Dairy Industry News Roundup: Week of September 26 - October 2, 2026

# Dairy Industry News Roundup: Week of September 26 - October 2, 2026 U.S. dairy spot markets closed the week of September 26 through October 2, 2026, with a notably bifurcated picture: CME cheese blocks fell to $1.27/lb by Wednesday while barrels held at $1.4525/lb, butter surged from $1.40 to a weekly average near $1.34/lb on heavy volume, NDM Grade A climbed to $2.1925/lb, and dry whey ticked above $0.81/lb. On the policy front, USDA confirmed October's advanced Class I base price at $18.88/cwt, a $1.84/cwt jump from September. The September 16 GDT auction posted a headline 1.1% overall decline but a 16.5% Cheddar price spike to $4,075/MT, while the next auction is now confirmed for October 6. H5N1/HPAI surveillance continued under USDA APHIS's National Milk Testing Strategy framework, and the next WASDE, due October 9, is now just one week out. --- ## 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 Dairy Markets: Cheese Blocks Slide, NDM and Whey Catch a Bid The week opened with spot dairy prices carrying over from the prior Friday's close, where Grade AA butter closed at $1.4000/lb and cheese barrels finished at $1.4525/lb with 40-pound blocks at $1.3075/lb. By Wednesday, September 30, the market had diverged sharply across product categories. Forty-pound cheese blocks fell $0.0050 to $1.27/lb, while barrels held unchanged at $1.4525/lb, and butter climbed $0.0425 to $1.36/lb. Twenty-eight sales were reported in butter, ranging from $1.34 to $1.36/lb. The barrel-block inversion, with barrels commanding a $0.1525/lb premium over blocks, remained at historically wide levels, a dynamic that directly compresses Class III futures settlement values. Dry whey on Wednesday was up $0.050 to $0.8150/lb, while NDM Grade A moved up $0.0075 to $2.20/lb. NDM's continued strength near multi-month highs reflects persistent export inquiry and tightening spot availability. By Tuesday, September 29, the weekly CME averages showed butter at a current average of $1.3438/lb versus the prior week's $1.3645/lb average, while NDM averaged $2.1863/lb versus $2.1415/lb the prior week, and dry whey was averaging $0.8075/lb versus $0.7950/lb. | CME Spot Product | Fri Sept 25 Close | Wed Sept 30 Close | Week-over-Week Change | |---|---|---|---| | Butter (Grade AA) | $1.4000/lb | $1.3600/lb | -$0.0400 | | Cheese Blocks (40 lb) | $1.3075/lb | $1.2700/lb | -$0.0375 | | Cheese Barrels | $1.4525/lb | $1.4525/lb | Unchanged | | NDM Grade A | $2.1700/lb | $2.2000/lb | +$0.0300 | | Dry Whey (Extra Grade) | $0.8050/lb | $0.8150/lb | +$0.0100 | Extra grade dry whey closed the prior Friday at $0.8050/lb, and the continued upward drift through midweek suggests protein demand from food manufacturers is outpacing available spot supply. --- ## 3. October 2026 FMMO Advanced Prices: Class I Surges $1.84/cwt The USDA Agricultural Marketing Service released the Announcement of Advanced Prices and Pricing Factors for October 2026 during the final days of September, delivering a meaningful lift to Class I milk pricing. The base Class I price was set at $18.88/cwt for October 2026, with the advanced butterfat pricing factor at $1.5024/lb, the Class II skim milk price at $14.82/cwt, and the Class II nonfat solids price at $1.5935/lb. The base Class I price increased $1.84/cwt from the previous month. The base skim milk price for Class I was set at $14.12/cwt for October 2026, representing an increase of $1.96/cwt from September. The two-week product price averages underpinning the announcement reflected the elevated NDM values that characterized September spot trading. The two-week product price averages used in the formula were: butter at $1.4678/lb, nonfat dry milk at $1.7731/lb, cheese at $1.5598/lb, and dry whey at $0.6657/lb. | FMMO October 2026 Price Factor | Value | |---|---| | Base Class I Price | $18.88/cwt | | Base Skim Milk Price (Class I) | $14.12/cwt | | Class I Price Increase vs. September | +$1.84/cwt | | Advanced Butterfat Pricing Factor | $1.5024/lb | | Class II Skim Milk Price | $14.82/cwt | | Class II Nonfat Solids Price | $1.5935/lb | | 2-Week Avg. Cheese (Formula) | $1.5598/lb | | 2-Week Avg. NDM (Formula) | $1.7731/lb | As the all-milk price bounces in the $19 to $20 range and feed costs continue rising to as high as $12.02/cwt in October, the tides turned in October as the advanced Class I base price improved for the first time since June. Producers with Class I exposure will see the most direct benefit, though the barrel-block inversion tempers enthusiasm in the Class III complex. --- ## 4. Cold Storage: Butter and Cheese Stocks Draw Down Ahead of Q4 Cold storage data released by USDA NASS during the reporting week showed meaningful drawdowns in both butter and cheese inventories, a constructive signal entering the seasonally stronger fourth-quarter demand period. Cold storage figures dated September 21, 2026, compared