Dairy Industry News Roundup: Week of October 3 - 9, 2026

# Dairy Industry News Roundup: Week of October 3 - 9, 2026 Cheese blocks closed Tuesday at $1.3350 per pound on the CME, capping a week defined by a deepening structural split in U.S. dairy markets: protein-linked products soaring to multi-year highs while butterfat and cheddar continue their prolonged slide. The October 9 WASDE landed Friday with updated price forecasts, USDA APHIS confirmed HPAI H5N1 in two Washington State dairy herds on October 8, and the GDT's Event 413 on October 6 delivered a 1.2 percent index gain driven almost entirely by a 4.3 percent surge in skim milk powder to $3,847 per metric ton. Meanwhile, the October Federal Milk Marketing Order advanced Class I base price jumped $1.84 to $18.88 per hundredweight, and U.S. dairy margins are tightening fast as all-milk prices slide toward the low $19s against sticky feed costs. --- --- ## 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) --- ## Industry News ## 2. CME Spot Markets: The Great Divergence Deepens The week of October 3 to 9 produced some of the starkest intra-category price splits the CME spot dairy pits have seen in years. The dairy markets continue to diverge, with strong demand for proteins lifting powder values. CME spot whey powder had already gained 2 cents to reach 82.5 cents per pound entering the week, a fresh 4.5-year high. Dry whey ticked up further as the week progressed. On Monday, October 5, cash dairy prices were mostly up at the CME. Dry whey rose 1 cent to $0.8350. Forty-pound cheese blocks gained 1 cent to $1.3250. Cheese barrels held at $1.4525. Butter fell 2.5 cents to $1.3150. Nonfat dry milk was unchanged at $2.22. Tuesday saw continued mixed action. Dry whey was unchanged at $0.8350. Forty-pound blocks rose 1 cent to $1.3350, with 8 sales reported. Barrels held at $1.4525. Butter slipped another half-cent to $1.31. Nonfat dry milk jumped 2.75 cents to $2.2475. By Wednesday, butter had dropped further to $1.2900, down 2 cents on the day, while NDM Grade A edged up 0.75 cents to $2.2550 and dry whey gained 1.5 cents to $0.8500 on a single trade. The weekly picture, as compiled through Wednesday's close, makes the divergence unmistakable: | Product | Mon Oct 5 | Tue Oct 6 | Wed Oct 7 | Week-to-Date Avg | Prior Week Avg | |---|---|---|---|---|---| | Butter ($/lb) | 1.3150 | 1.3100 | 1.2900 | 1.3050 | 1.3455 | | NDM Grade A ($/lb) | 2.2200 | 2.2475 | 2.2550 | 2.2408 | 1.9995 | | Dry Whey ($/lb) | 0.8350 | 0.8350 | 0.8500 | 0.8400 | 0.8140 | | Cheddar Blocks ($/lb) | 1.3250 | 1.3350 | n/a | n/a | n/a | | Cheddar Barrels ($/lb) | 1.4525 | 1.4525 | n/a | n/a | n/a | *Source: CME, Daily Dairy Report, Brownfield Ag News* Spot nonfat dry milk climbed to $2.22 entering the week, just 7.5 cents below the all-time high reached earlier in spring 2026. The NDM run is being propelled by a protein demand cycle that is simultaneously lifting dry whey and skipping butter and cheese almost entirely. ## 3. CME Futures: Class III Under Pressure, Class IV Elevated CME futures markets reflected the spot divergence in sharp relief. The weak cheese market dragged Class III values downward, with the October contract settling at $14.96 per cwt., down 27 cents since the prior Friday and well below dairy producers' breakevens. That reading stood in direct contrast to the Class IV complex, which is being underpinned by the NDM rally. Through Wednesday's settlement, the October Class III contract ranged from $15.00 on Monday to $15.06 Tuesday and $15.02 Wednesday. October Class IV settled at $20.35, $20.48, and $20.48 across the same three days. October Cheese futures settled near $1.427 per pound, while October NDM futures rose to $2.02 per pound by Wednesday. October Dry Whey futures held in the $0.730 to $0.733 range. October Butter futures dropped from $1.37 to $1.3343 by Wednesday's close. | Contract | Mon Oct 5 | Tue Oct 6 | Wed Oct 7 | |---|---|---|---| | Class III Oct ($/cwt) | 15.00 | 15.06 | 15.02 | | Class IV Oct ($/cwt) | 20.35 | 20.48 | 20.48 | | Cheese Oct ($/lb) | 1.4240 | 1.4270 | 1.4270 | | NDM Oct ($/lb) | 1.9990 | 2.0025 | 2.0200 | | Dry Whey Oct ($/lb) | 0.7300 | 0.7303 | 0.7330 | | Butter Oct ($/lb) | 1.3700 | 1.3700 | 1.3343 | *Source: CME, Daily Dairy Report* The more than $5.00 per cwt gap between Class III and Class IV October settlements is extraordinary by historical standards and is creating