June milk feed price ratio heading up

The “Mielke” Market Weekly

The July Class III benchmark milk price took a tumble, dropping to $17.32 per hundredweight, down $1.50 from June, a whopping $2.47 below July 2024 and the lowest level since April 2024. It put the 7-month average at $18.76, up from $17.33 a year ago and $16.95 in 2023.

Late Friday morning, Class III futures portended an August price at $17.18; September, $17.71; October, $18.10; November, $18.26; and December, $18.15.

The July Class IV price is $18.89, up 59 cents from June but $2.42 below a year ago. Its 7-month average stands at $18.87, down from $20.33 a year ago, and it compares to $18.55 in 2023.

Speaking in the Aug. 4 Dairy Radio Now program, StoneX broker Dave Kurzawski cited the growing milk supply as the dominant factor for the decline. Domestic dairy demand has been basically flat, he said, while exports are good, especially for cheese. Butter has better domestic demand, and nonfat dry milk has been “wonky.”

The good news is that the economy is doing pretty well, he said, and we have trade deals getting done; that could be a buoyant factor going into the bigger demand time period in the fall.

When asked if any of the trade agreements stood out as strong for dairy, he said no. However, as more deals are made, pressure mounts on the other countries to complete one, including China. We’re moving in the right direction, he concluded; perhaps the most important ones for dairy are those with Mexico and Canada.

The Global Dairy Trade held its 85th Pulse auction Tuesday, which saw 3.9 million pounds of product sold, down from 4.1 million on July 22. The price of skim milk powder was down, while whole milk powder was up from July 22.

Meanwhile, the Federal Reserve left interest rates unchanged this week. And, as the president’s Aug. 1 tariff deadline approached, Trump announced a new trade agreement with the European Union. EU goods will face a 15% tariff rate, with some exemptions, and the EU agreed to purchase $750 billion of energy and invest $600 billion more in the U.S.

Officials from the U.S. and China resumed negotiations in Sweden on Monday. An agreement was made with South Korea. Talks with India were not successful. Mexico was given another 90 days to reach an agreement, but Trump threatened a 35% tariff on Canadian imports not covered by the U.S., Mexico, Canada trade agreement because of its recognition of Palestinian statehood.

Back home, June butter stocks remained below those a year ago, while cheese was slightly higher, according to the latest cold storage report. Strong exports and perhaps some good domestic demand kept product out of the cooler.

The June 30 butter inventory slipped to 354.5 million pounds, down 10.2 million pounds or 2.8% from May and down 22.4 million or 5.9% from June 2024. May stocks were revised up 3.1 million pounds.

American-type cheese stocks slipped to 805.1 million pounds, down 2.6 million or 0.3% from the May level, but they were up 3.6 million or 0.4% from a year ago.

The “other” cheese category holdings climbed to 584.1 million pounds, up 5 million pounds or 0.9% from May but down 9.2 million or 1.6% from a year ago. The May total was revised down 3.2 million pounds.

June’s total cheese inventory stood at 1.41 billion pounds, up just 2.6 million pounds or 0.2% from May but down 5.1 million or 0.4% from a year ago. The May total was revised down by 3.1 million pounds. Cheese stocks typically decline from May to June, but they grew this year as increased supply from new plants coming online stayed ahead of demand.

Chicago Mercantile Exchange block Cheddar closed Friday at $1.7050 per pound, up 6.50 cents on the week, the highest since June 30, but 14.50 cents below a year ago. The barrels finished at $1.71, 8.50 cents higher but 22 cents below a year ago. There were 38 sales of block on the week and 130 for the month of July, down from 178 in June. Barrel sales totaled five for the week and 21 for July, down from 33 in June.

Central region milk output is seasonally declining, reports Dairy Market News, but some producers in the Midwest say cool overnight temperatures are keeping milk volumes somewhat steady. Class III prices mid-week ranged $3-under to $1-over. Spot volumes are tightening, although some plants say milk was available due to downtime at nearby facilities. Cheese production is steady to lighter.

