Dairy Industry News Roundup: Week of October 10 - 16, 2026
U.S. dairy commodity markets turned sharply higher to close out the week of October 10-16, 2026, with CME cheddar blocks surging from $1.39/lb on Monday to $1.6525/lb by Thursday, a gain of more than 26 cents in four sessions, even as NDM retreated from $2.27/lb to $2.15/lb and butter recovered from a weekly low of $1.
# Dairy Industry News Roundup: Week of October 10 - 16, 2026
U.S. dairy commodity markets turned sharply higher to close out the week of October 10-16, 2026, with CME cheddar blocks surging from $1.39/lb on Monday to $1.6525/lb by Thursday, a gain of more than 26 cents in four sessions, even as NDM retreated from $2.27/lb to $2.15/lb and butter recovered from a weekly low of $1.27/lb to finish near $1.345/lb. The October WASDE (WASDE-676, released October 9) trimmed 2026 U.S. milk production to 236.9 billion pounds on lower cow numbers and per-cow output. USDA APHIS confirmed HPAI H5N1 in two Washington State dairy herds on October 8, the first-ever cattle detections in that state. And GDT Event 413 (October 6) posted a 1.2-percent headline gain, with SMP hitting its highest price since June 2022, while butter and cheese fell on the global platform.
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## 1. This Week From Therio
The team is heads-down building this week. If you missed our recent long-form pieces from co-founder Greg Cochara, both are worth catching up on:
- [Herdscripting 101: The Hidden Infrastructure Behind Every Dairy Treatment](/news/herdscripting-101)
- [Interstate Movement of Dairy Cattle: The Compliance Maze Nobody Talks About](/news/interstate-movement-101)
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## Industry News
## 2. CME Spot Markets: Cheese Rockets, Butter Recovers, NDM Retreats
The most dramatic story of the week played out in the CME cheese pit, where 40-pound cheddar blocks posted one of their sharpest four-session rallies of 2026. Blocks opened Monday at $1.39/lb and closed Thursday at $1.6525/lb, for a current weekly average of $1.5038/lb against a prior-week average of $1.3480/lb, with 17 trades printed on the week through Thursday's close. Thursday's session alone saw barrels add $0.1175 to close at $1.5700/lb, while 40-pound blocks jumped $0.1225 to $1.6525/lb.
The block-barrel spread, which had been inverted for much of September, re-normalized sharply this week. Wednesday's CME session on October 14 produced a split outcome, with 40-pound blocks gaining $0.0875 to $1.5300/lb while barrels were unchanged at $1.4525/lb, according to USDA AMS Dairy Market News Report 42. The acceleration Thursday brought blocks nearly $0.13 above barrels, a spread last seen in early summer.
The weekly NDPSR from USDA confirmed the softer prior-week baseline from which this rally launched. The National Dairy Products Sales Report for the week ending October 10, 2026, showed butter and cheddar block prices declining, while dry whey and nonfat dry milk posted gains, based on mandatory manufacturer reporting. Butter averaged $1.36/lb for the reporting period, down 1.0 cent week over week, while cheddar 40-pound blocks averaged $1.43/lb, down 2.7 cents.
| CME Spot Product | Mon 10/13 | Tue 10/14 | Wed 10/14 | Thu 10/15 | Wk Avg | Prior Wk Avg |
|---|---|---|---|---|---|---|
| Cheddar Block ($/lb) | 1.3900 | 1.4425 | 1.5300 | 1.6525 | 1.5038 | 1.3480 |
| Cheddar Barrel ($/lb) | 1.4525 | 1.4525 | 1.4525 | 1.5700 | 1.4819 | 1.4525 |
| Butter Grade AA ($/lb) | 1.2700 | 1.2700 | 1.3050 | 1.3450 | 1.2975 | 1.2880 |
| NDM Grade A ($/lb) | 2.2700 | 2.2600 | 2.2100 | 2.1500 | 2.2225 | 2.2500 |
CME futures tracked the spot rally with measured optimism: the October Class III futures settled at $15.17/cwt by Thursday, up from Monday's $14.96/cwt opening. October Class IV held near $20.42/cwt. October cheese futures closed at $1.4430/lb Thursday, and October NDM futures settled at $2.00/lb.