with September 1, 2026, showed butter stocks at 59,611 units, a decline of 3,527 or 6 percent, and cheese stocks at 81,014 units, a decline of 4,715 or 5 percent. The pace of stock reduction in both butter and cheese is running ahead of the prior year's comparable period, a dynamic that has provided a modest floor under CME butter prices even as the spot market cooled slightly from its September 25 peak of $1.40/lb. The 6% butter drawdown is especially notable given that the CME butter weekly average of $1.3645/lb for the week of September 21 through 25 remained above the prior-year equivalent. Processors and retailers appear to be working inventory down rather than building ahead of holiday demand, suggesting they may be waiting for further price concessions before restocking aggressively. | Cold Storage Category | Sept 1, 2026 | Sept 21, 2026 | Change (Units) | Change (%) | |---|---|---|---|---| | Butter | 63,138 (est.) | 59,611 | -3,527 | -6% | | Cheese | 85,729 (est.) | 81,014 | -4,715 | -5% | --- ## 5. GDT September 16 Auction: Headline Decline Masks a 16.5% Cheddar Spike The most recent Global Dairy Trade auction before the reporting week, held September 16, produced a headline figure that masked a dramatic divergence between fat-based and cheese product categories. The GDT Price Index fell 1.1% from the previous auction, marking the first decline in the price index since the first auction in July. The weighted average price was $3,868/tonne, with 42,444 tonnes of product sold, mostly whole milk powder and skim milk powder. In the auction, which featured 155 participating bidders and 126 winning bidders, prices were higher for Cheddar and skim milk powder, and lower for Mozzarella, whole milk powder, butter, anhydrous milkfat, lactose, and buttermilk powder. Cheddar's average winning price was $4,075/MT ($1.85/lb), up 16.5%. | GDT September 16 Product | Price (USD/MT) | Change vs. Prior Auction | |---|---|---| | All Products (Index) | $3,868 | -1.1% | | Whole Milk Powder | $3,565 | -0.8% | | Skim Milk Powder | $3,689 | +0.1% | | Butter | $4,760 | -5.7% | | Anhydrous Milkfat (AMF) | $5,739 | -3.0% | | Cheddar | $4,075 | +16.5% | The Cheddar surge to $4,075/MT represents a significant disconnect from the CME block price trading near $1.27/lb domestically. International buyers appear to be willing to pay a premium for committed forward supply, underscoring the role of U.S. export competitiveness even in a sluggish domestic cheese environment. The next GDT auction is scheduled for Tuesday, October 6, 2026. --- ## 6. WASDE October 9 Preview: Dairy Price Forecasts Under Scrutiny The next World Agricultural Supply and Demand Estimates report is due from USDA on October 9, 2026, at 12:00 p.m. ET. Markets are watching closely for any revision to the 2026 full-year dairy price forecasts following the volatile September spot trading. In the March 2026 WASDE, the dairy cow herd was projected to average 9.570 million head, an increase of 30,000 head, and milk production was forecast at 234.7 billion pounds for 2026. Since that report, ample milk production has been cited repeatedly as a bearish weight on price projections across the commodity complex. For 2026, the price forecasts for cheese, butter, NDM, and whey are all under downward pressure from increased milk production. However, the late-September NDM rally to the $2.19 to $2.20/lb range on the CME, well above prior WASDE assumptions, may prompt USDA's analysts to revise the NDM price band upward in the October report. Dairy markets are shifting as the industry heads into the final quarter of the year, and while ample milk production has provided some opportunity for dairy producers and processors to grow supply, forecasts for the remaining months of 2026 look similar. Feed cost escalation remains an important offset, with the Dairy Margin Coverage calculation turning more difficult. The October WASDE will also deliver updated global trade and supply figures that will set the framework for Q4 hedging decisions. --- ## 7. H5N1/HPAI in Dairy Cattle: NMTS Surveillance Continues, Vaccine Trials Ongoing H5N1 highly pathogenic avian influenza remained an active concern for U.S. dairy producers during the reporting week, with USDA APHIS's National Milk Testing Strategy (NMTS) providing the primary surveillance framework. USDA continues to support the rapid development and timely approval of an H5N1 vaccine for dairy cows, in addition to other species, and several vaccine candidates for use in dairy cows are currently undergoing field trials. No new confirmed outbreaks in dairy herds were reported at federal press channels during the September 26 through October 2 window, though NMTS bulk tank sampling remains ongoing in affected and adjacent states. APHIS issued updated guidance related to the April 2024 Federal Order that required testing of lactating dairy cattle before they move across state lines, with lactating dairy cattle