The June Federal order Class III benchmark milk price was announced at $19.87 per hundredweight, up $1.32 from May, $4.96 above June 2023, and the highest-Class III price since December 2022. The six-month Class III average stands at $16.92, down from $17.48 a year ago, and compares to $22.95 in 2022.

Friday morning futures portended July at $19.65; August, $20.11; September, $20.49; October, $20.33; November, $19.97; and December at $19.40.

The Class IV price is $21.08, up 58 cents from May, $2.82 above a year ago, and the highest Class IV since October 2023. Its six-month average is at $20.17, up from $18.59 a year ago, and compares to $24.67 in 2022.

The USDA issued its long awaited Recommend Decision on amendments to the Federal Milk Marketing Order pricing formulas. The Decision stipulates milk composition factors be adjusted to 3.3 percent true protein, 6.0 percent other solids, and 9.3 percent nonfat solids.

It would eliminate 500-pound barrel cheddar cheese prices from the Dairy Product Mandatory Reporting Program survey and use only the 40-pound block Cheddar price to determine the monthly average cheese price in the formulas. Make allowances would also be revised and the butterfat recovery factor would be updated to 91 percent from the current 90 percent.

The Decision returns to the “higher of” the advanced Class III and IV skim milk pricing factors in the base Class I skim milk price and implements a rolling monthly Class I extended shelf life (ESL) adjustment to “ensure better price equity for ESL products.” Class I differential values would also be updated to reflect the increased cost of servicing the Class I market.

After the Final Decision is published in the Federal Register, the dairy industry has 60 days to submit comments. After that, USDA has 60 days to release the Final Decision for a vote by producers.

National Milk Producers Federation President and CEO Gregg Doud stated: “Based on our initial reading, NMPF is heartened that much of what we proposed after more than two years of policy development, and another year of testimony and explanation, is reflected in USDA’s recommended Federal Milk Marketing Order modernization plan.”

Meanwhile, you’ll recall that May milk production was down 0.9 percent from a year ago but that didn’t have a lot of impact on the May Dairy Products report, according to StoneX broker Dave Kurzawski in the July 8 “Dairy Radio Now” broadcast.

May cheese production climbed to 1.213 billion pounds, up 2.1 percent from April’s count, which was revised up 1 million pounds, and was 0.7 percent above May 2023. Output for the first five months of 2024 totaled 5.97 billion, up 0.6 percent from 2023.

Wisconsin cheese totaled 305.6 million pounds, up 3.6 percent from April and up 3.2 percent from a year ago. California produced 214.5 million pounds, up 3.9 percent from April, but 0.5 percent below a year ago. Idaho contributed 81.6 million pounds, down 8.6 percent from April, but 8.9 percent above a year ago. New Mexico, with 81 million pounds, was up 3.9 percent from April, but down 13.5 percent from a year ago.

Italian cheese totaled 505.1 million pounds, up slightly from April and 4.4 percent above a year ago. Year-to-date output, at 2.5 billion pounds, is up 4.1 percent from a year ago.

American output climbed to 488.1 million pounds, up 4.5 percent from April but 5.7 percent below a year ago. YTD, at 2.4 billion pounds, was down 4.7 percent from a year ago.

Mozzarella cheese, at 405.1 million pounds, was up 7.1 percent from a year ago, with YTD output hitting 1.99 billion pounds, up 4.9 percent.

Cheddar output totaled 329 million pounds, up 11.8 million pounds or 3.7 percent from April’s level, which was revised down 5.1 million pounds, but was down 35.3 million pounds or 9.7 percent, from a year ago. YTD Cheddar hit 1.6 billion pounds, down 7.6 percent from a year ago.

Kurzawski says Cheddar has been underwhelming all year but pointed to the increase in Mozzarella, saying, “Demand has been really hot.” He suspects that consumers using home delivery services like DoorDash and Uber Eats, are reverting to pizza rather than individual meals because it’s cheaper, and that has increased the draw on Mozzarella cheese.

Butter production slipped to 204.3 million pounds, down 3.3 million pounds or 1.6 percent from April, but was up 7.9 million pounds or 4 percent from a year ago. YTD butter was at 1.04 billion pounds, up 4.7 percent from 2023, first time ever to top 1 billion pounds before the month of June, according to HGD.

Yogurt production totaled 403.2 million pounds, up 5.5 percent from a year ago. Hard ice cream, at 65 million pounds, was up 2.3 percent.

Dry whey output fell to 76.6 million pounds, down 4.6 million pounds or 5.7 percent from April, and down 5.2 million or 6.4 percent from a year ago. YTD whey is at 387.7 million pounds, up 1.5 percent. Stocks fell to 64.5 million pounds, down 8.1 million or 11.2 percent from April, and down 13.6 million pounds or 17.5 percent from a year ago.

Nonfat dry milk output slipped to 171 million pounds, down 3.2 million or 1.8 percent from April, and down 35.5 million pounds or 17.2 percent from a year ago. YTD powder was at 814.6 million pounds, down 14.9 percent. Stocks continued to slowly grow, climbing to 283.6 million pounds, up 2 million pounds, or 0.7 percent from April, but were down 16.7 million pounds or 5.6 percent from 2023.

Skim milk powder production jumped to 41.9 million pounds, up 6.1 million pounds or 16.8 percent from April, but was down 4.7 million or 10.1 percent from a year ago. YTD SMP was at 199.2 million pounds, down 18.5 percent from 2023.

Cash dairy prices start July strong. The Cheddar blocks closed the holiday shortened week at $1.90 per pound, down a penny but 50.75 cents above a year ago. The barrels finished at $1.9025, 2.25 cents higher on the week, and 52.25 cents above a year ago. Sales totaled five cars of block and 14 of barrel.

The holiday threw less of a wrench in Midwest cheesemakers’ plans than is typical, says Dairy Market News. Multiple plants were running a normal five-day workweek while milk availability holds up. Cheesemakers are trying to get ahead of a tightening milkshed in the region which faced hot temperatures and/or heavy rains. Even before the weather conditions, cheesemakers were noting lighter component levels. Cheese demand ranges from steady to strong, says DMN.

Cheese production is steady in the West. Milk demand from cheesemakers is stronger, however farm level milk output is generally declining in the region. Retail cheese demand is steady to stronger while food service is steady. Exports are steady to lighter as price competitiveness impacts the situation.

Almost defying gravity, CME butter closed Friday at $3.1325 per pound, up 0.75 cents on the week and 65.25 cents above a year ago, with three sales on the week.

Butter churns ran lighter schedules this week. Cream availability was below typical holiday levels and some multiples inched higher, somewhat abnormal in a weekday holiday. Retail butter demand remains ahead of expectations.