China’s dairy imports continue to tell a story. September whole milk powder (WMP) imports, for example, totaled 58 million pounds, up 79.8 percent from a year ago. HighGround Dairy reports that they rose counter-seasonally month-over-month to the highest September volume since 2022 and stated: “Domestic milk production has fallen to multi-year lows and China continues efforts to rebalance its dairy market, tightening local milk availability.

“Anecdotally, elevated domestic spot milk prices may have made imported WMP a more economical alternative for some buyers. Chinese WMP inventories began declining in June as consumption outpaced limited production, prompting increased purchasing on the Global Dairy Trade platform through August, above 2025 levels,” says HighGround Dairy.

Imports of skim milk powder however, fell to 13.5 million pounds, down 26.9 percent, the lowest since October. 2010, according to the Daily Dairy Report, and have fallen for 15 consecutive months.

Whey imports totaled 113.4 million, down 3.4 percent from a year ago. The U.S. has maintained a 45 percent market share, says the DDR, but were down 7.1 percent from 2025.

Butter imports hit 28 million pounds, up 18 percent, and also moved counter-seasonally higher from August to September, according to HGD, with increased shipments from New Zealand, France, and Belgium. HighGround says “Strong Chinese demand for Kiwi milkfat has extended into October, with North Asian buyers, presumably led by China, purchasing a record volume of anhydrous milkfat at the Oct. 20 Global Dairy Trade auction.”

Interestingly, HighGround says “China’s growing appetite for milkfat, supported by look demand from the confectionery and bakery sectors, continues to underpin import demand.”

Cheese imports hit 40.2 million pounds, up 27.9 percent, and up 19.2 percent year to date. The U.S. increased its cheese market share to 5.6 percent, according to the DDR.

Back on the home front, “Dairy margins improved around $1 per hundredweight in nearby periods with slightly less strength further out on the curve,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. “A combination of a sharp rally in Class 3 milk futures along with a sharp decline in the corn market were the contributing factors behind the margin strength over the first half of October,” the MW stated, “With strength in the block cheese market boosting milk futures while a bearish October crop report weighed on corn.”

The November Federal order Class I base milk price was announced at $20.27 per hundredweight, up $1.39 from October and $3.52 above a year ago. That put the nine-month average at $18.53, down from $19.01 a year ago, and compares to $20.25 in 2024. It equates to $1.74 per gallon, up from $1.44 a year ago.

Block Cheddar, after closing Friday at $1.6825 per pound, hit $1.80 on Tuesday, highest CME price since Oct. 30, 2025. It gave back 9.75 cents Wednesday, but recovered 2.25 cents Thursday, closing at $1.7250, 5.25 cents below a year ago, as traders anticipated the afternoon’s September Milk Production report, which I will detail next week. The barrels shot up to $1.72 Tuesday, highest since Nov. 3, 2025, and were holding there Thursday, 5 cents below a year ago.

Cooler weather seasonally increases milk output, which remains good and steady in the Central region, according to Dairy Market News. Southwest contacts report milk supplies are improving somewhat, however market conditions remain tight. Spot load availability remains limited for Class III producers as Class I and Class IV production increases. Contacts continue to report distribution constraints across the region. Class III spot milk prices at mid-week were flat-class to $4-over. Cheese manufacturers in the region continue to report good mozzarella demand and steady production. Cheddar output has slowed due to plant downtime and quality issues. Retail cheese sales remain firm, while food service demand remains below expectations, according to DMN.

Milk and cream production, along with some spot Class III availability, are meeting cheese manufacturer needs in the West. Some reported upticks in cost to secure Class III spot milk. Cheese production is steady. Strengthened pricing for whey commodities this year has been a counter to sluggish movements for cheese. While CME prices have strengthened, sellers in the West report no big changes in demand. Domestic retail demand is stable, while food service demand continues to be down. Exports are mostly reported as strong.

Cash butter fell to $1.33 per pound Wednesday and was holding there Thursday, 27.25 cents below a year ago. It closed Friday at $1.3650.

Cream supplies are steady to slightly tighter in the Central region, says DMN. Class II and cream cheese production continues to tighten availability. Reports continue of distribution and freight challenges affecting both milk and cream hauling. A notable volume of cream continues to move to Mexican buyers.

Grade A nonfat dry milk, after finishing Friday at $2.1625 per pound, reached $2.21 Tuesday, but lost 7.50 cents Wednesday, falling to $2.1350. It was unchanged Thursday, 97.50 cents above a year ago.

Dry whey dropped 5.25 cents Wednesday, dipping to 84.25 cents per pound. It was unchanged Thursday, but still 15.25 cents above a year ago. It closed Friday at a new record high 89.50 cents per pound.

The USDA’s Livestock, Dairy, and Poultry Outlook stated that the “Restaurant Performance Index published by the National Restaurant Association showed restaurant performance improved from May through August compared with the same period in 2025. The U.S. Department of Commerce, Bureau of the Census, says food service sales have grown faster than grocery store sales, which may help explain some of the restaurant expansion. Seasonally adjusted food service sales increased 4.1 percent from January through August 2026 compared with the same period in 2025, while grocery store sales rose 0.9 percent. Year-to-date growth in the production of yogurt, cottage cheese and ice cream also suggests stronger consumer demand for these dairy products,” according to the Outlook.

There was more encouraging food for thought on dairy products in a recent study. The Oct. 19 Daily Dairy Report stated, “Studies the past decade have shown that consuming full-fat dairy products does not increase one’s risk of heart disease or stroke, but now a new study shows that consuming the natural trans fats found in dairy products also is not associated with an increased risk of heart disease, stroke, cardiovascular death, or type 2 diabetes.

“The findings challenge the assumption that industrial trans-fats and natural trans-fats affect health in the same way,” the DDR stated, and was published in Nutrition Research.

USDA’s latest weekly slaughter data showed 53,600 dairy cows sent to slaughter the week ending Oct. 3, up 1,500 or 2.9 percent from a year ago. Year-to-date, 2,078,400 cows had been culled, up 80,100 or 4.0 percent from a year ago.

Powder continues to add strength to the Global Dairy Trade. Tuesday’s weighted average was up 2.5 percent, following a 1.2 percent rise Oct. 6. Volume climbed to 92.8 million pounds, up from 91.9 million on Oct. 6. The average metric ton price hit $4,021 US, up from $3,928.

Buttermilk powder led the gains, up 8.4 percent, following a 0.7 percent gain last time. Whole milk powder was up 4.4 percent, after gaining 1.2 percent, and skim milk powder was up 3.4 percent, following a 4.3 percent rise.