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## 3. October WASDE-676: Milk Production Trimmed, Class III Outlook Subdued
WASDE-676, approved by the World Agricultural Outlook Board on October 9, 2026, is the USDA's definitive monthly supply-and-demand update for U.S. and global dairy. The headline dairy number was a modest but meaningful downward revision to 2026 output. USDA's October WASDE decreased the 2026 milk production forecast slightly to 236.9 billion pounds, citing lower cow inventories and reduced milk output per cow.
The production downgrade was not large enough by itself to move Class III prices materially higher in futures. With cheddar blocks spending most of September below $1.40/lb, the weak cheese market had dragged Class III values downward, with the October contract having settled as low as $14.96/cwt, well below producer breakevens. The late-week CME cheese surge provided a more direct catalyst for futures than the WASDE adjustment.
For October 2026 Federal Milk Marketing Order purposes, the Base Class I Price is $18.88/cwt, which includes an Advanced Class IV Skim Milk Pricing Factor of $14.12/cwt, an Advanced Butterfat Pricing Factor of $1.5024/lb, and a Class II Skim Milk Price of $14.82/cwt. The two-week product price averages used in FMMO formulas reflected the lower cheese environment that prevailed heading into October: cheese averaged $1.5598/lb, butter $1.4678/lb, NDM $1.7731/lb, and dry whey $0.6657/lb.
| FMMO Pricing Factor | October 2026 Value |
|---|---|
| Base Class I Price | $18.88/cwt |
| Advanced Class IV Skim Milk Pricing Factor | $14.12/cwt |
| Advanced Class III Skim Milk Pricing Factor | $11.18/cwt |
| Advanced Butterfat Pricing Factor | $1.5024/lb |
| Class II Skim Milk Price | $14.82/cwt |
| Class II Nonfat Solids Price | $1.5935/lb |
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## 4. GDT Event 413: SMP Hits 4-Year High, Milkfats Retreat
At GDT Event 413, held on October 6, 2026, the overall price index rose 1.2 percent from the previous event, a move closely watched by dairy sector operators at a time when international prices remain sensitive to shifts in supply and demand. The event saw a total of 41,692 metric tons of dairy commodities traded with an average winning price of $3,928/t. Of 165 registered bidders, 124 emerged as winning bidders across 18 rounds lasting nearly three hours.
The most significant development globally was the SMP price. At GDT Event 413, SMP rose 4.3 percent to $3,847/t, the highest level since June 2022. Over the past six auctions, SMP prices have climbed 22.5 percent (approximately $700/t). For the third consecutive auction, SMP traded above whole milk powder, with the price gap between the two products reaching 6.7 percent. That inversion of traditional fat-versus-protein premiums underscores the structural demand shift toward protein globally.
Most other products declined. Lactose recorded the steepest drop at 6.9 percent to $1,677/t. Mozzarella lost 3.9 percent to $3,833/t, and cheddar declined 3.7 percent to $3,925/t. Anhydrous milkfat fell 1.1 percent to $5,683/t, while butter slipped 0.3 percent to $4,740/t.
| GDT Product | Event 413 Price ($/t) | Change vs. Event 412 |
|---|---|---|
| Skim Milk Powder | $3,847 | +4.3% |
| Whole Milk Powder | $3,605 | +1.2% |
| Buttermilk Powder | $4,123 | +0.7% |
| Cheddar | $3,925 | -3.7% |
| Mozzarella | $3,833 | -3.9% |
| Butter | $4,740 | -0.3% |
| Anhydrous Milkfat | $5,683 | -1.1% |
| Lactose | $1,677 | -6.9% |
| **Overall Index (Avg)** | **$3,928** | **+1.2%** |
The GDT price index has now increased in five of the last six semi-monthly auctions. The next GDT event is scheduled for October 20.
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## 5. HPAI H5N1 in Washington State: Two Herds Confirmed, NMTS Under Scrutiny
On October 8, 2026, USDA APHIS National Veterinary Services Laboratories (NVSL) confirmed via PCR detection HPAI H5 clade 2.3.4.4b in two dairy cattle herds in Washington State. These are the first confirmed cases of HPAI in livestock in Washington. While dairy cattle in a total of 19 states have been infected since the start of the outbreak in March 2024, APHIS noted it has seen cases in only a small number of states in 2026.
The detections carry particular significance because of how they were identified. The affected herds were tested after exhibiting clinical signs consistent with avian influenza. Prior to this detection, the herds had consistently tested negative through routine surveillance conducted under the National Milk Testing Strategy (NMTS) program. That means routine NMTS bulk-tank surveillance did not flag the herds before clinical symptoms appeared, raising questions about NMTS sensitivity in detecting subclinical infections in the Pacific Northwest.
