The June Federal order Class I base milk price was announced by the USDA at $22.18 per hundredweight, up $2.03 from May, $4.92 above June 2025, and the highest Class I price since Nov. 2024. The six-month average stands at $17.92, down from $19.65 at this time a year ago, and compares to $18.83 in 2024.
The Agriculture Department’s monthly Livestock, Dairy, and Poultry Outlook, issued May 18, mirrored milk price and production projections in the May 12 World Agricultural Supply and Demand Estimates report.
The 2026 average number of dairy cows was raised 10,000 head to 9.620 million. Forecast milk per cow was lowered to 24,470 pounds, 15 pounds lower than last month’s forecast. 2026 output is now projected at 235.4 billion pounds, an increase of 100 million pounds from the previous forecast.
The 2027 dairy herd is projected to remain unchanged relative to 2026 at 9.620 million head. Milk per cow is 24,535 pounds, up 65 pounds from the 2026 forecast. Milk production was forecast at 236.0 billion pounds, up 600 million pounds from 2026.
The Outlook also stated that beef steer and heifer marketings for slaughter slowed below expectations from last month’s report, as feedlots still appear willing to add weight to cattle while awaiting higher bids from packers.
The latest NASS Cattle on Feed report showed the April 1 feedlot inventory at 11.576 million head, 0.5% below a year ago. Feedlot placements in March were more than 7% lower year over year at 1.659 million. Following a very slow pace of marketings in February, marketings in March were 1.632 million head, up about 10% compared to March 2025, according to the Outlook.
Current pastureland conditions are the worst and most widespread since the last drought period in 2021–22, the Outlook reported. As of May 12, 62% of the cattle inventory was in an area experiencing drought, up from 29% a year ago, and compares to 55% in 2022. The Outlook warned; “This may hamper hay production and forage conditions, limiting producers’ ability to expand herds.”
“Weekly slaughter data suggests that farmers are still retaining older dairy cows, and culling rates will likely remain lower in the near term given the high returns from beef-on-dairy calves, tight replacement inventories, and the prospects of higher all-milk prices,” the Outlook stated.
The USDA’s latest Livestock Slaughter report showed an estimated 215,100 head of dairy cows were slaughtered under federal inspection in April.
That’s down 24,100 head from March, but 7,900 or 3.8% above April 2025. The latest weekly data shows 46,700 dairy cows sent to slaughter the week ending May 9, up 800 or 1.7% from a year ago. Year to date 1,028,100 head had been culled, up 54,500 or 5.6% from a year ago.
The latest Crop Progress report showed 76% of U.S. corn was in the ground, as of the week ending May 17, up from 57% the previous week, equaling that of a year ago, but 6% ahead of the five-year average. 39% was emerged, up from 23% the previous week, 8% behind a year ago but 2% ahead of the average. Soybean plantings were at 67%, up from 49% the previous week, 4% ahead of a year ago, and 10% ahead of the five-year average. 32% was emerged, up from 20% the previous week, dead even with a year ago, but 9% ahead of the average.
The latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. says “Dairy margins deteriorated further over the first half of May with mixed trends in both milk prices and feed costs as Class 3 prices were weaker while Class 4 prices strengthened and corn prices were flat while soybean meal rose sharply.”
“There has been a significant diversion in price between milk classes,” the MW stated, “As a blistering rally in the powder market with nonfat dairy milk (NDM) hitting fresh highs has supported Class 4 Milk futures while Class 3 Milk has been under pressure. Spot NDM at the CME reached a new all-time high of $2.295 per pound, and manufacturers’ stocks of NDM at the end of March were down 10.3% year-over-year, but up 6.9% from the prior month.”
The MW warned “A sharp unwinding of spread trading between soybean oil and soybean meal has allowed the meal market to catch a bid recently as year-round adoption of E15 may support corn-based ethanol at the expense of biodiesel production from soybean oil, according to a recent CBO report.” E15 is a fuel blend that consists of 10.5% to 15% ethanol mixed with gasoline, and in the United States, nearly all of this ethanol is derived from corn.