moving interstate from states with Unaffected State Status under the National Milk Testing Strategy no longer required to be tested for HPAI H5N1 prior to movement. Key points from the updated guidance: no testing is required for lactating dairy cattle originating from states with Unaffected State Status under NMTS, and Unaffected State Status requires ongoing testing and surveillance activities to confirm the absence of HPAI in the state's dairy herds. The detection of HPAI H5N1 in lactating dairy cattle does not pose a risk to consumer health or compromise the safety of the commercial milk supply, according to APHIS. The biosecurity and movement framework continues to evolve, with industry stakeholders monitoring any changes to interstate commerce requirements heading into fall cow movement season. --- ## 8. FMMO Pricing Dynamics: Barrel-Block Inversion Pressures Class III The persistent and historically wide inversion between CME cheese barrels and 40-pound blocks is among the most significant structural features of the current U.S. dairy market, with direct implications for Federal Milk Marketing Order Class III settlement. On Friday, September 25, cheese barrels were unchanged at $1.4525/lb while butter was up $0.0425 to $1.40/lb. Dry whey was unchanged at $0.8050/lb and 40-pound cheese blocks were down $0.02 to $1.3075/lb. The $0.1450/lb barrel premium over blocks is well outside the normal relationship, in which blocks typically trade at or above barrels. Under the FMMO Class III pricing formula, cheese is valued using the average of barrels and blocks, adjusted for moisture differences. When barrels trade at a large premium over blocks, the average used in the Class III formula is dragged down relative to what barrel-heavy manufacturers receive. This creates an unusual situation where processors running block lines face margin compression while barrel producers see stronger netback. | Date | Barrel Price | Block Price | Barrel Premium over Block | |---|---|---|---| | Sept 25, 2026 | $1.4525/lb | $1.3075/lb | +$0.1450/lb | | Sept 30, 2026 | $1.4525/lb | $1.2700/lb | +$0.1825/lb | | Prior Year Avg. (Sept) | $1.5600/lb | $1.5519/lb | +$0.0081/lb | The magnitude of the current inversion, now nearly $0.18/lb at midweek, is extraordinary by historical standards. Analysts at USDA AMS and private market services are monitoring whether barrel demand from export channels or processing shifts will eventually restore a more typical price relationship. --- ## 9. Retail Dairy Prices: Consumers See Mixed Signals at the Case USDA NASS reported U.S. simple average retail prices of $3.97/gallon for conventional whole milk and conventional reduced fat milk at approximately $3.93/gallon for the September retail pricing survey. The base Class I price for October 2026 is $18.88/cwt, an increase of $1.84 from September 2026, which will begin flowing through to farm milk checks in the coming weeks. Whether that improvement translates to higher retail shelf prices by mid-October depends heavily on retailer margin decisions and competitive promotional activity. Butterfat components at the farm level remain solid. Butterfat content of producer milk in June 2026 was 4.21%, protein was 3.30%, and other solids were 5.78%. Elevated component levels have been a consistent feature of 2026 production, amplifying component income for producers on component pricing programs even when base milk prices have softened. --- ## 10. Feed Costs and Herd Dynamics: Margin Pressure Persists Into Q4 Feed costs remain one of the primary pressure points on dairy producer margins heading into the final quarter of 2026. As the all-milk price bounces in the $19 to $20 range, feed costs continue rising to as high as $12.02/cwt in October. The season-average soybean price was projected at $10.20/bushel, down 30 cents from prior estimates, while soybean meal was forecast at $295/short ton, down $5. Any relief in soybean meal costs is a meaningful input for dairy rations, but corn prices and alfalfa hay availability in the Western states remain the more acute cost drivers for the majority of the U.S. milking herd. The dairy cow herd for 2026 was projected to average 9.570 million head, an increase of 30,000 head year over year. The herd expansion, modest as it is, is adding incremental milk to a market that is already well-supplied. Any further upward revision to the 2026 herd size in the October WASDE would add a bearish tilt to forward-year price expectations and could dampen heifer replacement demand. --- ## 11. Global Dairy Context: European and New Zealand Futures Signal Divergence The European EEX futures and New Zealand NZX futures markets provided additional context to the domestic U.S. market moves during the reporting week, underscoring the role of international price signals on U.S. export competitiveness. September EEX Europe futures for SMP settled around 3,208 euros/MT, with butter at 4,175 euros/MT