significant income inequality between cheese plants and butter/powder plants. Producers whose milk is priced under Class III formulas are feeling the full weight of cheese's prolonged correction. ## 4. FMMO Advanced Prices: October Class I Jumps $1.84 The USDA Agricultural Marketing Service announced the October 2026 advanced prices, with the Base Class I Price set at $18.88 per hundredweight. Key pricing factors include: Base Skim Milk Price for Class I at $14.12 per hundredweight, the Advanced Class IV Skim Milk Pricing Factor at $14.12, the Advanced Butterfat Pricing Factor at $1.5024 per pound, and the Class II Skim Milk Price at $14.82 per hundredweight. The Base Class I Price increased $1.84 from the previous month. The Base Skim Milk Price for Class I was $14.12 per hundredweight, an increase of $1.96 from the prior month. The two-week product price averages underpinning the October announcement reflect conditions from mid-September, which explains the lag relative to the current CME spot market downdraft in cheese. | FMMO Component | October 2026 | Change vs. September | |---|---|---| | Base Class I Price ($/cwt) | 18.88 | +1.84 | | Base Skim Milk Price for Class I ($/cwt) | 14.12 | +1.96 | | Advanced Butterfat Pricing Factor ($/lb) | 1.5024 | n/a | | Class II Skim Milk Price ($/cwt) | 14.82 | n/a | | Class II Nonfat Solids Price ($/lb) | 1.5935 | n/a | | 2-Wk Avg Butter ($/lb) | 1.4678 | n/a | | 2-Wk Avg NDM ($/lb) | 1.7731 | n/a | | 2-Wk Avg Cheese ($/lb) | 1.5598 | n/a | | 2-Wk Avg Dry Whey ($/lb) | 0.6657 | n/a | *Source: USDA AMS Announcement of Advanced Prices, October 2026* The Class I increase is good news for fluid milk processors and cooperatives handling Class I volume, but the underlying two-week cheese average of $1.5598 per pound is already materially above where blocks are trading this week, meaning November's advanced prices will likely tell a very different story. ## 5. October WASDE: USDA Updates Dairy Price Forecasts The October 2026 WASDE report was released at 12:00 PM ET on October 9. The report is the tenth of twelve scheduled 2026 releases and carried updated annual price forecasts for the U.S. dairy complex at a time when the market is sending conflicting signals by component. In the August 2026 WASDE, price forecasts were lowered for butter, increased for whey, and unchanged for cheese and NDM. Consequently, the Class III price was increased and the Class IV price was lowered. The all-milk price forecast for 2027 was lowered to $19.80 per cwt. The October update will reflect the additional weeks of cheese weakness and the continued NDM and whey strength documented in the CME spot market this week. Earlier in 2026, USDA had forecast the Class III milk price for the full year at $16.65 per cwt. The Class IV price was forecast at $17.15 per cwt, $1.45 higher than previous projections. The all-milk price for 2026 was forecast at $19.70 per cwt, an increase of $0.75. Watch for the October WASDE to potentially adjust the cheese and butter line items downward while holding or lifting the whey and NDM outlook. Earlier in 2026, the number of dairy cows was revised upward to 9.570 million head, an increase of 30,000 head from the previous forecast and 72,000 head more than in 2025. Milk production per cow was revised downward to 24,520 pounds, but overall milk production in 2026 was still forecast to rise. ## 6. GDT Event 413: SMP Hits an Unprecedented Premium Over WMP The October 6 GDT auction was one of the most technically notable sessions of 2026, not just for the headline index gain but for a structural price inversion that dairy traders will be discussing for months. The Global Dairy Trade price index rose 1.2 percent at the October 6 auction, recovering after a decline at the previous session. The weighted average price for dairy products reached $3,928 per metric ton. A total of 41,692 tonnes were sold, above the midpoint of the available supply range, suggesting firm buying interest for most of the event. Worldwide protein demand pushed skim milk powder to $3,847 per metric ton, an unprecedented $242 higher than whole milk powder, which is historically and functionally higher priced than skim powder. That inversion is a direct read on how aggressively global buyers are seeking lean protein relative to fat. | GDT Product | Oct 6 Price ($/MT) | Change vs. Prior Event | |---|---|---| | Skim Milk Powder (SMP) | 3,847 | +4.3% | | Whole Milk Powder (WMP) | 3,605 | +1.2% | | Buttermilk Powder | 4,123 | +0.7% | | Butter | 4,740 | -0.3% | | Anhydrous Milk Fat (AMF) | 5,683 | -1.1% | | Cheddar | 3,925 | -3.7% | | Mozzarella | 3,833 | -3.9% | | Lactose | 1,677 | -6.9% | | Overall Weighted Average | 3,928 | +1.2% | *Source: GDT Holdings, UkrAgroConsult, Farmers Weekly NZ* The headline price index rose to 1,171 points, reversing the downward movement observed in the prior trading session and consolidating eight months of relative price stability. A total of 41,692 metric tons of product was sold to 124 winning bidders across 18 bidding rounds, with 165 participants, compared with 42,444 metric tons sold to 126 winning bidders and 155 participants at the previous event. The fat-side weakness in Auckland mirrors exactly what is happening on the CME. Cheese and butter are under global selling pressure while powders rally on a demand signal with a different end-user base, primarily food manufacturers, infant formula producers, and foodservice markets in Asia and the Middle East. The next Global Dairy Trade event is scheduled for October 20. ## 7. HPAI Confirmed in Two Washington State Dairy Herds The most operationally urgent news of the week came Wednesday afternoon from USDA APHIS. On October 8, 2026, USDA's Animal and Plant Health Inspection Service National Veterinary Services Laboratories confirmed via PCR detection of highly pathogenic avian influenza H5 clade 2.3.4.4b in two dairy cattle herds in Washington. These are the first confirmed case detections of HPAI in livestock in the State of Washington. While dairy cattle in a total of 19 states have been infected since the start of the outbreak in March 2024, APHIS has seen cases in only a small number of states this year. 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 program. That detail is significant: it underscores that the NMTS bulk tank surveillance system did not flag these herds before clinical signs appeared, raising questions about the sensitivity of pre-movement testing protocols. 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. This detection does not pose a risk to consumer health or affect the safety of the commercial milk supply. Under USDA guidance issued earlier in 2026, lactating dairy cattle moving interstate from states with Unaffected State Status under the National Milk Testing Strategy are no longer required to be tested for HPAI H5N1 prior to movement. Washington's newly affected status complicates outbound movement logistics for that state's dairy industry and will require producers to consult APHIS and the Washington Department of Agriculture for updated movement requirements. California remains an Affected State at NMTS Stage 3, and pre-movement testing requirements remain in effect for cattle leaving California in accordance with the April 2024 Federal Order. ## 8. U.S. Dairy Margins Tighten as All-Milk Prices Slide U.S. dairy margins are tightening as all-milk prices fall to $19.78 per cwt and feed costs rise heading into late 2026. The squeeze is most acute for Class III-priced producers, whose milk check is being pulled down by cheddar's persistent weakness while corn and soybean meal markets remain above pre-2024 norms. In contrast to the powder complex, cheese and butter are in a slump. CME spot Cheddar blocks hit $1.27 during the week ending October 2, their lowest price since May 2020, during the darkest days of the pandemic shutdowns. The bounce into this week, with blocks at $1.3350 by Tuesday, offers some technical relief but does not change the fundamental supply overhang. Cheese is inordinately cheap, and exporters suggest that additional declines will not win much new business. Bargain shoppers are already buying U.S. cheese at a record-smashing pace, and they simply do not need more. That is a critical observation: the export channel is saturated at current prices, meaning the marginal buyer who would historically have stepped in to support the market has already been served. Looking back over the past several years, the milk-feed price ratio peaked in September and October of 2024 and has been on a slow decrease through 2025. Lower feed costs have bolstered more favorable milk-feed ratios. However, as milk prices continue to fall in 2026, margins are likely to be squeezed further, even with sustained cheaper feed inputs. Producers should reassess Dairy Revenue