The U.S. Department of Agriculture again raised its 2026 and 2027 milk production estimates in Friday’s World Agricultural Supply and Demand Estimates, based on the latest Milk Production report and raised cow inventories for both years. Output per cow was reduced slightly for 2026 but unchanged for 2027.
2026 production and marketings were projected at 236.6 billion and 235.6 billion pounds respectively, up 200 million pounds on both from a month ago. If realized, both would be up 4.9 billion pounds or 2.1% from 2025.
2027 production and marketings were projected at 238.1 billion and 237.1 billion pounds respectively, up 1.1 billion on both. If realized, both would be up 1.5 billion pounds or 0.6% from 2026.
Price forecasts for 2026 were lowered for nonfat dry milk, cheese and butter due to continuing strong growth in the milk supply. The whey price was unchanged from last month. The Class III and Class IV milk price forecasts were both lowered.
Price forecasts for 2027 were lowered for nonfat dry milk, cheese and butter while the price of whey was unchanged. As a result, the Class III and Class IV price forecasts were both lowered as well. I’ll have more details next week.
Class III milk futures prices on the morning of July 10 had the July contract at $15.62 per hundredweight, August at $16.72, September at $17.18, October at $17.63, November at $17.85 and December at $17.70.
The USDA’s latest Crop Progress report showed 16% of the corn crop was silking, as of the week ending July 5, up from 9% the previous week, 1% below a year ago but 2% ahead of the five-year average. Sixty-seven percent of the crop was rated good to excellent, unchanged from the previous week but 7% behind a year ago.
Looking at the beans, 34% were blooming, up from 19% the previous week, 4% ahead of a year ago and 6% ahead of the five-year average. Nine percent were setting pods, up 2% from a year ago and 3% of the average. Sixty-four percent were rated good to excellent, down 1% from the previous week and 2% behind a year ago.
Dairy cow culling remains well above a year ago. USDA’s latest data shows 49,200 head sent to slaughter the week ending June 27, up 4,100 or 9.1% from a year ago. The year-to-date total stands at 1,353,200, up 65,300 or 5.1% from a year ago.
Prices on Chicago’s LaSalle Street pushed higher last week. Block cheddar climbed to $1.565 per pound Thursday, highest since May 20 but closed the second Friday of July at $1.5475, up 11.5 cents on the week but still 11.25 cents below a year ago. The barrels closed Friday at $1.56 per pound, up 8.5 cents on the week, highest since May 14 and 11.5 cents below a year ago. Trading consisted of 21 loads of block on the week and five of barrel.
High temperatures in recent weeks have negatively impacted milk output in the Central region, reports Dairy Market News. Contacts say they are getting fewer spot milk offers. Prices increased slightly last week and ranged from $3 under to $2 over the Class price. Cheesemakers anticipate spot prices to increase in the coming weeks as milk output continues to decline seasonally. Cheese production is steady to stronger, as plants returned to full schedules following the Fourth of July holiday weekend. Retail cheese demand is steady, but food service sales remain light. Export demand is strong, but declining cheese prices in Europe are negatively impacting international interest, according to some.
Milk and cream production are lighter in the West, but cheese manufacturing is receiving expected milk deliveries. Class III spot milk is available but demand from cheese makers was moderate. Cheese production is stable and keeping pace with demand. Demand from domestic and international buyers is steady, according to Dairy Market News.
Cash butter closed July 10 at $1.65 per pound, 1.25 cents higher but 94 cents below a year ago with 36 sales posted for the week.
Central region high temperatures were negatively impacting milk output and component levels, said Dairy Market News. Cream production is declining week to week but remains up from last year. Cream demand picked up following the holiday weekend and cream multiples pushed higher last week. The strongest demand is from Class II manufacturers, but some butter makers were purchasing it to keep churns full and build inventory for use later in the year. Domestic butter demand is steady to light. Export demand is strong but lighter than earlier in the year. Inventories of 82% butterfat butter are snug, according to Dairy Market News.
Milk and cream production is lighter in the West but stakeholders say inexpensive spot loads of cream were available. Cream demand from butter manufactures was moderate though churns are active, keeping production and inventories stable. Domestic butter demand varied from steady to somewhat lighter last week, but manufacturers say year-to-date sales are up, especially for bulk butter. Export demand is steady.
