U.S. butter stocks fell seasonally in September but remained above those a year ago. The USDA’s latest Cold Storage report shows the Sept. 30 butter inventory at 295.7 million pounds, down 15.7 million pounds or 5.0 percent from August, but up 41.8 million or 16.5 percent from September 2025. The August total was revised up 4.3 million pounds.

American type cheese stocks fell to 792.2 million pounds, down 14.5 million or 1.8 percent from the August level, which was revised down 8.8 million pounds, and were down 12.6 million or 1.6 percent from a year ago.

The “other” cheese category saw inventory climb to 613.5 million pounds, up 1.9 million or 0.3 percent from August’s mark which was revised up 7.2 million pounds, and was up 43.8 million pounds or 7.7 percent from a year ago.

Cheese stocks in September totaled 1.428 billion pounds, down 13.6 million or 0.9 percent from August, but up 32.9 million or 2.4 percent from a year ago.

Analysts viewed the report as neutral to the market. The Oct. 23 Daily Dairy Report stated, “While there’s plenty of cheese stashed in cold storage warehouses, much of it is aged. Supplies of 4- to 30-day-old Cheddar suitable for delivery at the CME spot market remain tight, and that has spurred the recent spike in spot cheese values.”

Meanwhile, August fluid milk sales mirrored those of a year ago, according to the USDA’s latest data. Packaged sales totaled 3.5 billion pounds, unchanged from August 2025, and follows a 0.2 percent rise in July.

Conventional product sales hit 3.2 billion pounds, off 0.1 percent from a year ago. Organic sales, at 242 million, were up 2.4 percent from a year ago, and represented a typical 6.9 percent of total milk sales in the month.

Whole milk sales totaled 1.32 billion pounds, up 4.5 percent from a year ago, and up 3.6 percent for the eight-month period. Whole milk represented 37.9 percent of total sales for the month.

Skim milk sales, at 127 million pounds, were down 26.1 percent from a year ago, and down 15.0 percent year to date.

Packaged fluid sales, January to August, totaled just under 28 billion pounds, up 0.1 percent from 2025. Conventional product sales totaled 26.0 billion pounds, up 0.1 percent from a year ago. Organic products, at just under 2 billion pounds, were off 0.3 percent, and represented 7.1 percent of total milk sales for the year so far.

The figures represent consumption in Federal market orders which account for about 92 percent of total fluid sales in the U.S. About 7.5 percent of U.S. fluid sales are consumed in schools.

CME block Cheddar cheese climbed to $1.7450 per pound Wednesday, highest since Oct. 31, 2025. It was trading Thursday morning at $1.7350 however, 3.25 cents below a year ago. It closed Friday at $1.7350. The barrels reached $1.7250 Wednesday, highest since Nov. 3, 2025, and were holding there Thursday, 8 cents below a year ago. They closed Friday at $1.72.

Central Region milk supplies are steady to increasing, according to Dairy Market News. Seasonal weather was having a positive impact on cow comfort. Milk components are increasing, providing better milk solids to cheese manufacturers. Spot milk was more available this week, but Class I and IV facilities continue to take large amounts. Spot prices at mid-week were flat-Class to $3-over. Cheese manufacturers are operating busy schedules, particularly for barrels and curds. Some contacts expect a potential decrease in production as the holidays approach. Spot load purchases of cheese are strong, and contacts anticipate this trend will continue in the coming weeks. Retail demand is firm, while food service demand is steady, according to DMN.

Milk supplies are balanced and cream availability is mixed across the West. Cheese manufacturers report steady demand for Class III milk. A greater share of production is directed toward cream cheese to meet seasonal fall demand. Cheese production remains steady, says DMN, and plants are operating at strong capacity. However, some reported unplanned downtime which temporarily increased milk availability in parts of the region. A health and safety recall was affecting select products from an artisanal cheese manufacturer in the West. Domestic retail demand was stable to slightly improved from the previous week.

Cheese remains the leading dairy feature in grocery store advertising, both nationally and across the West, says DMN. The 6-8-ounce block category remains the most advertised cheese format, while promotions for 6-8-ounce shredded cheese have increased sharply. Advertisements in the northwest for 6-8-ounce block cheese were more than double those in the Southwest compared to the previous week. Food service demand remains soft, while demand from international buyers is moderate to strong. Spot cheese prices rebounded from recent lows, but contacts say the recovery was partly tied to a temporary shortage of exchange-eligible young Cheddar, according to DMN.

After closing Friday at $1.34 per pound, CME butter dropped to $1.2850 Wednesday, lowest price since Feb. 10, 2021. It rallied Thursday, hitting $1.32, but 29 cents below a year ago.

Central region Class II and III production facilities continue to demand larger volumes of cream, says DMN, keeping multiples elevated. 

Manufacturers indicate production is increasing to meet seasonal demand. Spot sales of bulk butter are steady, for both 80 and 82 percent butterfat butter. Cold storage volumes are slowly decreasing and overall market tone is steady to strong, says DMN.

Cream demand in the West has increased from Class II users though churn schedules remain full. Cream availability varies across the region, with tighter supplies reported in Arizona and parts of the Southwest, improved availability in California, and more readily available in the Mountain States. Churns are operating at full capacity. Export demand remains strong, though some contacts describe buyers as price sensitive. Domestic butter demand continues to improve, supported by firmer retail and food service sales. Contacts report strong butter movement during the middle of the month, although purchasing sentiment remains cautious. This aligns with the latest Cold Storage report which showed butter inventories declining 9 percent from the beginning of the month. Loads of 80 percent butter remain available, according to DMN.

Grade A nonfat dry milk closed Friday at $2.0950 per pound and continued its fall this week, dipping to $2.04 Wednesday, lowest since September 15. It regained 4.75 cents Thursday, clawing back to $2.0875, 95.50 cents above a year ago.

The Oct. 28 Daily Dairy Report says, “U.S. milk powder production has been falling the last five years as U.S. manufacturers route skim solids toward different uses. This dynamic accelerated this year as insatiable protein demand has pulled more skim solids into other uses, such as ultra-filtered milk, yogurt, and cottage cheese. While production has been under pressure, domestic demand for nonfat dry milk has been remarkably robust.”

In other news of interest, the Federal Reserve voted 10 to 2 this week to leave interest rates unchanged. Class III milk futures prices have shown some improvement due to rising cheese and whey values, but finances are stretched on the farm, particularly for diesel. Wednesday’s Class III futures settlements had the October price at $15.23 per hundredweight; November, $18.31; December, $16.80; January, $16.59; February, $16.94; and March at $16.91.