Class III to $16.70: extra cows are in the curve

December 2026 Class III milk reaches $16.70 per hundredweight by November 20, 2026 in the base case, $17.82 in the bull case and $16.40 in the bear case. The extra cows are already in the curve: September milk was up, the herd is still growing, and December trades $0.89 under November.

The December 2026 Class III milk future settled at $16.93 per hundredweight on November 10, 2026, on the Chicago Mercantile Exchange (CME) dairy market update, against $17.82 in November. September US milk production was 19.443 billion pounds, up 2.6%, from 9.743 million cows, in the National Agricultural Statistics Service (NASS) report of October 22, 2026. Milk Production is next due on November 20, 2026, at 3:00 pm Eastern Time. The call is that the print leaves December near $16.70 unless one of four observations fires.

Key levels for the December contract follow.

• Asset: Class III milk, December 2026, $16.93 per hundredweight — CME dairy market update, November 10, 2026 settlement
• Base case target: $16.70 per hundredweight by November 20, 2026 — a $0.23 drift that keeps the November–December inversion
• Bull case target: $17.82 per hundredweight if the 24-state herd is flat or below September's 9.304 million — the November contract's November 10 settlement
• Bear case target: $16.40 per hundredweight if 24-state October production is up 3.5% or more, or the herd adds 20,000 head or more — $0.20 under January's $16.60 settlement
• Major support: $16.60 per hundredweight — January 2027 Class III settlement, same CME sheet
• Invalidation level: a December settlement above $17.38 — the first cent above the $17.375 midpoint of $17.82 and $16.93

How this Class III call was built

The spot is the CME dairy-market settlement for November 10, 2026, not a later last sale: November $17.82, December $16.93 and January 2027 $16.60, with later months on the same sheet. The exchange site blocked a fresh settlements-page pull on November 12, so later screens are not treated as a new settlement. Supply is the NASS text of October 22, 2026. The horizon is the Milk Production listing for November 20, 2026 at 3:00 p.m., matched to the NASS November calendar at 3:00 pm Eastern Time. Cash is the Agricultural Marketing Service (AMS) announcement of November 4.

Related:Oats to 323 cents: stocks-to-use has already loosened

The herd was still rising in the last print

The October 22 NASS release is below. The 24-state herd rose 24,000 head from August, to 9.304 million.

Source: USDA NASS, Milk Production, released October 22, 2026.

Kansas rose 14.7%, to 492 million pounds. The November 20 release covers October milk production.

Class III milk is the federal-order price for milk used in cheese, and the line that trades it is the CME Class III milk future, in dollars per hundredweight. December 2026 settled at $16.93 on November 10, 2026, on the CME dairy market update, $0.04 above the November 9 settlement of $16.89, with volume of 1,213 and open interest of 6,565. November 2026 settled at $17.82 the same session, so December is $0.89 under the nearby month. NASS put September US output at 19.443 billion pounds, up 2.6%, from 9.743 million cows, and the 24-state herd at 9.304 million, up 24,000 from August. The base case is a December settlement near $16.70 on November 20, 2026, when Milk Production is due at 3:00 pm Eastern Time. What would move that case is whether October cows in the 24 states are still above 9.304 million.

"My mantra is always, don’t bet against the U.S. dairyman’s ability to make more milk, and certainly don’t bet against the U.S. dairyman’s ability to milk more cows either."

— Kathleen Wolfley, vice president of insights, EA Risk (Dairy Herd, November 6, 2026)

Why $16.70 sits in the middle of an inverted board

Source: CME Group dairy market update, Class III settlements for November 10, 2026, versus November 9. Prices are in dollars per hundredweight.

The gap between announced Class III and the futures board is why the call is a drift, not a collapse. AMS set October Class III at $15.16 per hundredweight on November 4, 2026, down $0.88 from September's $16.04 and $5.38 under Class IV at $20.54. December futures at $16.93 sit $1.77 above that cash price and $0.89 below November at $17.82. On the same CME sheet, November cheese settled at $1.68 per pound and December cheese at $1.60, against an October cheese average of $1.4444. A print that extends the 24-state gain of 2.7%, to 18.724 billion pounds, fits a settlement near $16.70, above January at $16.60. The bull case of $17.82 needs the herd to stop rising. The bear case of $16.40 needs growth of 3.5% or more, or another 20,000 cows. December has already refused the November price.

