The U.S. Department of Agriculture raised its 2026 milk production estimate for the fourth consecutive month in last week’s World Agricultural Supply and Demand Estimates and gave our first look into 2027. USDA bean counters raised the 2026 forecast slightly, citing expectations of a larger cow herd but a slower growth rate in output per cow. Output in 2027 will be driven by higher milk per cow and a stable herd, according to the WASDE.
2026 production and marketings were projected at 235.4 billion and 234.4 billion pounds respectively, up 100 million pounds on both from a month ago. If realized, both would be up 3.7 billion pounds or 1.6% from 2025.
2027 production and marketings were projected at 236 and 235 billion pounds respectively. If realized, both would be up 600 million pounds or 0.3% from 2026.
The import forecast on a fat basis was raised on increased expectations for butter shipments, the WASDE stated. The skim-solids import forecast was lowered slightly on lower expected imports of milk proteins. The fat-basis export forecast was raised on higher expected exports of cheese and butter. Exports on a skim-solids basis were raised on increased shipments of cheese and whey products offsetting lower expected shipments of nonfat dry milk.
The 2026 price forecasts for cheese, nonfat dry milk and whey were raised from last month’s report, but the butter forecast was lowered to reflect recent prices. The Class III milk price average for 2026 was raised on increased cheese and whey prices and was projected at $17 per hundredweight, up a dime from last month’s estimate and compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was projected at $17.55 per hundredweight.
The 2026 Class IV price was also raised as higher nonfat dry milk prices will more than offset the effect of lower butter prices. It is expected to average $19.95 per hundredweight in 2026, up $1.35 from last month’s report and compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $18.60.
Commercial exports in 2027 were forecast to be higher than in 2026 on a fat and a skim-solids basis due to additional exports of cheese and whey products. Commercial imports were forecast to increase on both a fat basis and skims-solids basis due primarily to increases in imports of cheese and milk proteins.
Domestic use in 2027 is expected to increase on both a fat basis and skim-solids basis. Dairy product prices were forecast to be higher for cheese and butter, but lower for whey and nonfat dry milk compared with 2026, according to the WASDE.
The U.S. corn outlook is for reductions to supply, total use and ending stocks with higher expected prices. The corn crop was projected at 16 billion bushels, down 6% from a year ago. Planted area of 95.3 million acres, if realized, would be down 3.5 million. Yield was projected at 183 bushels per acre. Larger beginning stocks partially offset the forecast reduction in production, resulting in total corn supplies declining 2% to 18.1 billion bushels.
Total corn use was forecast to fall 2% from a year ago on reductions to domestic use and exports. Food, seed and industrial use was forecast flat at 7 billion bushels. Feed and residual use was projected down to 6.1 billion bushels on smaller supplies and higher prices. Exports were forecast to decline 5% from a year ago to 3.2 billion. U.S. share of world trade is expected to decline modestly but remain above the average seen over the past several years.
The soybean outlook shows higher supplies, crush, exports and lower ending stocks from the prior marketing year. The soybean crop was projected at 4.435 billion bushels, up 173 million from a year ago. Along with higher beginning stocks, supplies are 188 million bushels above the 2025-2026 marketing year. Total U.S. production was projected at 130.4 million tons, up 4.2 million.
Exports were projected to rise to 1.63 billion bushels, an increase over 2025-2026 when tariff measures curtailed shipments to China. U.S. exports are expected to rise in 2026-2027 but the U.S. share of global trade is likely to continue its longer-term downward trajectory as large South American supplies, coupled with strong U.S. demand, limit export growth. Ending stocks were projected at 310 million bushels, down 30 million from the revised forecast. The season-average soybean price was forecast at $11.40 per bushel, compared with $10.40 in 2025-2026. Soybean meal was forecast at $310 per short ton, down $5.
Hopefully, the president’s trip to China will result in some agreement over tariffs and other trade issues as well as some additional U.S. exports, not just of soybeans, but dairy products and a variety of other U.S. goods. The two had plenty to discuss, including the war in Iran and the thorny issue of Taiwan, even as President Xi stated that the U.S. and China should be “partners, not rivals.”
