchases were booked, U.S. prices, although competitive, were not at a steep discount to the global market as they were earlier in the year, so “This is really good news.” And, cheese moving across the southern border to Mexico leapt to its second-highest level ever.

Nonfat/skim milk powder exports hit 159.4 million pounds, up 10.8 percent from July 2023, and surely helped put CME prices where they are. HighGround Dairy says July’s sailings were the highest since May 2023, with increased shipments to Southeast Asia and Mexico. Demand from China remained lackluster, down 21 percent, and the smaller exports are keeping year-to-date totals behind, down 8.5 percent.

Whey exports remained strong, totaling 29.6 million pounds, up 15 percent, though YTD are down 2 percent. China was the top destination, according to GHD.

Butter exports amounted to 6 million pounds, increasing for the second month in a row, up 16.3 percent from a year ago but down 8.6 percent YTD. Badger said U.S. prices are not at a huge premium to Oceania, and European prices are also higher than ours, so that has helped U.S. exports. We were still a net importer, however. Butter imports totaled 13.9 million pounds, up 44.8 percent, while cheese imports totaled 36.1 million pounds, up 9.8 percent from a year ago.

Tuesday’s Global Dairy Trade auction saw its weighted average slip 0.4 percent, following a 5.5 percent jump on August 20. Volume jumped to 84.5 million pounds, up from 77 million. The average metric ton price slipped to $3,833 U.S., down from $3,920.

The declines were led by lactose, down 8.9 percent, followed by whole milk powder, which was down 2.5 percent after gaining 7.2 percent on Aug. 20. Skim milk powder was up 4.5 percent, after a 4.0 percent gain. Butter was off 0.9 percent, after rising 3.7 percent, while anhydrous milkfat was up 0.7 percent after jumping 4.8 percent last time.