The MW reported “The March Dairy Products report showed combined production of NDM and skim milk powder at 212.7 million pounds, up 10% from last year. Cheese production of 1.258 billion pounds climbed 1.2% from a year ago although a sharp divergence in varieties was noted with Italian-style cheese production up 2.3% due to strong Parmesan production while American varieties declined 2.3% from 2025, including a 2% drop in Cheddar production. Butter production at 231.5 million pounds was also up 1.2%. USDA also reported record March exports of 568.3 million pounds in combined dairy products.”
There were lots of pluses in China’s April dairy import data. HighGround Dairy stated in its analysis “The number of bidders from North Asia has remained notably light on the Global Dairy Trade platform throughout 2026.”
“Trade data continues to confirm that China sourced massive volumes from New Zealand off-platform instead,” says HGD, “likely secured late last year when pricing was undeniably favorable. April imports climbed to the highest levels since February 2022 and marked the strongest April in five years. Nearly all the growth came from New Zealand, with volumes up 76% from 2025.”
Cheese imports totaled 43.9 million pounds, up 16.8% from a year ago, and the strongest April volume on record, according to HighGround, which added “Cheese demand continues to prove resilient as consumer preferences evolve, with diets increasingly shifting toward newer dairy formats centered around pizza, foodservice, and convenience-oriented consumption.”
Butter imports totaled 19.8 million pounds, up 23.3%. Whole milk/skim milk powder hit 197.7 million pounds, up 36.4%. Most of that was on whole milk powder, as skim milk powder imports were off 0.2%. Whey product imports, at 125.3 million pounds, were up 3.5%, and nearly half of that was from the USA.
Butter and powder nudged this week’s Global Dairy Trade higher. The weighted average was up 0.6%, following a 1.5% rise on May 5. Volume dropped to 28.6 million pounds, down from 30.3 million on May 5. The average metric ton price was $4,198 US, up from $4,127 on May 5.
The gains were led by butter, up 2.5%, after dropping 2.6% on May 5. Anhydrous milkfat was down 1.6% however, after advancing 1.1% on May 5. Skim milk powder was up 0.2%, following a 3.0% jump, and whole milk powder was up 1.2%, following a 2.2% advance. Lactose was up 0.5%, after jumping 3.7%. Cheddar was down1.3%, after dropping 3.6% last time, but GDT Mozzarella was up 2.9%, and followed a 4.7% rise last time.
StoneX says the GDT 80% butterfat butter price equates to $2.5109 U.S. per pound, up from $2.4451 on May 5, and compares to CME butter which closed Friday at $1.5350. Cheddar equated to $2.0684, down from $2.0916 last time, and compares to Friday’s CME block Cheddar at $1.5050. GDT skim milk powder averaged $1.6112 per pound, up from $1.6091, while whole milk powder averaged $1.7111, up from $1.6968, while CME Grade A nonfat dry milk closed Friday at $2.0725 per pound.
“North Asia increased purchases from the last event,” says StoneX, “but remained below year-ago levels. Southeast Asia/Oceania was the only region to increase purchase volume from the previous year. Europe and Middle East purchases were particularly weak, likely due to plentiful stocks in Europe and conflict in the Middle East.”
In other trade news, StoneX also reported that Chinese milk equivalent exports in April were down 17.1% from last year following a 36.2% decline in March.
High protein milk protein concentrate, casein, whey protein concentrate, whey protein isolate exports were strong but volume was low. Skim milk powder exports were also still strong with the weakness primarily coming from whole milk powder. “With the Chinese market shifting from over supply to a more balanced position,” StoneX says, “It expects exports to remain weak this year.”
CME Cheddar block fell to $1.5050 per pound the Friday before Memorial Day, down a nickel on the week, lowest CME price since Feb. 20, and 36.50 cents below a year ago, as traders anticipated the long weekend and the afternoon’s April Milk Production and Cold Storage reports. The barrels closed Friday at $1.48, 7.50 cents lower on the week, lowest since Feb. 19, and 37.25 cents below a year ago. 47 loads of block found new homes this week and 2 of barrel.