The USDA’s latest Crop Progress report showed 57% of U.S. corn had been planted as of the week ending May 10, up from 38% the previous week, 2% behind a year ago and 5% ahead of the five-year average. Twenty-three percent had emerged, 3% behind a year ago and 4% ahead of the average. Soybean plantings were at 49%, up from 33% the previous week, 4% ahead of a year ago and 13% ahead of the five-year average. Twenty percent had emerged, 4% ahead of a year ago.
The May 8 Daily Dairy Report warns however, “Over half the Continental US is experiencing drought or drier-than-normal conditions. For the week ending May 5, the US Drought Monitor reported that 75% of the country was under these conditions.”
“Nearly 61% was in drought, with much of this area in the West or Southeast. USDA reported that as of May 5, 47% of the alfalfa acreage and 61% of grazing lands were in drought. However, just 25% of corn acres, 27% of soybeans, and 32% of the dairy area were experiencing drought conditions,” said the Daily Dairy Report.
The Daily Dairy Report says this is mostly positive for dairies. “With much of the Corn Belt receiving adequate moisture, the stage is set for another strong year of corn and soybean production, which will limit costs for operations that buy most of their feed. However, alfalfa hay has been below $250 per ton for most of the past two years and these conditions could push prices higher, slightly decreasing margins.
Drought in the Great Plains reduced USDA’s winter wheat forecast and drought could impact the beef herd which is already at a 75-year low, pushing retail prices higher. President Trump floated the idea of reducing tariffs on beef imports to lessen prices however the Wall street Journal reported the plan was delayed. The higher beef prices have been a godsend to struggling dairy producers.
The plan drew opposition from Farm Action, a self-described “nonpartisan agricultural watchdog organization led by farmers.”
“The administration appears to be presenting this move as a way to lower beef prices for consumers while supporting domestic cattle ranchers, but we’ve already seen this approach fail. Previous import expansions from Argentina did not meaningfully reduce beef prices because the real problem is a highly consolidated meatpacking sector controlled by just a handful of dominant corporations,” stated Sarah Carden, Farm Action’s research and policy director.
Dairy culling continues to run above a year ago. USDA says 47,100 dairy cows were sent to slaughter the week ending May 2, up 2,100 or 4.7% from a year ago. Year to date 981,400 had been culled, up 53,700 or 5.8% from a year ago.
Checking dairy demand, the March U.S. Dairy Supply and Utilization report showed some cooling. Total cheese utilization fell 2% from February to March but was up 2.1% from March 2025. The drop was primarily due to a 5% decline in domestic American cheese consumption. “Although exports remain elevated compared to the prior year, a lackluster U.S. market ultimately moves the needle as it represented 90% of total cheese use in first quarter 2026,” says HighGround Dairy.
Butter utilization was off 0.8% from a year ago, after two months of “smashed records,” says HighGround Dairy and the first year over year decline since November 2025. “Even more curious was the counter-seasonal monthly decrease. Easter, Passover and Ramadan were earlier in 2026 than in 2025, which likely led to the big totals in January and February.” Domestic utilization dropped 6.3%, lowest level for the month since 2023,” according to HighGround Dairy.
Dry whey disappearance was up 0.8%, with domestic demand down a whopping 40.2%, lowest on a 30-day adjusted basis since March 2014, according to HighGround Dairy, offset by larger export volumes, up 37.1%, to China, Canada and Mexico.
Nonfat milk powder and skim milk powder utilization rose for the third consecutive month, up 12.4% from a year ago. Domestic use was up 93.8%, as cheesemakers standardized their vats, while powder exports were down 7.9% from a year ago.
Fluid milk sales reversed course in March, after slipping the previous two months. The USDA’s latest data showed packaged sales at 3.6 billion pounds, up 2.3% from March 2025 and followed a 0.4% slippage in February.
Conventional product sales totaled just under 3.4 billion pounds, up 2.1% from a year ago. Organic sales, at 272 million, were up 5.6% from a year ago and represented 7.5% of total milk sales in the month.
Whole milk sales totaled 1.3 billion pounds, up 4.8% from a year ago and up 3.1% for the three-month period. Whole milk represented 36.5% of total sales for the month. Skim milk sales, at 146 million pounds, were down 3.4% from a year ago and down 8% year to date.
