It appears the benchmark milk price has peaked for 2024. The September Class III was announced 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 a year ago, but compares to $22.24 in 2022.

Monday’s Class III futures settlements portend an October price at $22.51; November at $21.00; and December at $20.44.

The September Class IV price is $22.29, up 71 cents from August, $3.20 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.

Vats, churns ran strong

August milk production was off just 0.1% from a year ago but components were up again and the August Dairy Products report shows the results.

Total cheese production climbed to 1.198 billion pounds, up 0.5% from July and up 1.7% from August 2023. Year to date output amounted to 9.5 billion pounds, up 0.6% from 2023.

Italian cheese output was up 0.6% from July and 3.1% above a year ago.

American output was up 1.8% from July but 0.3% below a year ago.

Mozzarella was up 4.7% from a year ago.

Cheddar output jumped to 322 million pounds, up 10.4 million pounds or 3.3% from July’s output, which was revised 2.7 million pounds lower. It was down 3.4 million pounds or 1.0%, from a year ago.

YTD Cheddar stood at 2.6 billion pounds, down 7.0% from a year ago.

Butter production slipped to 159.0 million pounds, down 5 million pounds or 3.0% from July output, which was revised up 2.3 million pounds, but was up an impressive 20.1 million pounds or 14.5% from a year ago.

YTD butter was at 1.5 billion pounds, up 5.3% from 2023.

Yogurt production was up 7.7% from a year ago and hard ice cream was up 5.9%.

Dry whey output slipped to 65.5 million pounds, down 2.2 million pounds or 3.2% from July, and down 18.1 million or 21.6% from a year ago.

Stocks fell up to 59.2 million pounds, down 4.5 million or 7.2% from July, and down 28.6 million or 32.6% from a year ago.

Nonfat dry milk production fell to 114.6 million pounds, down 6.4 million pounds or 5.3% from July, but up 2.5 million or 2.2% from a year ago.

Stocks fell to 260.7 million pounds, down 9.1 million, or 3.4% from July, and down 1 million pounds or 0.4% from 2023.

Skim milk powder production slipped to 50.3 million pounds, down 1.3 million pounds or 2.4% from July, and down 21 million pounds or 29.4% from a year ago.

Cheese falls below $2

CME cheese prices continued their descent last week in spite of news that bird flu has spread in California, now confirmed in 53 dairies as of Oct. 2.

The Cheddar blocks closed Friday at $1.9475 per pound, down 16.25 cents on the week, down 26.75 cents from their Sept. 3 print, but still 24.50 cents above a year ago.

The barrels fell to $2.1450 per pound last Tuesday, regained 0.75 cents Wednesday, but closed Friday at $1.9550, down 34.25 cents on the week, down 30.50 cents on the month, but 37.75 cents above a year ago and 0.75 cents above the blocks.

Sales totaled 12 loads of block on the week and 34 for the month of September, down from 61 in August. There were 4 trades on barrel for the week and 21 for the month, down from 23 in August.

The blocks were unchanged Monday but lost 2 cents Tuesday, slipping to $1.9275 on 2 trades, lowest CME price since Aug. 6.

The barrels were offered 2.25 cents lower Monday, falling below the blocks for the first time since Aug. 7. They dropped another 5.25 cents Tuesday on 3 sales, dipping to $1.88, lowest since July 15 and 4.75 cents below the blocks.

Cheesemaker contacts tell Dairy Market News that demand has stalled somewhat.

Others are preparing for a busy holiday retail demand. Spot milk prices mid-week were above-Class levels, primarily due to plants coming back online after recent downtime.

Class III milk demand from cheese makers is steady in the West.

Bottling continues to tug on milk supplies and some processors indicate that milk is tighter than a year ago but can be obtained.

Cheese output is steady. Seasonally tighter milk volumes and a strong mozzarella market have contributed to tighter barrel stocks, says DMN. Demand is steady from domestic and international buyers.

Butter started last week jumping 7.25 cents, with 16 loads traded, but headed lower from there, falling to $2.68 per pound Wednesday, but closed Friday at $2.6875, down 4.50 cents on the week, 46.50 cents lower on the month, and 81.50 cents below a year ago. There were 59 sales on the week and 102 for the month, down from 223 in August.

Monday’s butter was up 2.50 cents on 6 trades but gave back 3.50 cents Tuesday on 6 trades, falling to $2.6775, lowest since Jan. 24.

Churning in the Central region is busy as cream availability is at unprecedented levels.

Multiples below 1.20 were reported and butter makers say they are getting offers from the West and, atypically, even from East region sources as Hurricane Helene’s effects were backing up cream moving to normal destinations in the East. Butter demand is steady to quiet, says DMN.

Wester butter manufacturers note retail production is strong or steady and bulk production is strong to lighter. Stocks are being built to cover upcoming churn maintenance as well as anticipated fourth quarter demand. Cream is widely available.

Domestic butter demand is steady to lighter however 2025 bookings are picking up.

Export demand is stronger as U.S. prices become more competitive, according to DMN.

Grade A nonfat dry milk finished Friday at $1.3525 per pound, down a half-cent, up a penny from Sept. 3, and 17.25 cents above a year ago. Sales totaled 18 for the week and 118 for the month, up from 113 in August.

Traders took the powder up a quarter-cent on 3 trades Monday and it was unchanged Tuesday, holding at $1.3550.

Dry whey saw its Friday close at 60.50 cents per pound, 0.75 cents higher on the week, up 3.50 cents on the month, and 30.75 cents above a year ago. There were 12 sales on the week and 38 for the month, up from 26 in August.

The whey was unchanged Monday but slipped a half-cent lower Tuesday on a trade, to 60 cents per pound.

Upgrade needed

The dairy industry has long used USDA’s monthly milk production data for tracking milk supplies and projecting dairy product output. Falling milk production typically signaled a decline in fluid supplies and components. But, a report from CoBank titled “Why Milk Components Matter More Than Milk Production” challenges the norm.

The report says “Decoupling 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% or more of U.S. milk goes into manufactured products like cheese and butter and 90% of dairy farmers are paid on multiple component pricing.

“It’s the components that matter and components matter to processors, so this is a win-win situation,” he said.

The report suggests the 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 happen, but “the industry needs to talk about how we get there.”

Lower Pulse

Tuesday’s Global Dairy Trade Pulse saw 4.9 million pounds of product sold, up from 4.8 million pounds in the last Pulse. The prices of both skim and whole milk powder were lower.