Farm milk prices continue to fall. The USDA announced the benchmark Class III price at $19.95 per hundredweight, down $2.90 from October, $2.80 above November 2023, and the lowest Class III since July. The 11-month average is $18.92, up from $17.11 a year ago, and compares to $22.09 in 2022.

Wednesday’s Class III futures portend a December price at $18.98, which would result in a 2024 average of $18.92, up from $17.02 in 2023, and compare to $21.96 in 2022.

The November Class IV price is $21.12, up 22 cents from October, and 25 cents above a year ago. Its average stands at $20.75, up from $19.11 a year ago, but compares to $24.68 in 2022.

You’ll recall October milk production was up 0.2 percent from a year ago. Components were up as well. The October Dairy Products report shows where the milk went.

Cheese production totaled 1.226 billion pounds, up 5.6 percent from September, and up 1.0 percent from October 2023. Year to date 11.9 billion pounds had been produced, up 0.6 percent from 2023.

Wisconsin vats provided 315.2 million pounds of the October total, up 11.4 percent from September, and 4.3 percent above a year ago. California output, at 204.5 million pounds, was up 2.0 percent from September, but 0.6 percent below a year ago. Idaho produced 94.3 million pounds, up 5.2 percent from September and 5.7 percent above a year ago. New Mexico provided just under 76 million pounds, up 1.3 percent from September, but 10.8 percent below a year ago.

Italian cheese output totaled 511.6 million pounds, up 4.9 percent from September and 0.5 percent above a year ago. American output climbed to 486.2 million pounds, up 6.6 percent from September, but 0.2 percent below a year ago. Mozzarella totaled 405.6 million pounds, up 1.6 percent from a year ago.

Cheddar output shot up to 332.3 million pounds, up 19.5 million pounds or 6.2 percent from September, but was down 10.5 million or 3.1 percent, from a year ago. YTD Cheddar stood at 3.2 billion pounds, down 6.2 percent. Lots of eyes are on cheese data these days as additional manufacturing capacity comes online in various regions of the country. Will demand keep up?

Butter production climbed to 167.5 million pounds, up 7 million pounds or 4.4 percent from September, and up 5 million pounds or 3.1 percent from a year ago. YTD butter hit 1.86 billion pounds, up 5.7 percent from 2023. The 3.1 percent increase in October is strong but well below the 11.3 percent in September and 14.5 percent in August.

Yogurt production totaled 419.3 million pounds, up 11.9 percent from a year ago. Hard ice cream, at 62.5 million pounds, was up 11.8 percent from 2023.

Dry whey output slipped to 66.3 million pounds, down 1.7 million pounds or 2.5 percent from September, and down 9 million or 11.9 percent from a year ago. YTD whey was at 727.8 million pounds, down 8.7 percent. Stocks fell to 50.5 million pounds, down 5.2 million or 9.4 percent from September and down 24.8 million or 32.9 percent from a year ago.

Nonfat dry milk output climbed to 125.1 million pounds, up 9.6 million or 8.4 percent from September, but was down 3.5 million pounds or 2.7 percent from a year ago. YTD NFDM was at 1.4 billion pounds, down 11.6 percent. Stocks fell to 234.4 million pounds, down 16.1 million or 6.4 percent from September, but were up 16.1 million pounds or 7.4 percent from 2023.

Skim milk powder production fell to 41.0 million pounds, down 12.4 million pounds or 23.2 percent from September, and down 13 million or 24.1 percent from a year ago. YTD SMP stood at 455.9 million pounds, down 18.5 percent from 2023.

StoneX says “The fat and protein that didn’t go into cheese or butter ended up in milk protein concentrate, up 84 percent YoY, and miscellaneous products like ice cream, sour cream, and yogurt.”

CME dairy prices were looking mostly higher the first week of December. The Cheddar blocks reached $1.70 per pound Wednesday but fell Thursday to $1.6650, after closing the previous Wednesday, the day before Thanksgiving, at $1.6425. The barrels hit $1.6675 Wednesday but fell to $1.6425 Thursday, following last Wednesday’s finish at $1.6050 per pound.

Cheese demand and milk availability varies according to Midwest cheesemakers, says Dairy Market News. Demand for barrels, curds and some European style cheese has ticked lower in recent weeks. Cheddar and Italian cheesemakers say demand is steady to strong. Milk availability has shifted to what it was prior to the Thanksgiving holiday. Offers were above-Class III. Cheesemakers in the eastern edge of the Central region said milk was more available than it was in November. Spot milk prices, mid-week, were at or near $1-over Class III for the most part.

Cheese output is mixed in the West with some plants in unplanned downtime.

Milk demand from cheese makers is steady to stronger and was comparatively tighter for the southwest part of the region. Domestic cheese demand is mixed from spot buyers but steadier contractually, while international interest is steady.

Midwest churning was active after some allotted downtime over the holiday week, reports DMN.

Cream suppliers reported only minimal issues finding homes for their extra cream. Butter is available, particularly the 80 percent milkfat salted kind. Market tones are uncertain with some contacts expecting more downward price pressure while others see a range bound price around $2.50 moving forward.

Western butter production is mixed. Some butter makers reported wind conditions led to power loses that caused significant unplanned downtime while other reduced capacity was due to churn maintenance. Cream is somewhat comparatively tighter in the southwest part of the region but widely available in most of it. Domestic demand is steady to lighter, according to DMN.

A small drop in the All Milk Price and a slightly higher alfalfa price pulled the October milk feed price ratio lower, for only the second time in 2024. The latest Ag Prices report shows the ratio at 2.96, down from 3.00 in September, and compares to 2.01 in October 2023.

The All Milk Price averaged $25.20 per cwt., with a 4.26 percent butterfat test, down 30 cents from September, which had a 4.15 test, but was $3.70 above October 2023, which had a 4.21 percent test. It was the first drop since April.

The latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. States: “Dairy margins were flat to slightly weaker over the last half of November, as milk prices traded steady to lower across the curve while feed costs were roughly unchanged. A recent uptick in U.S. milk production and weakness in cheese and butter are weighing on CME milk futures contracts,” the MW warned, “Keeping the market under pressure.”

The MW detailed USDA’s October Milk Production report, stating, “A larger dairy herd was primarily responsible for the increase in milk production, with the U.S. dairy cow inventory estimated at 9.365 million, up 19,000 from September and 10,000 more than last year, which represented the first year-over-year increase since May 2023. The herd has expanded 46,000 head the past three months, with yield increasing by three pounds to 1,996 pounds per cow.”