The USDA announced the September Federal order Class III milk price at $17.59 per hundredweight, up 35 cents from August, but is a whopping $5.75 below a year ago. The Class III average stands at $18.46, up from $18.37 at this time a year ago, and compares to $17.13 in 2023.

Wednesday’s Class III futures settlements portend an October price of $17.53; November, $17.40; December, $17.47; and January 2026 at $17.20.

The September Class IV price is $16.17, down $2.33 from August, $6.12 below a year ago, and the lowest Class IV price since August 2021, when it stood at $15.92. The nine-month Class IV average now stands at $18.53, down from $20.69 a year ago, and compares to $18.65 in 2023.

Meanwhile, the federal government began a partial shutdown Wednesday as lawmakers kept failing to reach a budget agreement. Congress has not passed any of the 12 appropriations bills needed to fund the government.

StoneX says the National Agricultural Statistics Service alone has 501 employees and 456 are furloughed. Many USDA generated reports that the dairy industry relies on will cease. The Oct. 1 Daily Dairy Report says, “The last and longest shutdown began in 2018 and ended in 2019 after 35 days. For dairy producers, the resulting information blackout and closure of USDA agencies will be more than an inconvenience.”

U.S. butter stocks in August were down from July and a year ago while cheese stocks were up slightly, according to the latest Cold Storage report. The Aug. 31 butter stock pile fell to 305.9 million pounds, down 25.6 million pounds or 7.7 percent from July, and down 18.5 million or 5.7 percent from August 2024.

American type cheese stocks grew to 818.2 million pounds, up 4.7 million or 0.6 percent from the July level, and up 24.6 million or 3.1 percent from a year ago. The July total was revised up 5.2 million pounds.

The “other” cheese category inventory came in at 578.2 million pounds, down 14.8 million pounds or 2.5 percent from July, but was up 649,000 pounds or 0.1 percent from a year ago. The July total was revised up 7.7 million pounds.

The total August cheese inventory slipped to 1.417 billion pounds, down 10.9 million pounds or 0.8 percent from July, but was up 23.4 million or 1.7 percent from a year ago. The July total was revised up 12.0 million pounds. Total stocks were above the prior year for the second time in 17 months.

“Arguably the cheese price in August was exactly where it should have been given the growth in inventory,” says StoneX. Regarding butter, there were reports that a lot of imported butter was sitting in bonded warehouses and hadn’t cleared through customs yet, “So our guess is that the lower than expected Cold Storage number is because imports are still on the weak side. Butter is still ridiculously cheap compared to the stocks/use ratio,” according to StoneX.

CME Cheddar block cheese saw daily gains this week, climbing to $1.7750 per pound Thursday morning, highest it has been since Aug. 29, after closing Friday at $1.65.

The barrels made it to $1.7250 Wednesday, highest since Sept. 4, but were trading Thursday at $1.72, following their Friday finish at $1.6225. This week a year ago, both plunged 34.25 cents and were trading at $1.9475 and $1.9550 respectively.

A total of 111 loads of block traded hands in the month of September, up from 74 in August. Barrel sales totaled 8 for the month, down from12 in August.

Cool fall temperatures are contributing to increasing milk output in the Central region, according to Dairy Market News. Some of the extra milk was going to Class I. Spot trades were light as cheesemakers have sufficient internal volumes. Mid-week Class III milk prices ranged $1-under to $1-over Class. Cheese production is steady in the region. Domestic demand is steady from retail and food service. International interest is strong, and some contacts said demand was up slightly from previous weeks.

Milk production in the West is strengthening from summer dips. Cheese production varies from steady to stronger. Domestic demand is moderate to steady. Export demand remains more robust than domestic demand despite a competitive international market, according to DMN.

CME butter jumped 4 cents Monday, hitting $1.76 per pound. It lost a nickel Tuesday, regained 1.50 cents Wednesday, and added 2.50 cents Thursday, hitting $1.75. It had closed Friday at $1.72. There were 185 loads of butter that found new homes in September, up from 86 in August.

Central region milk production and components remain above a year ago and cream is plentiful with multiples as low as 0.85 this week. Demand for cream is steady to lighter, with some butter makers saying they are not in the market for more as they use internal volumes to keep churns active. Domestic butter demand is steady from week-to-week, but sales remain light. International demand for 82 percent butterfat butter is strong and contacts say inventories are tight. 

Cream is readily available in the West and more affordable this week with below flat market multiples reported. Butter production is steady to strong with plenty of cream to churn and the focus on retail more than bulk. Retail sales are more robust than food service sales. Salted and unsalted inventories are meeting demand. Domestic demand is mixed and exports are strong, says DMN.

StoneX stated in its Sept. 30 Early Morning Update: “The market is now on a path to converge the spot price and the nearby futures price. We expect that to be somewhere higher than where spot sits today ($1.7600) and likely closer to $2, but it may take a few weeks to get there. A butter price bounce does not change the current dynamic of strong milk production and plenty of cream. Those dynamics are expected to persist well into fourth quarter.”

Grade A nonfat dry milk was trading Thursday at $1.15 per pound, after closing Friday at $1.1550. Sales amounted to 117 for September, up from 89 in August, and the highest monthly total since October 2024.

Dry whey lost a quarter cent Wednesday, slipping to 64 cents per pound, and stayed there Thursday, after finishing Friday at 64.75 cents per pound. Trades totaled 18 for September, down from 43 in August.

Strength is coming back into the markets as we start the new quarter and new month, says StoneX broker Dave Kurzawski in the Oct. 6 Dairy Radio Now broadcast. “People underestimate how powerful the fall season going into winter and the holidays is for dairy.

“We had some drastic down movements in prices, especially on butter, but now we’ve adjusted the price and I think we’re attracting a more substantial bid,” he explained. “Butter can be exported in a very significant way now that prices have adjusted, even though the world market has come down a little bit.”

That’s not the case on cheese, he admitted, but domestic cheese demand may be better right now and he believes we’re seeing a different tone now than the rather bearish or negative tone of September. “We have plenty of milk, we have plenty of cream, and yet prices are becoming a little more buoyant,” he said.