Grade A nonfat dry milk fell to $1.475 per pound July 7, lowest since Feb. 2 but saw its July 10 finish at $1.555, up a nickel on the week and 28.75 cents above a year ago. There were 70 Chicago Mercantile Exchange sales on the week.
Chicago Mercantile Exchange dry whey ended the week at 69 cents per pound, half a cent higher and 12.25 cents above a year ago, with only one sale recorded.
“Whey prices have stayed above 60 cents per pound, a historically high price, since September 2025. A nickel increase in dry whey prices results in a 30 cent per hundredweight increase in the Class III price. With cheese prices in the doldrums, higher whey prices have been providing support to the Class III complex,” said the July 9 Daily Dairy Report.
Dairy farmers can be grateful that strong exports are helping keep U.S. prices as strong as they are, considering the amount of milk being produced. May exports totaled 574 million pounds, up 13.4% from May 2025 and up 0.9% from April.
“More product moved to eight of the US’ top 10 export destinations, led by China, where shipments surged 213% from 2025. The sharp year-over-year increase largely reflects an easy comparison, as US-China trade tensions weighed heavily on exports a year ago. Even so, May marked the largest monthly US dairy export volume since June 2025,” said HighGround Dairy.
Cheese exports hit 135.4 million pounds, up 18.4% from a year ago and up 23.8% year to date. Butter sailings totaled 21.9 million pounds, up 89.4% from 2025 and up 104.2% year to date.
Nonfat dry and skim milk powder exports fell to 109.5 million pounds, down 20% from a year ago. HighGround Dairy said that likely reflects elevated U.S. prices relative to competing exporters. On a 30-day adjusted basis, it was the lowest monthly volume since January 2025, with exports to Mexico down 13.2%.
Dry whey exports, at 60.5 million pounds, were up 112%, highest volume since June 2010. Shipments rose to all of the top 10 destination countries, according to HighGround Dairy, with China’s purchases up a whopping 437%.
Global dairy prices continued to fall seasonally at the Global Dairy Trade last week, down for the third event in a row. The weighted average dropped 4.9%, following a 2.8% decline on June 16 and 0.6% on June 2. Volume shot up to 58 million pounds, up from 28.5 million on June 16 and the highest since Jan. 20. The average metric ton price was $3,793, down from $3,979 on June 16.
“The new dairy season is under way in New Zealand, with another strong run of milk production expected through peak collections. As [Global Dairy Trade] offer volumes seasonally increase, buyers face less urgency to secure product, making price pressure more apparent,” warned HighGround Dairy in its pre-Global Dairy Trade analysis.
Cheddar led the declines, down 12.3%, after dropping 3.4% on June 16. Global Dairy Trade mozzarella, however, was up 3.8%, following a 5% fall last time. Skim milk powder was down 7%, after dropping 3.6%.
Whole milk powder was down 4.4%, following a 3.1% decline. Butter was down 5%, following a 2.4% loss and anhydrous milkfat was down 3.9% after seeing a 1% decline. Lactose was down 3.6% after jumping 4.2% last time. Buttermilk powder was up 8.2%.
StoneX says the Global Dairy Trade 80% butterfat butter price equates to $2.3615 per pound, down from $2.4412 on June 16 and compares to Chicago Mercantile Exchange butter which closed Friday, July 10, at $1.65. Cheddar equated to $1.7692, down from $2.0281 last time, first time below $2 since Nov. 18, 2025, and compares to Friday’s Chicago Mercantile Exchange block cheddar at $1.5475. Global Dairy Trade skim milk powder averaged $1.4219 per pound, down from $1.5275, while whole milk powder averaged $1.5537, down from $1.6280. Chicago Mercantile Exchange Grade A nonfat dry milk closed Friday at $1.555 per pound.
“North Asia, which includes China, increased purchases significantly from the very weak levels of the last event. Their purchases compared to last year were slightly lower but skim milk powder purchases specifically did increase across both periods. SE Asia and Oceania has an increase in purchase volume from both last year and last event, driven by increases in whole milk and skim milk powder,” said analyst Dustin Winston.
