We spent most of this year telling members that milk prices were soft and feed was cheap, and that the two roughly canceled out. That story changed in the back half of August, and it's worth walking through what actually happened before you make any fall decisions off the old assumption.
Federal order Class III pricing — the category that covers most cheese-milk — moved up over a dollar from July into August, which sounds like good news after a stretch of weak milk revenue earlier in the year. It's still running below where it sat a year ago, but the direction was finally right. At the same moment, though, feed grain markets did the opposite of what forecasters expected all summer. A rapid reassessment of corn yields across the central growing region pushed feed and forage prices up sharply, and that rally ate into the milk-price gain almost as fast as it arrived. The ratio between milk price and feed cost, the rough shorthand a lot of producers use to gauge whether a herd is paying for itself, actually tightened rather than loosened.
Why this matters even if you don't buy grain by the truckload
If you're a farmstead operation growing most of your own feed, this looks like a distant commodity story. It isn't, quite. Feed costs for the hay and supplemental grain most small operations still buy in tend to track the same broader grain market, just with a lag and a regional markup. A rally in the Corn Belt shows up at your local feed store a few weeks later, not never. If you were counting on a soft fall feed bill based on what the market looked like in July, it's worth checking your actual quote again rather than your memory of it.
For members further from the farm — a creamery buying milk under contract, a cheesemonger running a counter — the effect shows up differently. A tighter farm-level margin upstream tends to show up eventually as firmer resistance on price from your milk supplier, even if it takes a season to move through a contract cycle. It's not a reason to renegotiate anything today, but it's a reason to ask your supplier what they're seeing rather than assuming the spring numbers still hold.
Members who called our office in the last two weeks described the same surprise in slightly different words: a feed bill that came in higher than the quote they'd been planning around, or a supplier who suddenly wasn't willing to hold a price past the next delivery. None of that is catastrophic on its own. It is, however, a sign that the relatively calm assumptions many of us were making back in June and July about the rest of the year no longer hold, and it's worth revisiting any plan that was built on them.
What we're telling members to actually do
Don't lock in a feed contract based on the July numbers; get a current quote before you commit anything for the fall or winter. If margin coverage or a similar risk program is part of your operation, this swing is exactly the kind of shift that changes whether your enrollment level still makes sense — a coverage level chosen when margins looked stable in the spring may not match a tighter fall. And if you supply or are supplied by another member under a standing agreement, this is a reasonable season to have an honest conversation about what each side is actually seeing on their own ledger, rather than negotiating off last quarter's numbers.
It's also worth resisting the urge to overcorrect. One month of higher feed prices is a data point, not a trend, and members who panic-lock a full year of grain at a rallying price sometimes end up worse off than members who waited two more weeks for the market to settle. The goal right now is current information, not a fast decision.
We'll keep tracking both lines — milk price and feed cost — through the fall and let members know if the gap widens further in either direction. If your own numbers look different from what we're describing here, we'd like to hear about it; regional variation has been wide this year, and member reports are often ahead of the published data.
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.