APHIS is working closely with the Washington Department of Agriculture to conduct additional on-farm investigations, diagnostic testing, and epidemiological data collection to better understand the detection and prevent further disease spread. The agency emphasized that the detection does not pose a risk to consumer health or affect the safety of the commercial milk supply.
Since April 29, 2024, a federal order has been in effect requiring testing of lactating dairy cattle for H5N1 prior to interstate movement and reporting of positive nucleic acid detection and serology results to APHIS. The Washington State detections are likely to renew debate over whether NMTS Stage criteria should be tightened for Pacific flyway states entering fall waterfowl migration season.
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## 6. NDM and Dry Whey: Protein Markets Diverge from Milkfats
The domestic dry products complex painted a dramatically different picture from cheese this week. NDM retreated off multi-year highs during the first four sessions, with CME spot Grade A NDM declining from $2.27/lb Monday to $2.15/lb by Thursday's close, a pullback of 6.0 cents. Even so, the weekly average of $2.2225/lb remained historically elevated.
In the prior week, CME spot dry whey gained 2 cents to reach 82.5 cents/lb, a fresh 4.5-year high, while spot NDM climbed to $2.22/lb, only 7.5 cents below an all-time high reached in spring 2026. Asian buyers are actively importing U.S. whey powder, supporting prices despite robust production.
For NDM, both domestic and international demand are strong while production remains restrained. Other dairy processors are absorbing much of the milk supply, spot milk prices are rising, and dryers are running light in the Southwest.
Industry contacts indicate that high-heat NDM production remains limited, inventories are staying very tight, and spot loads are difficult to source. That supply tightness has been the dominant feature keeping NDM well above the Class IV price signal.
| Dry Product | Oct Wk Avg ($/lb) | Prior Wk Avg ($/lb) | YTD 2026 Trend |
|---|---|---|---|
| NDM Grade A | 2.2225 | 2.2500 | Strong uptrend |
| Dry Whey | ~0.8250 | ~0.8050 | 4.5-yr high |
| Dry Buttermilk | n/a | n/a | Steady-to-firm |
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## 7. USDA Dairy Products Report: August Production Numbers in Context
Total cheese output (excluding cottage cheese) for August 2026 totaled 1.25 billion pounds, 1.4 percent above August 2025 but 1.4 percent below July 2026. That year-over-year gain, while modest, confirms that cheese production continues to trend above prior-year levels, keeping inventories ample even as the CME price recovered this week.
Nonfat dry milk production for human food in the most recently reported month totaled 132 million pounds, 9.6 percent above year-ago levels but 19.9 percent below July 2026. The sequential drop from July reflects both seasonal patterns and milk diversion away from dryers toward higher-value uses as spot milk prices have risen.
Dry whey production for human food was 75.1 million pounds, 8.2 percent above year-ago but 7.4 percent below July 2026. Ice cream regular hard production totaled 64.9 million gallons, 2.3 percent below year-ago and 7.8 percent below July 2026.
| Dairy Product Category | Aug 2026 Production | vs. Aug 2025 | vs. Jul 2026 |
|---|---|---|---|
| Total Cheese (excl. cottage) | 1.25 billion lbs | +1.4% | -1.4% |
| NDM (human food) | 132 million lbs | +9.6% | -19.9% |
| Dry Whey (human food) | 75.1 million lbs | +8.2% | -7.4% |
| Ice Cream (hard, regular) | 64.9 million gallons | -2.3% | -7.8% |
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## 8. FMMO Class I Prices and October Advance Pricing: Butterfat Factor at $1.5024
The base Class I price for October 2026 is $18.88/cwt, an increase of $1.84/cwt compared to September 2026. That is a meaningful jump for fluid milk handlers and is driven by the elevated butterfat pricing factor, which at $1.5024/lb reflects the butter market's strong summer performance before the September-October pullback.
The Class I increase of $1.84/cwt month-over-month is one of the larger single-month moves of 2026 and comes at a time when fluid milk consumption trends are mixed. For October 2026, the advanced Class IV skim milk pricing factor is $14.12/cwt, the Class II skim milk price is $14.82/cwt, and the Class II nonfat solids price is $1.5935/lb.
