Shutdown May Cause Loss of Sept. Milk Records
Published: Friday, October 24, 2025
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 Agriculture Department. Last week there was no fluid milk sales report, no Crop Progress report, no Dairy Supply and Utilization report, no 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.
Meanwhile, 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% 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 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," she wrote.
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.
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% from their peak and more checkpoints have been authorized there.
CME block Cheddar, after dropping 9 cents the previous week, closed mid-October at $1.7750 per pound, up 7.50 cents but still 15 cents below a year ago. The Cheddar barrels closed last Friday at $1.77, 6 cents higher and 24 cents below a year ago. There were 18 sales of block on the week and only one of barrel.
Dairy Market News reports that cheese production was lighter in the Midwest last week as some manufacturers were 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 cheese 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 last 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.
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%, while EEX Mozzarella is down 57 cents per pound, or 26%. 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," said HighGround Dairy.
Cash butter climbed to $1.67 per pound last Wednesday, then fell back to $1.6275 last Thursday, and closed last Friday at $1.5950, down a penny on the week, lowest since Feb. 26, 2021, and $1.0650 below a year ago. There were 30 sales put on the board last week.
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. Mid-week multiples 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% butterfat butter is strong and inventories are tight while 80% butterfat butter remains available, according to DMN.
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