America’s big birthday bash has come and gone and for farmers and the farm bill is the priority. The Wisconsin-based American Dairy Association highlighted two comments made at a recent Senate Ag Committee hearing. Senator Jim Justice, R-West Virginia, said agriculture needs “a great big plan” to solve its fundamental riddle. Senator Peter Welch, D-Vermont summed up that riddle: “Our farmers create an immense amount of wealth, they just don’t get any of it.”
“USDA’s Economic Research Service reported in June that Americans spent a record $2.51 trillion on food in 2025,” the American Dairy Association stated. “Yet food accounted for just 9.7% of disposable personal income, down from 10.4% in 1997. Consumers are spending more than ever on food, but it takes a smaller share of their household income versus nearly three decades ago, and the USDA’s Food Dollar data show that just 3.3 cents of every consumer food dollar gets back to livestock production, including dairy, and 2.5 cents to crop production.”
“Dairy provides another example,” the American Dairy Association charged. “According to USDA’s Milk Production, Disposition and Income Summary, dairy farmers marketed nearly 5.8 billion more pounds of milk in 2025 than the year before. Yet dairy farm cash receipts fell by $1.9 billion. American farmers continue creating more wealth with every seed planted and every calf born and raised. The challenge is ensuring they can keep enough of it,” the American Dairy Association says. More details are posted at the American Dairy Association website.
Meanwhile, Western United Dairies had a warning for their dairy farmer members in the newsletter last week.
The Central Valley Regional Water Quality Control Board (RB5), on June 3, adopted the Modesto Nitrate Management Zone Implementation Plan (MZIP).
“For dairies, this Plan starts a 35-year timeclock,” said Western United Dairies. “Between now and then, dairy producers and the Central Valley Dairy Representative Monitoring Program (CVDRMP) have much work to accomplish. The goal at the end of the 35 years is to achieve no further degradation of the groundwater from nitrate.”
“The 35-year window provides time to identify and implement improvements needed to manage surplus nitrogen at each farm and then appropriately manage the remaining nitrogen. Specific deliverables must be accomplished over time and require accountability. The MZIP area will continue to test drinking water and provide safe water to residents with impacted wells when tests show water is above the safe drinking water standard for nitrate concentration. Within three years, examples include use of a new Data Management System for Annual Reports (web-based portal) and data collection to allow analyses of data at different scales, development of site-specific Irrigation and Nutrient Management Plans, and reporting of compliance with Irrigation and Nutrient Management Plan annually thereafter. At 10 years, each dairy must document it is on track to achieve 0 nitrogen surplus by the 35-year mark. This becomes increasingly more difficult for facilities that may have intermittent fallowing of land due to Sustainable Ground Water Management Act restrictions,” said Western United Dairies. Check the Western United Dairies website for complete details.
The International Dairy Foods Association praised the European Union’s implementation of the U.S.-EU trade agreement, stating that it “opens new export opportunities for US dairy.”
“The agreement establishes tariff-rate quotas (TRQs) which will allow tariff-free access for up to 10,000 metric tons (mt) of US cheese, and 10,000 mt of other US dairy products including yogurt, ice cream, dairy spreads and lactose,” the International Dairy Foods Association stated. “The EU also agreed to reduce tariffs on up to 50,000 mt of US infant formula and related products and streamline dairy certification requirements as part of this deal.”
“US exporters will be able to take advantage of these TRQs immediately,” the International Dairy Foods Association said. “As the entirety of quota volumes is now available at the reduced tariff rate through June 30, 2027. Importantly, the agreement also includes commitments that the EU’s sustainability regulations, including the Corporate Sustainability Due Diligence Directive, do not unfairly restrict EU-US trade or burden US companies.” commitments that the EU’s sustainability regulations, including the Corporate Sustainability Due Diligence Directive, do not unfairly restrict EU-US trade or burden US companies.”
This article originally appeared on Farmers Advance: ‘Our farmers create an immense amount of wealth, they just don’t get any of it’
Reporting by Lee Mielke, Farmers’ Advance / Farmers Advance
USA TODAY Network via Reuters Connect
By Lee Mielke, Farmers' Advance | USA TODAY Network