Milk output is keeping up with contractual needs in the West, according to cheesemakers, but demand is steady. Domestic demand is lighter. Export demand is steady to stronger, according to DMN.

Butter started the week with a 3.50-cent jump to $2.50 per pound, but the rally was short lived and closed Friday at $2.4450, down 2 cents on the week and 66 cents below a year ago. There were 11 sales for the week and 64 for the month, down from 286 in June.

Milk production and component levels are declining seasonally in the Central region, contributing to lighter cream production. Demand for cream from ice cream makers is declining, leaving a greater volume for steady butter output. Food service sales are down while export demand remains strong, says DMN.

Fat components in milk are decreasing in the West, and milk output is seasonally lower, but contractual cream to butter manufacturers was being filled. Spot loads are tighter, and multiples were rising. In a few cases, churns were quiet for much of the third quarter due to equipment replacement. Others were running heavily but not at capacity; some cite prices for spot cream as the reason. Domestic butter demand is steady to lighter. Exports are steady to strong, according to DMN.

Grade A powder hit $1.2925 per pound Monday but saw its Friday finish at $1.2875, unchanged on the week and 4.75 cents above a year ago, with 13 sales on the week and 90 for the month, up from 32 in June.

StoneX says Mexican buyers have stepped back a bit after some buying in early July. “A stronger U.S. dollar and the potential of a weaker GDT would put short-term pressure on nonfat prices,” StoneX warned.

Dry whey finished the week at 55 cents per pound, up a penny but 6 cents below a year ago, with 10 CME sales reported on the week.

Lower corn and alfalfa prices resulted in the June milk feed price ratio heading back up, ending four months of decline. The ag prices report shows the June ratio at 2.34, up from 2.24 in March, and it compares to 2.36 in June 2024.

The all-milk price averaged $21.30 per cwt. with a 4.19% butterfat test, unchanged from the May price, which had a 4.24% test, and it compares to $22.80 in June 2024 with a 4.10% test.

The national corn price averaged $4.47 per bushel, down 17 cents from May and a penny below a year ago. Soybeans averaged $10.40 per bushel, unchanged from May but $1.40 below a year ago. Alfalfa hay averaged $177 per ton, down $14 from May and $18 below a year ago.

The June average cull price for beef and dairy combined was at $150 per cwt., up $3 from May, $12 above June 2024 and $78.40 above the 2011 base average. Quarterly milk cow replacements averaged $3,010 per head in July, up $140 from April and $650 above July 2024. Cows averaged $2,900 per head in California, up $200 from April and $800 above a year ago. Wisconsin’s average at $3,290 per head was up $160 from April and $640 above July 2024.

Milk production margins moved higher for the second month in a row and remained at historically high levels with a 44-cent per cwt. gain above May, says dairy economist Bill Brooks of Stoneheart Consulting in Dearborn, Missouri. “Income over feed costs in June was above the $8 per cwt. level needed for steady to higher milk production for the 20th month in a row. Input prices were mostly lower in June with one of the three input commodities inside of the top 10 for June all-time.

“Feed costs were the 10th highest ever for the month of June and decreased 44 cents per cwt. from May, The June All-Milk price stayed in the top 10 for the month, at the fourth highest ever for the month.

“Milk income over feed costs for 2025 (using July 31 CME settling futures prices for Class III milk, corn and soybeans, plus the Stoneheart forecast for alfalfa hay) is expected to be $12.99 per cwt., a loss of 13 cents per cwt. versus last month’s estimate. Income over feed in 2025 would be above the level needed to maintain or grow milk production and down 40 cents per cwt. from 2024’s level.”

“Milk income over feed costs for 2026 is expected to be $12.93 per cwt., a loss of 6 cents per cwt. versus 2025. Income over feed costs would be above the level needed to maintain or grow milk production and up 41 cents versus the previous month,” Brooks concluded.