The Class I versus Class III spread this month is notably wide at approximately $3.71/cwt ($18.88 minus the ~$15.17 CME Class III October future), a signal that fluid processors are paying a significant premium over the manufacturing milk price. This spread could incentivize some milk movement toward manufacturing classes if it persists into November.
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## 9. Global Supply Context: New Zealand Season Opens, China Volumes Soften
Global milk production continues to grow, while resilient protein demand and uncertainty around future supply are supporting prices. New Zealand's strong start to the 2026/2027 season is tempered by El Nino-related weather risks that could curb output. Production across major exporters remains positive, except in China, where volumes fell as herd rationalization continued.
Global trade signals are mixed, with strong exports but weaker Chinese imports. GDT results show firm protein prices and pressured milkfats. Supply risks and shifting demand leave the global outlook finely balanced.
New Zealand export data continues to draw attention. SMP exports from New Zealand were stronger in August 2026, up 47 percent year-over-year and 8 percent year-to-date. There was a 68 percent volume increase in shipments to Asia excluding China, and a 171 percent growth in Middle East purchases, while shipments to China fell 28 percent. The reorientation of New Zealand SMP flows from China toward Southeast Asia and the Middle East is one of the more consequential structural shifts in global dairy trade this year.
New Zealand export value data showed that the combined value of milk powder, butter, and cheese exports in August 2026 totaled $1.2 billion, an increase of 7.6 percent compared to August 2025.
| NZ Export Category | Aug 2026 Value | YoY Change |
|---|---|---|
| Milk Powder + Butter + Cheese (combined) | $1.2 billion | +7.6% |
| SMP volume to Asia ex-China | N/A | +68% |
| SMP volume to Middle East | N/A | +171% |
| SMP volume to China | N/A | -28% |
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## 10. Butter Markets: Inventories Heavy, Churns Steady in East and Central
Butter was the week's most range-bound commodity after opening at $1.27/lb Monday and recovering to $1.345/lb by Thursday, a 7.5-cent swing that nonetheless left the weekly average at $1.2975/lb, only marginally above the prior week's $1.2880/lb. The October butter futures contract settled at $1.3398/lb Thursday.
Butter production in the East is steady, with some plants reporting heavy stocks that are allowing maintenance downtime. Cream supplies in the Central region are steady with spot loads available, butter manufacturers report churns are operating steadily, and Class II and Class IV demand remains steady. Inventories of 80-percent butterfat butter remain ample, while inventories of 82-percent butterfat butter are described as tight.
At GDT Event 413, butter prices were mostly lower, with December up just 0.1 percent and remaining offered contracts down by as much as 1.6 percent. No butter was offered for March or April. December and January accounted for 82 percent of total butter sales. Global milkfat inventories remain elevated, bolstered by strong export growth. Dairy fats continued to weaken internationally, with GDT butter prices falling another 0.3 percent to $4,740/t.
| Butter Metric | Value | Context |
|---|---|---|
| CME Spot Mon 10/13 | $1.2700/lb | Weekly low |
| CME Spot Thu 10/15 | $1.3450/lb | +4.0 cents recovery |
| CME Wk Avg (Mon-Thu) | $1.2975/lb | vs. $1.2880 prior week |
| CME Oct Futures (Thu) | $1.3398/lb | Settled |
| GDT Event 413 | $4,740/t | -0.3% vs. Event 412 |
| NDPSR Avg (wk ending 10/10) | $1.3600/lb | -1.0 cent wk/wk |
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## 11. Cheese Market Fundamentals: Mozzarella Demand Drives West, Cheddar Stocks Ample
Even with the dramatic CME block rally this week, underlying physical market fundamentals remained mixed. The overall market tone for cheese was described as mixed through early October. Cooler weather in the East aided steady milk output while retail cheese demand was constant and bulk demand was weak. Some bulk cheese cleared below exchange levels.
Mozzarella demand is strong in the West, where strong whey demand is driving cheese manufacturing. Contracted milk is arriving though Class III spot loads are tighter. Cheese production schedules are stable, inventories accessible, and demand from food service and export channels is unchanged.
Butter conditions show a clear pattern in the West for mozzarella and provolone, where inventories are beginning to tighten. Cheddar inventories remain ample with spot loads readily available.
