Class 3 Milk Climbs from August, Down from 2024
Published: Friday, October 10, 2025
The Agriculture Department 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. Last Friday morning, Class III futures portend an October price of $17.19; November, $17.07; December, $17.15; January 2026, $17.01; and February was at $16.98 per hundredweight.
The 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 average now stands at $18.53, down from $20.69 a year ago, and compares to $18.65 in 2023.
Meanwhile, the government began a partial shutdown last 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.
Many USDA generated reports that the dairy industry relies on will cease. The Oct. 1 Daily Dairy Report said, "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 was 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%, from July, and down 18.5 million, or 5.7%, from August 2024.
American-type cheese stocks grew to 818.2 million pounds, up 4.7 million, or .6%, from the July level, and up 24.6 million, or 3.1%, 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%, from July, but was up 649,000 pounds, or .1%, 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 .8%, from July, but was up 23.4 million, or 1.7%, from a year ago. The July total was revised up 12 million pounds. Total stocks were above the prior year for the second time in 17 months.
Cheddar block closed last Friday at $1.79 per pound, up 16.50 cents on the week, highest since Aug. 26, but 15.75 cents below a year ago when both the block and barrel prices plunged 34.25 cents to $1.9475 and $1.9550, respectively.
The barrels finished last Friday at $1.77, 14.75 cents higher on the week, but 18.50 cents below a year ago. Thirty-two loads of block traded hands on the week and 111 for the month of September, up from 74 in August. Barrel sales totaled two for the week and eight for the month, down from 12 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 is 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 climbed to $1.76 per pound last Monday, dipped to $1.71 last Tuesday, but closed last Friday at $1.75, up 3 cents on the week but 93.75 cents below a year ago. There were 58 loads that found new homes on the week and 185 for the month of 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 .85 last 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% butterfat butter is strong and contacts say inventories are tight.
Cream is readily available in the West and more affordable with below flat market multiples reported. Butter output was steady to strong with plenty of cream to churn. Retail sales are more robust than food service sales. Salted and unsalted inventories are meeting demand. Domestic demand is mixed and exports are strong, according to 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 ($1.76) 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 closed at $1.16 per pound, a half-cent higher, but 19.25 cents below a year ago. Sales totaled 27 loads last week and 117 for September, up from 89 in August, and the highest monthly total since October 2024.
Dry whey finished at 63 cents per pound, 1.75 cents lower, but 2.50 cents above a year ago on one sale this week and 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 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.
When asked if supply or demand was driving the market, he said, "It toggles back and forth, or that's what it feels like this year. If we focus on supply we tend to go down. Demand had cooled some and we lost some export sales on cheese," he said, but "Demand is the ultimate finder of price as we go forward, after having spent several weeks in the low $1.60s and now we're back in the $1.70s. He expects demand over the next several weeks will carry the weight for the market as we gear up for the holidays," he concluded.
One of the dairy farm financial indicators looked a little brighter in August as feed prices slipped for the third month in a row, the All-Milk Price inched a little higher, and beef prices continued to rise. The USDA's latest Ag Prices report showed the August feed price ratio at 2.51, up from 2.36 in July, but still below the 2.79 in August 2024. The index is based on the current milk price in relationship to feed prices for a ration consisting of 51% corn, 8% soybeans and 41% alfalfa hay. One pound of milk would purchase 2.51 pounds of dairy feed of that blend.
The All-Milk Price averaged $20.90 per hundredweight with a 4.16% butterfat test, up 10 cents from July, (first increase since May) which had a 4.13% test, and compares to $23.60 in August 2024, with a 4.10% test.
The national corn price averaged $3.96 per bushel, down 33 cents from July, following an 18 cent drop the month before, but is still 12 cents above a year ago. Soybeans averaged $10 per bushel, down 20 cents from July, and 30 cents per bushel below a year ago. Alfalfa hay averaged $166 per ton, down $7 from June, and $9 below a year ago.
Looking at the cow side of the ledger, the August average cull price for beef and dairy combined hit $162 per hundredweight, up $5 from July, after jumping $7 the previous month, $20 above August 2024, and $90.40 above the 2011 base average.
"Milk production margins increased for the second month in the past three and remained at historically high levels with a 57 cents per hundredweight gain from July," said dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo. "Income over feed costs in August were above the $8 per hundredweight level needed for steady to higher milk production for the 22nd month in a row."
"Input prices were lower in August with one of the three input commodities inside of the top 10 for August all-time. Feed costs were the 11th highest ever for the month of August and decreased 47 cents per hundredweight from July, while reaching a level not seen since November 2020's $8.19. The August All-Milk price stayed in the top 10 for the month, at the sixth highest ever recorded for the month."
Milk income over feed costs for 2025 (using Sept. 30 CME settling futures prices for Class III milk, corn and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $12.58 per hundredweight, a loss of 29 cents per hundredweight versus last month's estimate. Income over feed would be above the level needed to maintain or grow milk production, and down 81 cents per hundredweight from 2024's level, he said.
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