What a one-report herd model leaves out

NASS revised preliminary August production in the 24 states up by 132 million pounds, or 0.7%, to 19.3 billion pounds. NASS puts the quarterly root mean square error at 0.1% over 20 quarters, around the current 59.5 billion-pound estimate. A first print can still be revised.

Cows are not only a milk decision. Wolfley said there are "$1,000 or more beef-on-dairy cross calves potentially available," which pays farms to keep animals a cheese price alone would cull, and that higher feed costs with low Class III prices leave her "more concerned around margins for producers as we roll into 2027." The feed side sits in this desk's notes on soybean meal's flat official-price case and the crowded-long case in corn. Neither note sets the $16.70 target.

"I think there is a point where we plateau rather than just continuing at this rate for another couple of years. I think there will be a break in this run before we hit that 10 million cow mark."

— Ben Laine, senior dairy analyst, Terrain (Dairy Herd, November 6, 2026)

What would invalidate this call

The base case breaks if any one of these four signals prints.

• The 24-state herd is at or below 9.304 million head. September was up 24,000 from August. A flat or lower October herd is the condition on the $17.82 bull case.
• 24-state October production is up 1.5% or less. September was up 2.7%, to 18.724 billion pounds. The supply turn would already be in the milk.
• December Class III settles above $17.38 per hundredweight. That is the first cent above the midpoint of the November 10 settlements at $17.82 and $16.93. Through it, $16.70 is the wrong side.
• December cheese settles above $1.68 per pound. November cheese settled at $1.68 on November 10 and December cheese at $1.60. The cheese bid would be extending, not rolling off.

A heavier herd does not break a lower base case. Another 20,000 head, or 24-state growth of 3.5% or more, is the bear path to $16.40, $0.20 under January's $16.60.

What to watch into the November 20 release

Milk Production is listed for November 20, 2026, at 3:00 pm Eastern Time, on the Milk Production page and the November 2026 calendar. The listing covers October production. Compare the print with 9.304 million 24-state cows and a 2.7% production gain in the October 22 release. Cattle on Feed shares that hour; the feeder-cattle note is a separate call. Cold Storage is November 24 at 3:00 pm Eastern Time. AMS announces November class prices on December 2, per the October announcement write-up. Until then the reference is the CME update of November 10 and the AMS announcement of November 4.

TL;DR

December 2026 Class III milk settled at $16.93 per hundredweight on November 10, 2026, $0.89 under November at $17.82, on the CME dairy market update. The base case is $16.70 by the close on November 20, when NASS releases Milk Production at 3:00 pm Eastern Time. September US output was 19.443 billion pounds, up 2.6%, and the 24-state herd rose 24,000 head from August to 9.304 million. The bull case is $17.82 if that herd stalls, and the bear case is $16.40 if October growth reaches 3.5%. A December settlement above $17.38 retires the call.

FAQ

What is Class III milk, and which contract is this call using?

Class III milk is the federal-order price for milk used in cheese, traded as the CME Class III future in dollars per hundredweight. The contract under review is December 2026. On November 10 it settled at $16.93, with volume of 1,213 and open interest of 6,565, ahead of November's 524 contracts at $17.82. November is the nearby price the curve steps down from, not the contract the target is set on.

Why is the base case only $0.23 under the last settlement?

The supply story is already public. NASS has reported a larger herd and September milk up 2.6%, and the curve has marked it: December at $16.93 versus November at $17.82. A base case of $16.70 says the October print confirms that path and takes a further $0.23, short of January at $16.60, without erasing the $1.77 premium over the announced October price of $15.16.

When is the next Milk Production report, and which month does it cover?

NASS lists Milk Production for November 20, 2026, at 3:00 pm Eastern Time. That release covers October cows, milk per cow and production. The report in hand, dated October 22, covers September: 19.443 billion pounds of US milk and 9.304 million cows in the 24 major states. Cows, yield and production can be revised the following month.

What would prove this Class III call wrong?

Any one of four prints: a 24-state herd at or below 9.304 million, October production in those states up 1.5% or less, a December Class III settlement above $17.38, or December cheese above $1.68 per pound. The $17.38 level is the first cent above the midpoint of $17.82 and $16.93. A heavier herd does not break the call. It moves the target to the bear case at $16.40.

This article is informational analysis only and is not financial, investment, or trading advice. Foreign-exchange, commodity, and equity markets are highly volatile and can lose substantial value rapidly. Leveraged products carry total-loss risk and may exceed the initial margin posted. Past performance and historical correlations do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.