Central region milk production is steady, according to Dairy Market News, and above a year ago. Cheesemakers ran full schedules ahead of the holiday weekend. Mid-week spot prices for Class III milk were down from last week and ranged $6-under to $1-over Class. Some cheesemakers were purchasing spot milk from nearby processors at lower prices, due to the holidays, while others were paying prices close to or above Class to ensure enough milk to run full schedules. Domestic cheese demand is strengthening as retailers and food service providers prepare for summer. Export demand was unchanged.
Milk intakes at cheese facilities in the West were meeting expectations. In a few parts of the West, milk was tight. Demand for spot loads from cheese makers was moderate. Cheese production was steady to lighter. Spot inventories continue to be tight for some manufacturers. Buyers indicate spot loads are available, but not in abundance for every type of cheese. Domestic demand is steady. Export demand varies from steady to strong as U.S. prices are still competitive but the difference is narrowing, according to DMN.
CME butter fell to $1.5250 per pound Thursday, lowest since Jan. 29, but closed Friday at $1.5350, down 10.50 cents on the week and 88.50 cents below a year ago. There were 118 loads sold on the week, highest since late March.
Central region cream production is strong, says DMN, and inventories remain somewhat snug amid strong demand from Class II processors. Some butter makers in the Southwest were buying cream from the West where multiples are lower to keep churns active. Butter makers were running busy schedules this week. Domestic butter demand was unchanged. Retail sales remain strong, while food service demand is down from last year. Export demand remains strong, says DMN.
Seasonal milk output continues to provide plenty of cream for western butter manufacturers. Spot cream demand was mixed with the upcoming holiday weekend.
Butter manufacturers are working to build inventories ahead of upcoming holidays and summer months. Domestic demand is steady. Export demand varies from steady to stronger. Space in shipping lanes and at ports is reported to be tighter, presenting more logistical challenges for international trading, according to DMN.
What goes up, must come down and down it came. Grade A nonfat dry milk saw its Friday finish at $2.0725 per pound, plunging 20 cents on the week, lowest since April 9, but still 82 cents above a year ago. There were 26 trades this week.
Dry whey closed Friday morning at 68 cents per pound, a half-cent lower, but still 13.75 cents above a year ago, with 2 sales put on the board for the week.
The Food and Drug Administration (FDA) issued an Emergency Use Authorization this week for Dectomax/Dectomax-CA1 injectable solution for the prevention and treatment of New World screwworm infestations in lactating dairy cows, dry cows, and replacement heifers 20 months of age and older, except for calves to be processed for veal. The order also authorizes use in swine, horses at least one year old, sheep except for lactating sheep, and deer.
“The FDA has concluded that based on the totality of the scientific evidence available, it is reasonable to believe that Dectomax/Dectomax-CA1 may be effective for the indications in the species described above, and the known and potential benefits of the product outweigh its known and potential risks.”
Members of the International Dairy Foods Association (IDFA) donated more than 2,700 ice cream novelties and handheld frozen treats for Tuesday’s White House Congressional Picnic, in what IDFA called “A timeless American favorite with Members of Congress, administration officials and their families gathered on the White House South Lawn.”
“Ice cream is one of America’s most cherished traditions, bringing families, friends, and communities together across generations,” said Michael Dykes, president and CEO of IDFA. “We are proud to support this year’s White House Congressional Picnic and celebrate the people who dedicate themselves to serving our nation.”
I’ll have complete details next week on the April Milk Production and Cold Storage reports. One final note from “Down Under;” the May 20 Daily Dairy Report says “With only one more month of data left to cap off the 2025-26 milk production season, New Zealand looks poised to end the season on a high note with record levels of milk solids production.”
“For the season through April, milk production and total solids were up 3.5% and 4.4%, respectively, ahead of the same period in the 2024-25 season, both all-time highs,” according to the DDR.
This article originally appeared on Farmers Advance: Pastureland quality plummets to lowest levels since the 2021 drought
Reporting by Lee Mielke, Farmers’ Advance / Farmers Advance
USA TODAY Network via Reuters Connect
