USDA's October WASDE Cut Class III to $15.80 Per Hundredweight While Class IV Climbed to $18.90. Here Is What That Split Means for Your Cooperative.

The October World Agricultural Supply and Demand Estimates came out on October 9. USDA cut its 2026 Class III price forecast to $15.80 per hundredweight while raising its Class IV forecast to $18.90. The all-milk price forecast held at $19.90 per hundredweight.

Those two numbers moving in opposite directions tell a specific story. If your cooperative ships milk to both cheese and butter or powder plants, you are already feeling the split. If you are working through Q4 payroll projections right now, the gap between what Class III and Class IV milk is worth deserves more attention than a single blended number.

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What Changed in the October WASDE

USDA trimmed its 2026 milk production estimate to 236.9 billion pounds, down from 237.2 billion pounds in September. The revision came from lower cow inventories and slightly less milk per cow, not from demand weakness.

On pricing, USDA moved in two directions. Class III fell because cheese markets remain under pressure. Domestic cheese output has been running above year-ago levels throughout the fall, and with the U.S.-Canada export channel largely closed, that supply is accumulating domestically. Barrel cheese settled below $1.50 per pound this week.

Class IV moved up because nonfat dry milk prices have climbed. Grade A NDM closed at $2.17 per pound, up significantly from earlier in the quarter. Butter markets have held more steadily than cheese.

The October base Class I price is $18.88 per hundredweight, up $1.84 from September. That increase reflects the higher Class IV calculation used to set Class I, and it provides some offset for cooperatives that process fluid milk.

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Why the Class III and Class IV Divergence Matters for Cooperative Payroll

Producer payroll at most cooperatives is based on a blend of Class III and Class IV prices, weighted by how the cooperative actually used its milk during the pay period. When the two prices are close together, blending is straightforward. When they diverge by more than $3 per hundredweight, as they do now, the routing decisions your cooperative makes in October and November have a measurable effect on what producers receive in their December checks.

Cooperatives that can shift volume toward Class IV uses, butter, powder, cream, gain a direct advantage in this environment. Cooperatives locked into cheese plant commitments have less flexibility. Neither situation is wrong, but both deserve to be quantified in your Q4 plan.

The practical question is whether your payroll team has visibility into how milk class allocation is shaping up before the pay period closes. Catching a Class III overweight early gives you options. Finding out after the fact does not.

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What a 236.9 Billion Pound Supply Pool Means for Your Routing

USDA cut the production forecast, but 236.9 billion pounds is still a large supply pool. It is up 5.2 billion pounds from 2025 output. More milk, fewer export channels (Canada is largely closed, China is uncertain), and compressed cheese margins add up to a domestic balance that favors careful milk placement over volume growth.

Your routing team should be tracking plant utilization rates, not just pickup volume. A plant running at 95 percent capacity on cheese with Class III at $15.80 is a different risk profile than it was when Class III was at $18. Contingency routing plans matter more in this environment, not less.

Milk Moovement's routes and scheduling tools give cooperatives real-time visibility into where milk is going and what each placement is worth, so Q4 decisions can be made on current data rather than last quarter's assumptions.

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Three Questions to Review Before November Pay Period Calculations Run

First: what is your projected Class III to Class IV milk split for October and November, and does it match your producers' expectations? If your cooperative communicates price estimates before the final settlement, confirm those estimates reflect the October WASDE changes.

Second: do you have flexibility in your hauling schedule to shift volume if a Class IV plant can take additional milk? Even a partial shift from cheese to powder or butter in a high-volume week can move a blended price by several cents per hundredweight, which adds up quickly across your membership.

Third: are your plant contacts confirming capacity through December? The November-December window is when many processors run maintenance shutdowns or hit storage limits. Knowing which plants are constrained ahead of time is the difference between a planned route adjustment and an emergency hauling call.

Ready to see how Milk Moovement can give your team real-time milk placement data before Q4 pricing decisions lock in? Reach out to the team at sales@milkmoovement.com to set up a conversation.

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