Packaged fluid sales in the three-month period totaled 10.8 billion pounds, off 0.2% from 2025. Conventional product sales totaled just under 10 billion pounds, off 0.2% from a year ago. Organic products, at 774 billion pounds, were up 0.1% and represented 7.2% of total milk sales for the year so far. The figures represent consumption in federal market orders which account for about 92% of total fluid sales in the U.S. About 7.5% U.S. fluid sales are consumed in schools.
Chicago Mercantile Exchange block cheddar climbed to $1.64 per pound Wednesday, May 13, but closed Friday, May 15, at $1.555, down 6.75 cents on the week, lowest since April 9 and 37.5 cents below a year ago. The barrels had been holding at $1.60 since May 7 but lost 3 cents Thursday, May 14, and 1.5 cents Friday, May 15, also dipping to $1.555, 4.5 cents lower on the week and 32.5 cents below a year ago. Sales totaled 24 loads of block.
Dairy Market News reports that milk production is strong in the Central region. Spot milk was available, but some contacts reported lower volumes in their local area. Spot prices ranged midweek from $4 under to $2 over Class. Some reported that strong demand from other processors was increasing those prices. Cheese production was unchanged, as plants continue to run full schedules. Retail demand is strong, while food service sales are down year over year. Export cheese demand is strong. U.S. prices remain competitive, though some contacts said the price difference is slim and an uptick in domestic prices could cause export demand to decline.
Demand for spot milk in the West was not heavy from cheese makers as contractual intakes were generally covering strong production.
Spot availability was mixed. Some manufacturers described their inventories as extremely tight. Domestic cheese demand is steady and international buying is strong, thus keeping prices stable, according to some.
Cash butter fell to $1.6175 per pound on Wednesday but closed on Friday at $1.64, 2.5 cents lower on the week and 70.25 cents below a year ago. There were 99 loads that exchanged hands on the week.
Central region cream production remains strong, according to Dairy Market News. Demand is strong from Class II and Class III processors. Spot cream sales to churns were somewhat light, though contacts reported an uptick in interest from purchasers in the Southwest. Butter production is strong, with some increasing production of 82% butterfat butter amid strong export demand. Retail butter sales are steady domestically, while food service interest is light, says Dairy Market News.
Milk and cream production were keeping butter churns busy in the West. Spot cream demand was stronger from butter makers. Butter production was strong, producing stock before holiday downtime later this month. Inventories are described as stable or increasing. Domestic butter demand is moderate to strong and steady to strong from international buyers, according to Dairy Market News.
Grade A nonfat dry milk didn’t set any new record last week but remains strong, closing Friday at $2.2725 per pound,1.75 cents lower on the week but $1.0475 above a year ago. There were 28 sales on the week. Lack of product was behind the higher prices, but powder production is on the rise. Unfortunately, exports will suffer due to the high prices and the pendulum will likely soon reverse, with stocks rising and prices plummeting.
Dry whey closed the week at 68.5 cents per pound, 1.5 cents lower, but still 13.5 cents above a year ago. There were four sales on the week.
This week’s Global Dairy Trade Pulse saw just under 6.7 million pounds of product sold, up from 6.1 million on April 28. The price on anhydrous milkfat was up, butter was down. Skim milk and whole milk powder moved higher.
The House has passed the “Combatting Organized Retail Crime Act.” The National Milk Producers Federation and the U.S. Dairy Export Council called it “an important tool for our dairy producers to ensure that their products reach end customers safely and on time.” National Milk Producers Federation President and CEO Gregg Doud said “We appreciate Reps. Joyce, Lee, Valadao and Titus for leading this commonsense legislation to crack down on cargo break-ins that continue to affect US dairy shippers. We look forward to working to move the bill forward in the Senate and into law.”
Michael Dykes, president and CEO of the International Dairy Foods Association announced his plans to retire at the end of 2026.
This article originally appeared on Farmers Advance: Beef imports won’t fix high prices. US needs to tackle corporate consolidation
Reporting by Lee Mielke, Farmers’ Advance / Farmers Advance
USA TODAY Network via Reuters Connect