and whey at 1,630 euros/MT. The October 2026 EEX forward curve reflects slightly higher values, consistent with seasonal demand expectations in European retail markets. On the NZX in New Zealand dollar terms, the October 2026 whole milk powder contract was at $3,645/MT, SMP at $3,835/MT, AMF at $5,500/MT, and butter at $4,550/MT. The NZX Sep-27 contracts for butter at $5,260/MT and AMF at $5,845/MT suggest that international markets expect a meaningful tightening of fat supplies through 2027, a signal that contrasts with softer near-term CME butter pricing. | Product | EEX (Sep-26, EUR/MT) | NZX (Oct-26, USD/MT) | CME Spot (Week of 9/26, USD/lb) | |---|---|---|---| | Butter | 4,175 | 4,550 | $1.34 avg. ($2,954/MT est.) | | SMP / NDM | 3,208 | 3,835 | $2.19 avg. ($4,828/MT est.) | | Whey | 1,630 | N/A | $0.81 avg. ($1,786/MT est.) | The sharp premium in global SMP/NDM values versus the EEX SMP forward curve is a direct signal that U.S. exporters retain a competitive pricing advantage in skim milk powder trade lanes, particularly into Southeast Asia and Latin America. USDA FAS export data, due in coming weeks, will confirm whether that advantage is translating into shipped volume. --- ## Quick Hits - Grade A NDM's weekly average for the week of September 21 through 25 was $2.1415/lb, an increase of $0.0995 from the prior week, the largest single-week gain in the NDM complex in several months. - The September 2 GDT auction saw the overall price index rise 0.9%, marking the fourth straight increase in the GDT price index at that time, making the September 16 1.1% decline the first interruption to that bullish streak. - USDA continues to support the rapid development of an H5N1 vaccine for dairy cows, with field trials ongoing across multiple candidate formulations per APHIS announcements. - Extra grade dry whey's weekly average for the week ended September 25 was $0.7950/lb, up $0.0275 from the prior week, reflecting steady demand from the animal nutrition and food ingredient sectors. - The next WASDE report is scheduled for release on October 9, 2026, setting up a potentially significant market-moving event for Class III and Class IV futures the following week. - APHIS's updated interstate movement guidance follows a United States Animal Health Association resolution received in October 2025 and is expected to be widely supported by dairy and state animal health regulatory officials. - The next GDT dairy commodity auction is scheduled for Tuesday, October 6, 2026, with global buyers watching the fat and powder price relationship closely after the September 16 divergence. --- ## What to Watch Next Week **October 6, GDT Auction:** The bi-monthly Global Dairy Trade event will be the first major market catalyst of the new week. After the September 16 Cheddar spike of 16.5% to $4,075/MT and a 5.7% butter decline, buyers and sellers will be positioning around whether those moves represent structural shifts or one-event noise. **October 9, WASDE Release:** The USDA World Agricultural Supply and Demand Estimates report is scheduled for release at 12:00 p.m. ET on October 9, 2026. Dairy analysts will focus on any revision to the 2026 all-milk price, Class III and Class IV price forecasts, and the milk production outlook, particularly in the context of the ongoing herd expansion. **CME Spot Market Direction:** The barrel-block inversion near $0.18/lb entering the new week is unsustainable in the medium term. Watch for any convergence trade, either blocks finding buyers at depressed levels or barrel demand softening as export inquiry shifts. **NDM Export Demand:** With CME spot NDM near $2.20/lb and international SMP values showing strength on EEX and NZX platforms, USDA FAS weekly export data will reveal whether U.S. shippers are capitalizing on the relative value advantage. **HPAI H5N1 Vaccine Trials:** Any updates from USDA APHIS on the status of field trials for H5N1 vaccine candidates in dairy cows will be closely watched. A positive efficacy signal could meaningfully shift market perceptions of long-term herd risk and biosecurity cost burden. **Feed Cost Trajectory:** Corn and soybean meal price action, combined with USDA's Crop Progress report, will continue to shape the Dairy Margin Coverage margin outlook. With feed costs projected near $12.02/cwt in October, any downward surprise in feed inputs could provide meaningful margin relief. --- *The Therio Dairy Newsdesk delivers weekly U.S. dairy industry intelligence for producers, cooperatives, processors, lenders, and allied industry professionals. Our analysis draws on USDA AMS, NASS, APHIS, FAS, ERS, CME Group, GDT, and proprietary market sources. For questions, submissions, or subscription inquiries, contact the Therio editorial team. All prices and data cited are sourced from publicly available government and exchange reports; forward-looking commentary reflects analyst interpretation and does not constitute trading advice.*