Protection enrollment levels for Q1 2027 now that October WASDE data is available. ## 9. USDA Dairy Products Report and September Product Price Averages The USDA NASS Dairy Products report was scheduled for release on October 5, 2026. The report covers August production volumes for butter, cheese, dry milk products, and frozen dairy items, providing the most current supply-side accounting for the complex. The product price averages for September 2026 were: butter $1.4462, nonfat dry milk $1.7891, cheese $1.5577. Those September averages tell the story of a market that was still finding support two to three weeks ago, before the October selling wave accelerated. The September 2026 monthly CME averages showed butter at $1.3746, down 1.5 cents (1.1 percent) for the month, and dry whey at $0.7740, up 7.2 cents (1.9 percent) for September. The whey monthly gain of nearly 10 percent is one of the largest single-month advances in recent years and sets up an already elevated base heading into Q4. Processors continue to direct whey streams toward higher-protein concentrates. Contacts indicate U.S.-made dry whey remains competitive with European product. That competitiveness is important context for export demand projections under the October WASDE. ## 10. USDA NASS Milk Production and Herd Dynamics The national dairy herd is running larger than originally projected for 2026, a fact that underpins the continued production growth pressuring cheese and butter prices. Earlier 2026 USDA forecasts revised the number of dairy cows upward to 9.570 million head, an increase of 30,000 head from the previous forecast and 72,000 head more than in 2025. Expectations for 2026 include a slight reduction in the national herd to 9.555 million head, but with milk yield per cow forecast to increase by 10 pounds, the 2026 production forecast stands at 234.1 billion pounds. Each successive WASDE through the summer and into fall has shown upward pressure on production per cow, with genetic and nutritional efficiency gains outrunning any modest herd-size reduction. While discussions about HPAI detections have slowed somewhat, there is still risk, especially during migratory seasons. The more imminent threat in 2026 is regulatory and trade partner reactions to herd infections. The Washington State detections confirmed this week could renew trading partner scrutiny of U.S. raw commodity exports if the outbreak extends. | Herd/Production Metric | 2025 Actual | 2026 Forecast | |---|---|---| | Dairy Cow Numbers (million head) | 9.498 | 9.570 | | Milk per Cow (lbs/year) | 24,391 | 24,520 | | Total Milk Production (billion lbs) | 231.4 | 234.7 | | All-Milk Price ($/cwt) | ~21.35 | ~19.78 | *Source: USDA ERS, Purdue Commercial Ag, eDairy News* ## 11. Global Trade Context: SMP Demand Signals and Export Competitiveness The protein demand story playing out on the GDT is inseparable from U.S. export positioning. Earlier in 2026, milk production forecasts were raised for both 2026 and 2027, with cow inventories and milk per cow revised higher. Commercial export forecasts were raised on both a fat basis and a skim-solids basis, primarily due to increased shipments of cheese, whey, and butter. Following record high export volume in 2025, the 2026 dairy product export forecast was revised upward from earlier months, reflecting increased international demand for U.S. dairy products. On a milk-fat basis, the export forecast was raised to 18.0 billion pounds. The current CME price levels for NDM, at $2.22 to $2.25 per pound spot, are well above GDT-equivalent SMP values when converted to a per-pound basis, which could moderate U.S. competitiveness in SMP export markets even as global demand strengthens. European EEX futures for October showed SMP at 3,463 euros per metric ton and butter at 4,375 euros per metric ton, while NZX showed WMP at $3,595 USD per metric ton and SMP at $3,850 per metric ton. The NZX SMP figure running slightly above the GDT clearing price confirms that futures markets anticipated further SMP strength and that this week's GDT result was broadly in line with pre-auction expectations. ## 12. Antitrust and Cooperative Headwinds U.S. dairy cooperatives face a price-fixing antitrust suit. While details of the current litigation are still developing, antitrust scrutiny of cooperative pricing practices has intensified in the context of the broader Class III-versus-Class IV income