It was week three of the government shutdown with both sides of the aisle showing no sign of cracking, outside of some wise cracks or attempts at them. Again, the markets received no input from the various reports provided by the USDA. This week there was no fluid milk sales report, no Dairy Supply and Utilization report, or Livestock, Dairy, and Poultry Outlook, and no weekly update on dairy cow slaughter numbers. Next week could mean the loss of the September Milk Production and Cold Storage reports, as well as the monthly Livestock Slaughter report, to name a few.

The Daily Dairy Report’s Monica Ganley Quarterra warned in the Oct. 10 Milk Producer Council newsletter: “Dairy markets, both in the U.S. and around the world continue to lean bearish as they digest the status of supply and demand. Milk production remains hefty the world over. Volumes in the European Union and the U.K. were up 3.3 percent in August as strong milk prices and favorable weather supported production. While animal health issues remain present, they have so far not derailed growth. European gains come on top of upbeat production in the U.S., New Zealand, and South America, further contributing to a world that is awash in milk. The global appetite for dairy products is stable to slightly stronger, but current demand is no match for the onslaught of supply,” wrote Quarterra.

Rabobank analyst Lucas Fuess echoed those remarks in the Oct. 20 Dairy Radio Now broadcast, saying that output is growing significantly in all key dairy regions of the world, even South America which is easily forgotten as a dairy exporter.

He pointed out that U.S. output is measured against a year ago when we were dealing with avian influenza, but milk components are also higher and contributing to plenty of product to convert into cheese, butter, and powder.

October is traditionally New Zealand’s peak month, he said, and they’ve been seeing record output so far this season so October may be a record as well. And, while Europe had a slow start this year, output is climbing now.

Rising milk output has pressured prices lower and Fuess warned that U.S. producers will be seeing that reflected in fourth quarter milk checks. Lower feed costs and strong bull calf prices will help offset lower milk prices somewhat.

Speaking of animal health, the National Milk Producers Federation held its second in-person foot-and-mouth disease (FMD) biosecurity training in Seattle the second week of October. The meeting evaluated the potential use of a bulk tank milk test for FMD surveillance at the herd level during an outbreak.

The meeting was part of a project backed by a USDA cooperative agreement through the National Animal Disease Preparedness and Response Program.

Meanwhile, a new case of New World screwworm has been confirmed in Mexico about 170 miles south of the last confirmed case. The good news is that Agriculture Secretary Brook Rollins reported that cases in Mexico have dropped 28 percent from their peak and more checkpoints have been authorized there.

Cash block Cheddar, after dropping 9 cents last week and closing Friday at $1.70 per pound, fell to $1.67 Monday. It was trading Thursday morning at $1.7675.

The Cheddar barrels held at Friday’s close of $1.71 Monday and Tuesday, then gained 3 cents Wednesday, and added 3 cents more Thursday, hitting $1.77.

Dairy Market News reports that cheese production was lighter in the Midwest this week as some manufacturers are down for maintenance. Contacts say they are primarily selling spot loads of milk to Class I manufacturers, though some noted sales to other nearby cheesemakers. Class III spot prices ranged from 25 cents under to $2-over Class at mid-week. Demand for Class III milk was steady from previous weeks but remained light overall. Export demand is strong, and contacts say they continue to move significant volumes to international markets. Demand for cheese is generally steady in domestic markets, but some contacts reported increased mozzarella sales this week, according to DMN.

Cheese manufacturers in the west are receiving sufficient milk and spot loads are available as output increases seasonally. Cheese production is steady and available for most varieties although mozzarella was on the tight end. Domestic cheese demand is steady while exports are steady to strong. But, cheese prices are generally declining globally, enabling international suppliers to increase their competitiveness with the U.S., says DMN.

HighGround Dairy’s Monday Morning Huddle warned: “In early July, European Gouda and Mozzarella were at a 50 cent per pound (or more) premium to CME blocks but in a plot twist, EU prices are now less than those in the U.S. In just over three months, the European Energy Exchange (EEX) Gouda price has plummeted 61 cents per pound or 27 percent, while EEX Mozzarella is down 57 cents per pound or 26 percent. For U.S. manufacturers, the loss of this discount means that exports will likely decrease as international buyers look for deals. U.S. cheese exports to South Korea, Australia and Japan have been a big part of the record-high sailings in 2025, and these sales may fall starting in first quarter 2026, as Europe becomes the preferred vendor,” says HighGround Dairy.

After closing Friday at the lowest CME price since Aug. 4, 2021, $1.6050 per pound, cash butter climbed to $1.67 Wednesday. It lost 4.25 cents Thursday, slipping to $1.6275.

Cream is available in the Central region, says DMN, but contacts say lighter demand from butter makers and increasing interest from Class II purchasers is pushing multiples higher. Cream multiples at mid-week ranged from 1.05 to 1.27 in the region. Butter production is strong, but some plants report scheduled downtime was contributing to lighter output compared to recent weeks. Domestic butter demand is light. Retail sales are trending higher, but food service remains limited. International interest in 82 percent butterfat butter is strong and inventories are tight while 80 percent butterfat butter remains available, according to DMN.

Milk production and fat components are strengthening in the West, resulting in sufficient cream and many butter producers are not bringing in any extra. Cream multiples mid-week were unchanged from the previous week. Butter output is steady for the most part, with manufacturers working to build supplies for holiday demand. Unsalted inventories are reportedly snug but loads of both salted and unsalted butter are available. Domestic demand is steady. Export demand is strong, says DMN.

Grade A nonfat dry milk fell to $1.1150 per pound Wednesday, lowest since April 26, 2024. It held there Thursday, after closing Friday at $1.1275.

Powder continued its slide in the Global Dairy Trade’s Pulse auction Tuesday where 5.6 million pounds of product was sold, up from 5.4 million the previous week. Prices were down on both.

Dry whey gave up a half-cent Tuesday, slipping to 63 cents per pound. It added a penny Thursday, hitting 64 cents, following a Friday finish at 63.50 cents per pound.

StoneX wrote in its Oct. 14 Early Morning Update: “The main theme of the day for the dairy complex at large, with the exception being dry whey, is that we have plenty of milk and thus both the will and capacity to make plenty of product. Likely more product than demand would require.”