Meanwhile, the July 25 Daily Dairy Report stated, “On July 1, 3.5 million heifers were available for milk-cow replacement, the lowest midyear total since USDA (U.S. Department of Agriculture) began estimating heifer counts in 1989. The agency did not publish its semi-annual Cattle inventory report in 2024 due to budget cuts, so year-over-year comparisons were not unavailable. However, in July 2023, USDA pegged the inventory of dairy heifers weighing 500 pounds or more at 3.65 million head, the lowest count since 2004. In today’s report, USDA revised its July 2023 estimate downward to 3.5 million head. So, while the agency’s revised figures show no change in dairy heifer inventories in the most recent 24 months, USDA’s estimate is much lower than it was two years ago,” according to the DDR.

The USDA’s latest weekly slaughter report showed 51,100 dairy cows were sent to slaughter the week ending July 19, up 1,700 from the previous week but down 1,100 or 2.1% from a year ago. Year to date, 1,428,600 head had been culled, down 105,000 head or 6.8% from a year ago.

The latest crop progress report shows 76% of U.S. corn was silking as of the week ending July 27, up from 56% the previous week, 1% ahead of a year ago and 1% behind the 5-year average. Twenty-six percent was in the dough stage, up from 14% the previous week but 2% behind a year ago. Seventy-three percent was rated good to excellent, down 1% from the previous week but 5% ahead of a year ago.

The report shows 76% of the soybeans were blooming, up from 62% the previous week, 1% ahead of a year ago and even with the 5-year average. Forty-one percent were setting pods, up from 26% the previous week, 1% behind a year ago and 1% behind the average. 70% were rated good to excellent, up from 68% the previous week and 3% ahead of a year ago.

In politics, the National Milk Producers Federation and U.S. Dairy Export Council Executive Vice President for Policy Development and Strategy, Jaime Castaneda, and the senior vice president for global economic affairs, Will Loux, testified Monday before the U.S. International Trade Commission, citing “the need for the government to hold trading partners accountable for policies that disrupt global markets for nonfat milk solids products and harm U.S. dairy producers and exporters. Chief among those concerns were Canadian policies.”

Castaneda and Loux highlighted how trade distorting policies and subsidies from Canada, India, Turkey, the EU and others have driven artificially low-priced exports from those competitors onto global markets, undercutting U.S. producers.

The International Dairy Foods Association’s Becky Rasdall Vargas also testified, emphasizing, “Canada’s supply management system creates a persistent surplus of nonfat milk solids by tying farm-level milk production quotas to domestic butterfat demand. Canada establishes a below-market price for Canadian NFS products to clear the surplus, effectively displacing U.S. exports both in Canada and in third-country markets,” Vargas said.

The IDFA also announced its annual Dairy Forum this week will be held Jan. 25–28, 2026, in Palm Desert, California. More than 1,200 leaders from across the dairy supply chain will meet at the JW Marriott Desert Springs Resort and Spa.

The so-called Dairy Pride Act has been reintroduced in the Senate. The bill seeks to stop plant-based products from using dairy terms and requires the Food and Drug Administration to enforce labeling standards that prevent consumer confusion in the marketplace.

Agriculture Secretary Brooke Rollins announced a reorganization this week of the department she now heads to “refocus its core operations to better align with its founding mission of supporting American farming, ranching, and forestry.”

“Over the last four years, USDA’s workforce grew by 8%, and employees’ salaries increased by 14.5%,” Rollins said, “including hiring thousands of employees with no sustainable way to pay them. This all occurred without any tangible increase in service to USDA’s core constituencies across the agricultural sector. USDA’s footprint in the National Capital Region is underutilized and redundant, plagued by rampant overspending and decades of mismanagement and costly deferred maintenance. President Trump has made it clear government needs to be scrutinized, and after this thorough review of USDA, the results show a bloated, expensive, and unsustainable organization,” Rollins stated.

The Senate Ag Committee, however, said, “Not so fast,” and held a hearing on the matter Wednesday. Deputy Agriculture Secretary Stephen Vaden took questions from committee members from both sides of the aisle. We await the outcome.