There were no bulls to be found on LaSalle Street this week. The bears roamed freely, showing no fear of an overcorrection even as parts of the dairy complex scored multi-year lows. Red ink poured into the cheese and milk powder trade and deluged the butter market. CME spot butter plummeted to $1.86 per pound, down 16.25ȼ in just five trading sessions. Spot butter is down more than 40% from the mid-summer high, languishing at its lowest level since October 2021, nearly four y

On September 17, 2025, the State Water Resources Control Board will consider placing the Kern Subbasin on Probation. Last February, the State Board considered this issue and decided there was enough progress being made to give the Kern GSAs a little more time. They set a date of September 17 to reconsider the issue.

The selloff continued on LaSalle Street this week. Robust production of high-component milk is keeping churns and vats full and weighing on dairy product prices. After the close today, USDA detailed how processors are divvying up the growing milk supply with its monthly update to the Dairy Products report.

The butter market melted down. CME spot butter plummeted 19ȼ this week to $2.045 per pound, its lowest price in nearly four years. Last week’s Cold Storage report showed that inventories were not burdensome as of July 31. But more recent commentary from USDA’s Dairy Market News suggests that stocks are starting to pile up. U.S. butter is the cheapest in the world – by far – and exports remain strong. But America’s dairy cows are simply cranking out too much high-fat milk, esp

The dairy markets have lost that summer sizzle. Prices plummeted this week on the heels of a Milk Production report that confirmed heady growth. Unseasonably cool overnight temperatures and another 10,000 cows pushed milk output upward in July. Production totaled 19.57 billion pounds, up 3.5% from July 2024. Once again, components supercharged the growth. The U.S. dairy herd made 4.7% more butterfat, 4.4% more protein, and 3.8% more nonfat solids than it did last July.

The backpacks are ready, the bus schedules are finalized, and milk bottlers are ramping up output. It’s back-to-school season in much of the country. But it’s still hot, and milk output is slipping. USDA’s Dairy Market News says milk is tight in the East. In the Central and West regions, output is declining seasonally, but there is more milk than there was a year ago. Cream production is slipping across the nation, but, as ice cream manufacturers wind down, there is plenty of

For the month of August, there has been a lot going on in California water. My job for Milk Producers Council is to be the dairy industry’s eyes, ears, and advocate on water supply. I participated in a number of meetings this past week and I thought I would share a bit of what I learned. Subsidence has been a problem in California ever since we began using large capacity wells to do irrigation. The DWR document describes the...

As summer moves into the home stretch, the spot market for milk is tightening up. The typical seasonal decline in milk production has combined with hot and sticky summer weather in some areas to push down on output. At the same time, bottlers are preparing for the start of the school year and have begun to increase their demand, further reducing milk availability for manufacturers. As a result, processors in the Upper Midwest this week paid a...

The dairy markets are showcasing the colorful – and somewhat morbid – Wall Street adage: “Even a dead cat will bounce if it falls from a great height.” This week milk futures managed a modest recovery, briefly interrupting the dramatic downtrend. Most Class III futures contracts added just a few cents, but the September contract rallied 21ȼ to $17.73 per cwt. Most Class IV futures climbed roughly a nickel. The September contract closed at $19.10.

The California Department of Water Resources (DWR) recently released a document on subsidence and how to stop it. When groundwater is pumped, particularly from wells deep underground, the ground above can sink, as the clays between the aquifer and the ground surface compress. This phenomenon of the ground surface sinking is called subsidence. Subsidence has been a problem in California ever since we began using large capacity wells to do irrigation. The DWR document descr

The State Water Resources Control Board has significant control and authority over how water flows through the Sacramento-San Joaquin River Delta. The Delta is essentially the valve through which Northern California surface water passes through on its way to the ocean. A limited amount of that flow is diverted to the aqueducts for use in the Central Valley, Southern California and the Bay Area. For a number of years, the State Water Board has been in the process of updating t

U.S. dairy producers are keeping cows in their barns rather than sending them to the slaughterhouse. Through mid-July, dairy producers culled 1.38 million milk cows. That’s 310,000 fewer than the 2020 through 2023 average, and it marks the lowest mid-July slaughter since 2008, when depressed cull rates fostered rapid – and ultimately unsustainable – expansion. Heifers are still in short supply. This afternoon, USDA estimated there were 3.5 million dairy heifers on July 1, ste

The dairy markets have lost that summer sizzle. It’s still hot in the Northeast and in states along the West Coast. Milk production is much lower than it was during the spring flush, just as it always is in mid-July. Components have dropped. But in the center of the country, cows are enjoying cool nights and recovering from the sweltering conditions that prevailed a couple weeks ago. Milk yields are bouncing back in the Midwest. Cheesemakers in the region found a few loads of

Trade topics continue to dominate the headlines as the 90-day pause on the ‘Liberation Day’ tariffs came and went this week. While the situation remains fluid, the administration appears to have extended the overall reciprocal tariff pause until August 1, while sending a series of letters to specific countries threatening elevated tariff rates. Many of the countries that received tariff letters are key destinations for U.S. dairy exports, casting further doubt over U.S. dairy

Tucked away in the Big Beautiful Bill is a billion dollars of grant money to pay for “construction and associated activities that restore or increase the capacity or use of existing conveyance facilities constructed by the Bureau of Reclamation or for construction and associated activities that increase the capacity of existing Bureau of Reclamation surface water storage facilities. The loss in water was split almost equally between the federal Central Valley Project and the

The heifer shortage and avian influenza reined in U.S. milk output in 2024, fostering lofty milk and dairy product prices in the second half of last year. But after nearly two years of low cull rates and sheer grit, the parlors are full, and so are the milk tanks. In the first 24 weeks of 2025, dairy cow slaughter was 7.7% behind the 2024 pace and 15.6% slower than historic average cull rates. Dairy producers added 122,000 cows over the past 11 months. From coast to coast, b

The invisible hand is solving the heifer shortage. Years of decent profits and the promise of more prosperity on the horizon pushed producers to invest in new barns, forgo some beef calf income in favor of dairy calves, and cull as few cows as possible. Those efforts are adding up. USDA revised its estimate of the April milk cow herd. The agency now shows that dairy p On the supply side, warm weather is tightening cream supplies as components drop seasonally and ice cream

Strong exports have assuaged concerns about rising U.S. cheese and butterfat output. Even after a significant spring and early-summer rally, U.S. cheese and butter remain the cheapest in the world, putting a firm floor under these dairy commodities. Domestic butter demand is holding strong, but Americans are eating a little less cheese than they did last year. On the supply side, warm weather is tightening cream supplies as components drop seasonally and ice cream product

U.S. milk and dairy product output is growing quickly. But formidable exports are keeping a firm floor under the dairy markets. Even after sizable spring rallies, American cheese and butter are the cheapest in the world. Exports of those products are strong and likely to remain so. Daily average U.S. cheese exports surged to an all-time high in April, up 6.7% from already-lofty volumes in April 2024. U.S. exporters sent butter abroad at a good clip, but shipments fell well sh

The cheese markets are searching for the ceiling. CME spot Cheddar blocks rallied 7.75ȼ this week to $1.9475 per pound, and they established a fresh seven-month high. Barrels climbed 1.75ȼ to $1.87. Such lofty values were wholly unexpected earlier in the year, when the trade was focused on the impact of new cheese production. But start-up issues have reduced the volume of fresh cheese that meets CME specifications for delivery to Chicago. USDA’s Dairy Market News reports that