Cheese was described as inordinately cheap heading into this week, and exporters indicated that additional price declines would not win much new business. Bargain shoppers were already buying U.S. cheese at a record-smashing pace and did not need further supply. The midweek and Thursday rally appears to have been triggered by a combination of short-covering in futures, improved export inquiries, and thin CME participation that amplified price moves.
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## 12. Retail Activity and Seasonal Demand Signals
Conventional and organic dairy ads decreased in week 41. Conventional ads dropped 22 percent, with fluid milk and cheese remaining the dominant conventional items featured in promotions. Organic milk and organic yogurt ranked as the most prominently featured organic dairy items.
The decrease in ad activity during week 41 is consistent with seasonal patterns as retailers transition from summer promotional calendars. Holiday-driven promotional activity for butter, cream, and cheese typically ramps up through October and November, and any acceleration in holiday cheese featuring would add fundamental support to the CME block rally that materialized late in the week.
Some analysts suggested the latest cheese selloff in prior weeks could prompt domestic buyers including restaurants and grocers to feature cheese and boost demand at the margins. The speed of the block recovery in the Oct 13-15 window suggests at least some buyers acted on that price signal.
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## Quick Hits
- At GDT Event 413, prices were higher for SMP, WMP, and buttermilk powder and lower for cheddar, mozzarella, butter, anhydrous milkfat, and lactose, making milk powders the clear winners of the October 6 global auction.
- SMP's $242/t premium over WMP at GDT Event 413 established an unprecedented valuation inversion that overturns historical models pricing full-fat powders higher due to integrated butterfat content.
- CME 2027 Class III futures were offering producers revenue prospects in the high $16s and low $17s per cwt as of mid-October, offering some forward-pricing opportunities above current breakevens.
- California remains classified as an NMTS Affected State at Stage 3, meaning pre-movement testing requirements remain in effect for cattle leaving California under the April 2024 Federal Order.
- The next GDT auction (Event 414) is scheduled for Tuesday, October 20, 2026, which will provide critical confirmation of whether the SMP rally has legs or is running into resistance.
- The NDPSR for the week ending October 3, 2026, reported butter at $1.3694/lb, 40-lb blocks at $1.4579/lb, dry whey at $0.6814/lb, and NDM at $1.9369/lb, marking the recent baseline before the week's sharp moves.
- At GDT Event 413, North Asia led butter purchasing with 73 percent of volume, followed by South/Central America and Europe.
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## What to Watch Next Week
**GDT Event 414 (October 20):** The next GDT auction will test whether SMP can hold its multi-year highs above $3,847/t, and whether the fat complex (butter, AMF) finds a floor after several consecutive declining events.
**CME Spot Continuation:** The 26-cent block rally in four sessions demands verification. If blocks hold above $1.55/lb into next week and volume picks up on the CME, a sustained price recovery is likely. If the rally fades on thin volume, processors and traders will revisit the sub-$1.40 level.
**APHIS/NMTS Washington Investigation:** USDA APHIS has indicated genetic sequencing of the Washington State HPAI detections is underway. Final genotyping results from NVSL will clarify whether this is a D1.1 spillover event (as seen in Nevada earlier in 2026) or a B3.13 lateral movement from another state.
**November WASDE (November 10):** With the October production downgrade fresh, analysts will watch whether USDA makes further cuts to 2026 milk output given tightening milk availability signals in the Central and West regions.
**Class III November Futures:** If the CME block spot market sustains above $1.60/lb in the first days of next week, November Class III futures above $16.00/cwt become realistic, which would be the first time producers see a $16-handle Class III since early Q2 2026.
**Fall Bird Migration and HPAI Risk:** The Washington State detections arrived at the opening of the Pacific Flyway fall migration season. APHIS and state veterinarians in Oregon, Idaho, and Montana should be on elevated alert through mid-November.
**October Cold Storage Report (October 23):** USDA NASS will release the September Cold Storage Report. Given ample cheddar stocks described in multiple regional markets and elevated butter inventories in the East, the storage data will be critical context for evaluating whether this week's CME rally reflects genuine demand or thin-market technical trading.
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*The Therio Dairy Newsdesk publishes weekly U.S. dairy industry analysis every Friday, covering commodity markets, USDA reports, animal health, trade, and cooperative news. Therio is committed to data-forward, independent reporting for producers, processors, cooperatives, and industry professionals. All prices and figures are sourced from USDA AMS, CME Group, APHIS, GDT, and other primary industry sources. Nothing in this report constitutes financial or trading advice.*