disparity. Producers receiving Class III-priced milk are questioning whether structural elements of the Federal Order system are adequately reflecting competitive market conditions, particularly given the record-wide spread between the two classes. The regulatory and trade partner reaction dimension of HPAI also feeds into the policy environment, with the more imminent threat being how trading partners respond to new herd detections. The Washington State HPAI confirmation this week could prompt inquiries from key dairy export markets in Asia and the Middle East, even though commercial milk supply safety is not in question. --- ## Quick Hits - Spot butter fell 6 cents in the week ending October 2 to $1.34, and continued its downward trajectory into this week, reaching $1.29 by Wednesday. - The GDT weighted average price of $3,928 per metric ton represents the combined settlement across all 18 bidding rounds, with protein powders doing the heavy lifting. - The next GDT auction is scheduled for Tuesday, October 20, 2026. - The diesel fuel price factor used in the October FMMO advanced price announcement was set at $5.804 per gallon, directly affecting Class I over-order premiums in Southeast and Appalachian orders. - Extra grade dry whey closed the prior week at $0.8250, with the weekly average at $0.8140, up 1.9 cents. - In May 2026, USDA updated guidance allowing interstate movement of lactating dairy cattle without individual influenza A tests from states with Unaffected state status under the National Milk Testing Strategy. - The softening of beef-cross calf values has removed an essential operational shock absorber that insulated commercial herds during earlier periods of milk price volatility. - The October 2026 WASDE report was released at 12:00 PM ET on October 9, 2026. --- ## What to Watch Next Week 1. **October WASDE Reaction.** The market will digest the October 9 WASDE dairy price revisions over the following week. Watch for whether USDA lowered the 2026 all-milk price forecast below $19.70 per cwt in response to the sustained cheese and butter weakness, and whether NDM and whey forecasts were revised materially higher. 2. **GDT Event 414 on October 20.** After SMP's unprecedented $242-per-ton premium over WMP at Event 413, the market will be watching closely to see whether protein buyers step back or continue to bid aggressively. A second consecutive large SMP gain would confirm a structural shift in global protein demand. 3. **Washington State HPAI Investigation.** USDA APHIS indicated it will release full genetic sequencing results from the two Washington herds as soon as they are available. The key question is whether the virus matches the D1.1 genotype or represents a new introduction pathway. Movement restriction updates from WSDA will follow. 4. **CME Cheese Direction.** Blocks need to hold above the $1.27 floor established in early October or risk a retest of pandemic-era lows. The barrel-block inversion (barrels at $1.4525 versus blocks at $1.3350) remains unusually wide and will continue to pressure the Class III formula calculation. 5. **USDA Dairy Products Volume Data.** The October 5 Dairy Products report covering August manufacturing volumes will provide clarity on whether cheese output is being curtailed or whether the supply overhang is still building. 6. **Feed Cost Updates.** Corn and soybean meal futures direction in the wake of the October 9 WASDE crop production revisions will set the margin calculus for Q4 2026 and early 2027 DRP decisions. 7. **Antitrust Lawsuit Developments.** Initial court filings and cooperative responses in the price-fixing antitrust suit may become public in the coming weeks, with potential implications for how cooperatives communicate Class III and Class IV allocation decisions to members. --- *The Therio Dairy Newsdesk publishes weekly U.S. dairy industry roundups every Friday, combining CME spot and futures data, USDA report analysis, HPAI surveillance updates, and global trade context into a single resource for producers, processors, cooperatives, and market participants. All prices and figures cited reflect data available through market close on October 9, 2026, or the most recent report release date. This report is for informational purposes only and does not constitute trading advice. Contact the Therio editorial team for licensing, redistribution inquiries, or to submit industry news tips.*