Margins are locked up tight—did you know Midwest IOFC is hovering just above breakeven, with Class III nearly $0.60/cwt squeezed by feed costs?
EXECUTIVE SUMMARY: Hey, here’s what’s really going on—everyone talks about cheese leading the market, but it’s feed costs and weak powder exports that’ll make or break your milk check. Look at today’s numbers: block cheese up $0.02/lb, sure, but butter dropped to $2.32/lb and dry whey sank to just $0.59/lb. IOFC ratios in Wisconsin and California are pinched, with some herds seeing margins slip below $1.50/cwt profit. Globally, the U.S. still undercuts Europe on butter, but powder competition from New Zealand is brutal. That’s why the big co-ops are hedging feed like crazy… and pushing for forward risk programs. If you’re not watching both Class III futures and your soybean meal contract, you could be missing real opportunities for profit. Try this: reset your hedging—lock in a milk floor, book feed when it dips, and don’t sleep on export chatter. That combo could easily put an extra $4,000–$7,000 in your pocket this quarter.
KEY TAKEAWAYS
- Cheese blocks are propping up Class III, but dry whey at $0.59/lb wipes out up to $0.40/cwt from your pay price. Check your monthly USDA checkoff for the hit.
- Soybean meal hit $295.70/ton—a 7% rise over summer—so locking feed early could save you thousands on IOFC alone. Talk to your nutritionist before the next rally.
- Export butter opportunities remain strong, but logistics will decide whether U.S. product actually clears the dock. Watch USDA and trader calls for trends.
- Culling’s picking up across Midwest dairies due to heat and feed pressure; monitoring herd health now means less risk come fall. Review your cow records and adjust if needed.
- Don’t wait for whey or powder prices to rebound—use DRP or puts on Class III while the floor’s holding at $18.86, lock in margin, and keep cash flow steady.
That’s what I’m seeing out here—dairy’s never just the spot cheese price. If you want paychecks that translate to growth, watch those feed numbers and export flows like a hawk. Seriously, try these tweaks. They’re what the progressive outfits are doing… and they’re seeing the difference right in their milk checks.
What’s happening in the CME dairy pit today? If you blinked, you might’ve missed it—cheese blocks put on a small rally ($0.02/lb up), but everything else? Butter nudged lower, NDM keeps feeling soft, and dry whey? It’s almost like nobody showed up to buy. That’s the sort of start that gets barn conversation rolling: “Are the cheese buyers trying to lift this whole market on their own?”
What strikes me about today’s story isn’t just who’s leading, but who’s dragging. Block cheese is standing up—anyone milking for Class III is grateful for it. But whey’s like that last stubborn heifer—won’t budge, and until she does, Class III just can’t run.
Here’s a quick scan of the numbers that hit your milk check:
| Product | Price | Move | Key Driver | Short-Term Outlook | Farm Impact |
| Cheese Block | $1.85/lb | +2.00¢ | Food Service Demand | Slightly Bullish | Shoring up your next Class III check. |
| Cheese Barrel | $1.81/lb | Flat | Retail Packager Demand | Neutral | No change, but block strength helps. |
| Butter | $2.32/lb | -1.25¢ | Export Pricing Gap | Tentative | Softens Class IV—needs global pull. |
| NDM Grade A | $1.265/lb | -0.50¢ | Export Competition | Weak | Squeezes Class IV, flattens margins. |
| Dry Whey | $0.59/lb | -1.50¢ | Oversupply | Heavy | The biggest drag on Class III right now. |
What This Means for Your Milk Check
Class III September futures parked at $18.86/cwt; Class IV, $18.42/cwt. If you’re hedging next month’s milk, the window sits around $18-$19/cwt—solid, not a home run, but block cheese is your best friend. A floor trader mentioned, “Everybody’s selling butter; nobody needs it now.” With nine open offers and zero bids at the close, it’s like waiting for rain when you’ve got hay stacked high. Butter barely moved (just two trades all day), and the rest just marked—to market. Low conviction leads to wide spreads, and that usually means volatility is waiting in the wings if traders wake up.
The Squeeze at Home: Feed Costs & Herd Health
If you’re watching feed costs, there’s good news and bad. December corn trickled down to $4.03/bu (small win), but soybean meal surged to $295.70/ton. IOFC ratios in Wisconsin and upstate New York are not great. We’re seeing a 2.15 ratio; guys feeding fresh cows in California say their basis is even hotter. One Chippewa Falls producer texted, “Block numbers look strong, but feed costs have us on edge.” Midwest cows aren’t showing peak yield, culling’s ticking up, and if prices don’t turn, regional supplies could tighten come September. Northeast producers echo the same sentiment: young cows are keeping up, but older cows are dropping off.
The Global Wild Card: Will Exports Show Up?
Here’s the thing, though—exports are the wild card. U.S. butter is a steal compared to European or New Zealand products. Export brokers expected a flood of outbound loads, but freight and logistics are real headaches, and some are starting to wonder if it’ll get solved this season. Processors in the Southwest are amped for exporting butter if logistics open up—“Asia wants the fat, but we need more trucks than we’ve got,” said one plant manager. NDM and powders? We’re still getting undercut by Europe on SMP, and New Zealand’s pricing is tough. Southeast Asia’s buying, but every contract feels like a knife fight. Mexico’s steady, but picky.
A look at the IOFC numbers for August (see the chart at the end of this article) shows margins in the Midwest remain tight, and with feed options limited and meal basis burning out west, everyone’s feeling the pinch.
Actionable Strategy: Farmer’s Short List
Here’s what I’d do (and what I’m hearing from guys across the belt):
- Lock a floor with DRP or put it in if Class III fits your cost structure; don’t wait for the whey.
- Hedge soybean meal, especially if your ration’s heavy.
- Keep your cash flow plan on a tight leash. Sideways checks for September; don’t overlever if whey and powder keep softening.
- Watch export chatter and FMMO headlines—basis changes next season could change the local payout picture.
Industry Pulse and Final Insights
The FMMO reform discussion is currently trending. Webinar feedback suggests that Southwest and Northeast producers should watch how test formulas play out. Regulatory changes are coming—could be a game changer for your Class III/IV checks if the USDA gets its way.
If there’s one theme, it’s balance—cheese blocks are trying to hold margins, but the rest of the barn’s getting squeezed. Export prospects are real but fragile, and feed is where next month’s check could get eaten up. If you haven’t dialed in a risk plan, don’t wait. And if you want the real scoop, check those IOFC visuals—sometimes the charts say as much as any table.
Stay loose, ask around, and keep sharing what’s happening at your place—the smartest moves come from what we learn off each other’s experience.
Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.
Learn More:
- Unlocking Dairy Profitability: Mastering Margin Management and Risk Mitigation – This article provides a step-by-step guide to the risk management tools mentioned in the report. It details practical strategies for using DRP and hedging to protect your bottom line against the exact market volatility analyzed above.
- Navigating the Tides of the Global Dairy Market: A 2024-2025 Outlook – Go beyond the daily numbers with this strategic outlook on the global dairy market. This piece analyzes the broader economic forces and long-term trends shaping prices, helping you make more informed decisions for future planning and investment.
- The ROBOT REVOLUTION: How Automation is Reshaping the Modern Dairy – Explore how leading dairies are using automation to combat the margin pressure discussed in the report. This article showcases how robotic technology can boost efficiency and lower production costs, offering a proactive strategy to improve profitability.
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