The USDA announced the nation’s September benchmark Class III milk price at $23.34 per hundredweight, up $2.68 from August, $4.95 above September 2023, and the highest Class III price since June 2022. That put the 2024 average at $18.37, up from $17.13 at this time a year ago and compares to $22.24 in 2022.

Wednesday’s Class III futures settlements portend an October price at $22.97; November, $22.31; December, $21.32; and January 2025 at $20.54.

The September Class IV price is $22.29, up 71 cents from September, $3.16 above a year ago, and the highest Class IV since November 2022. Its average stands at $20.69, up from $18.65 a year ago and compares to $24.81 in 2022.

Lots of eyes are on the International Longshoremen Association dockworkers strike at 36 U.S. Maritime Alliance terminals along the East and Gulf Coast. A new six-year labor contract was not achieved.

The National Milk Producers Federation and the U.S. Dairy Export Council called on the Biden Administration to immediately intervene, warning, “This disruption could have a devastating impact on American dairy farmers and exporters who rely on the smooth functioning of these ports to get their products to international markets.”

“The administration must act now to bring both sides back to the table. The stakes are too high,” said Gregg Doud, president and CEO of NMPF. “This strike puts the livelihoods of American dairy farmers and the strength of our supply chain at risk. The administration needs to step in and end the strike before further damage is done.

“The U.S. dairy industry relies heavily on ports to maintain access to global markets. In 2023, over 530,000 20-foot equivalent units of dairy products, valued at $1.7 billion, were shipped through East and Gulf ports, accounting for 21 percent of total U.S. dairy exports by volume. The ongoing strike directly jeopardizes $32 million in dairy exports per week, with additional indirect consequences looming as exporters are forced to reroute shipments and face rising transportation costs.”

Meanwhile, CME cheese prices continued their descent ahead of Friday afternoon’s August Dairy Products report and news that bird flu has now been confirmed in 52 California dairies.

The Cheddar blocks were trading Wednesday at $2.0275 per pound and the barrels at $2.1525.

Dairy Market News reports that contacts say cheese demand has stalled somewhat. Others are preparing for a busy holiday retail demand season, including working on gift baskets and other special orders. Barrel processors say they have had a slight growth in availability for spot market offers, but extra loads are moving briskly. Spot milk prices, mid-week, were above-Class levels. That is due to some plants coming back online after recent downtime, says DMN.

Class III milk demand from cheese makers is steady in the West. Bottling demand continues to tug on milk supplies and some processors indicate milk is tighter than a year ago however needed milk can be obtained. Cheese output is steady along with contractual demand. Seasonally tighter milk volumes and a strong mozzarella market have contributed to tighter barrel stocks, according to DMN, and demand is steady from domestic and international buyers.

Cash butter fell to $2.68 per pound Wednesday.

Churning in the Central region is busy. Plant managers say current and mid-term cream availability is at unprecedented levels. Multiples below 1.20 were reported this week, and butter makers say they are getting offers from the West and, atypically, even East region sources. Hurricane Helene’s effects were backing up cream trucks moving to normal destinations in the East. Butter demand is steady to quiet. As market prices trickle lower day by day, customers are waiting before adding to their inventories, according to DMN.

Western butter manufacturers note retail production is strong or steady and bulk production is strong to lighter. Stocks are being built to cover upcoming churn equipment projects as well as anticipated fourth quarter butter demand. Cream is widely available in most parts of the region but demand from butter manufacturers is mixed. Domestic butter demand varies from steady to lighter however 2025 contractual booking is picking up. Export demand is stronger as domestic prices become more competitive internationally, says DMN.

Grade A nonfat dry milk was trading at $1.3550 Wednesday and the whey was at 60.25 cents per pound.

The dairy industry has long used USDA’s monthly milk production data for tracking milk supplies and projecting dairy product output. Falling milk production would typically signal a decline in supplies of fluid milk and its components but a new report from CoBank entitled “Why Milk Components Matter More Than Milk Production.” The report stated, “The decoupling of fluid milk production and milk component production represents an important paradigm shift for the industry given growing consumer demand for manufactured dairy products.”

Speaking in the Oct. 7 “Dairy Radio Now” broadcast, CoBank dairy economist Corey Geiger said milk components have grown much and, while milk output has been down for 14 consecutive months, components, such as butterfat and protein, have been up in 12 of those 14 months.

Geiger said 80 percent or more of U.S. milk goes into manufactured products like cheese and butter and 90 percent of dairy farmers are paid on multiple component pricing so “It’s the components that matter and components matter to processors so this is a win-win situation.”

The report suggests that the dairy industry would benefit from a more comprehensive monthly report from USDA that includes milk, protein and butterfat production levels. Geiger says it will take some work to make this change happen but “The industry needs to talk about how we get there.”

Falling corn, soybean, and hay prices and a rising milk price moved the August milk feed price ratio higher again, up for the sixth time in the past seven months. The latest Ag Prices report shows the August ratio at 2.79, up from 2.50 in July, and compares to 1.66 in August 2023.

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 2.79 pounds of dairy feed of that blend.

The All-Milk Price averaged $23.60 per hundredweight (cwt.), with a 4.09 percent butterfat test, up 80 cents from July, which had a 4.07 test, highest since December 2022, and $4 above August 2023, which had a 4.00 percent test.

California’s average, at $22.70 per cwt., was up 60 cents from July and $3.60 above a year ago. Wisconsin’s, at $23.00, was up $1.10 from July and $3.80 above a year ago.

The national corn price averaged $3.84 per bushel, down 39 cents from July and $1.89 below a year ago. Soybeans averaged $10.30 per bushel, down a dollar from July and $3.80 per bushel below a year ago. Alfalfa hay averaged $175 per ton, down $8 from July and $55 per ton below a year ago.

Looking at the cow side of the ledger; the August average cull price for beef and dairy combined was unchanged at $142 per cwt., $27 above August 2023, and $70.40 above the 2011 base average.

Quarterly milk cow replacements averaged $2,360 per head in July, up $240 from April, and $600 above July 2023.