The federal dairy outlook released this month raised its 2023 milk production forecast a little, mostly on stronger yield per cow, and split cheese and butter into two different stories. Cheese came in lower again, roughly a third below where it sat a year ago. Butter went the other direction, up on firmer demand. If your Class III math has felt off this fall, that split is most of why.
We've heard from a handful of members already recalibrating fourth-quarter plans around it. A farmstead producer in the upper Midwest told us she's been watching her component pricing more closely than usual this month, because a milk check built on cheese solids doesn't move the way it did last October, even with total production up.
Why the split matters more than the average
It's tempting to look at an average milk price and call the quarter fine. The average hides the split. If your cheese moves through a component-heavy pricing formula, softer cheese prices reach your check faster than they reach a headline number blended with butter's strength. Members selling primarily fluid or butterfat-forward product are having a noticeably easier fourth quarter than members selling primarily cheese solids, even inside the same region.
Export data adds a second layer. Overall dairy export volume has held up well this year, but cheese shipments specifically have been uneven market by market — some destinations up, others down on tariff-related friction that's been building for over a year. A domestic cheese buyer told us the uneven export picture is one reason wholesale cheese hasn't firmed the way butter has: more of it is staying home, chasing the same shelf space.
International reference prices tell a similar story. Recent global dairy trading events have shown cheddar-style cheese prices easing a few percentage points at a time, not collapsing, but drifting in a direction that keeps pressure on the domestic number rather than relieving it. None of this points to a single dramatic event. It's a slow grind, which is arguably harder to plan around than a sharp move, because there's no obvious moment that tells you the adjustment is over.
What to do with the split, not just watch it
If you haven't already, pull your own pricing formula apart by component and see how much of your check rides on cheese solids versus butterfat versus other-solids. Members who've done this exercise tell us it changes how they think about locking in forward contracts, because a formula that looked diversified on paper sometimes turns out to be more cheese-weighted than the producer realized.
The Membership & Outreach Committee has been fielding questions on this from smaller operations that don't have a full-time person tracking component pricing month to month; if that's you, reach out and we'll point you to a member who's built a simple tracking sheet worth borrowing. And if you're heading into winter make decisions with this split in mind, our Pricing & Margin for Specialty Cheese course walks through exactly this kind of component math before you commit to a season's schedule.
None of this is a call to panic about the fourth quarter. Milk production is up, which is a healthy underlying signal even when it puts pressure on any one class price. But a healthy supply picture and a comfortable cheese margin are two different things, and members who've had the smoothest close to this year are the ones who stopped assuming the two move together. Check your own component split before you finalize any pricing decisions for the months ahead, and if the number surprises you, that's worth a call to the committee rather than a guess.
The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.