The USDA again raised its 2025 and 2026 milk production forecasts in its latest World Agricultural Supply and Demand Estimates report. The rise was based on higher cow inventories and an increased rate of growth in milk per cow as evidenced in the latest Milk Production report.

2025 production and marketings were projected at 228.3 and 227.3 billion pounds respectively, up 500 million on both from a month ago. If realized, both would be up 2.4 billion pounds or 1.1 percent from 2024.

2026 production and marketings were projected at 229.1 and 228.1 billion pounds respectively, up 900 million pounds from a month ago. If realized, both would be up 800 million pounds or 0.4 percent from 2025.

The 2025 price forecast for cheese was lowered, based on recent prices. Butter, nonfat dry milk (NDM), and whey prices were increased from the previous month’s forecast based on robust demand.

The 2025 Class III milk price forecast was lowered, as lower cheese prices more than offset higher whey prices. The 2025 average was projected at $18.50 per hundredweight, down 15 cents from last month’s estimate, and compares to $18.89 in 2024 and $17.02 in 2023. The 2026 average was projected at $17.85, up a nickel from a month ago.

The Class IV price was raised on higher butter and NDM prices. It is expected to average $19.05 in 2025, up 20 cents from last month’s estimate, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average was estimated at $18.60, up 40 cents from a month ago.

This month’s corn outlook is for smaller supplies, domestic use, and ending stocks. Beginning stocks were cut 25 million bushels to 1.3 billion, reflecting an increase in exports that is partly offset by lower feed and residual use. Feed and residual use is down 75 million based on indicated disappearance in the June 30 Grain Stocks report. Exports were raised 100 million bushels to 2.8 billion based on current outstanding sales and, if realized, would be record high.

Corn production for 2025-26 was estimated at 15.7 billion bushels, down 115 million bushels on lower planted and harvested area. The yield was unchanged at 181 bushels per acre. Total use was cut 50 million bushels with a reduction for feed and residual use based on lower supplies. With supply falling more than use, ending stocks are down 90 million bushels. The season-average farm price was unchanged at $4.20 per bushel.

Soybean production was projected at 4.3 billion bushels, down 5 million from last month on lower harvested acres and an unchanged yield of 52.5 bushels per acre. The crush was raised 50 million bushels to 2.54 billion, supported by higher demand for soybean oil for biofuel. Exports were lowered 70 million bushels to 1.75 billion. The U.S. season-average soybean price was projected at $10.10 per bushel, down 15 cents from last month.

StoneX reported, “Corn exports have been strong to-date, however we export a lot of ethanol to Canada that will be impacted by the new tariffs Trump has put in place. The U.S.-Mexico border has also been closed for cattle trade with New World Screwworm reemerging in Mexico. Those cattle are going to still need to be fed, but it will be across the border now, which should help boost exports.”

The USDA’s latest Dairy Supply and Utilization report had encouraging news as May cheese use hit 1.26 billion pounds, up 1.2 percent from May 2024 and moved into the top five all-time utilization numbers, according to HighGround Dairy. “Other than American cheese exports set a record, and international usage for the month ranked number three in the data back to 2011 (on a 30-day basis).”

Butter disappearance, at 193.2 million pounds, was down 3.6 percent, after marking a record-high April. Domestic consumption waned post the Easter holiday, explains HGD, however, exports climbed to11.6 million, up 132.0 percent as international buyers took advantage of cheap U.S. product along with a weak U.S. dollar.

Nonfat and skim milk powder use totaled 229.7 million pounds, up 10.9 percent from a year ago, first time to top year ago numbers since January 2024. HighGround credited elevated domestic and international demand.

Dry whey utilization, at 69.5 million pounds, dropped 10.0 percent, due to the loss of exports to China which were down 67 percent, according to HGD. “Tariff troubles began early in the year, and May’s sales were likely booked in February, when the issues were escalating.”

CME block Cheddar fell to $1.6250 per pound Tuesday but was trading Thursday at $1.64, after closing Friday at $1.66. The barrels fell to $1.65 Tuesday and remained there Thursday, following a Friday finish at $1.6750.

Mild temperatures in the Midwest in recent weeks contributed to a slight uptick in milk output, according to Dairy Market News, but remains down from June. Some cheesemakers said downtime at nearby plants enabled them to obtain spot milk at lower prices. Retail cheese sales were steady, food service was light, but export demand is strong.

Cheese production is steady in the West, though some plants reported declining milk output is causing them to look for milk. Cheese is available although manufacturers note strong export demand is keeping inventories for some varieties tighter than others. Retail sales are steady and demand is up.

Food service sales are light and down from a year ago, says DMN.

The butter closed Thursday at $2.53 per pound, lowest CME price since June 25, following a Friday close at $2.59.

Milk components continued to decline throughout most of the Central region, but mild temperatures in recent weeks were improving cow comfort, leading to an uptick in milk output and components. Ice cream makers are purchasing significant volumes of cream. Retail butter demand is steady, but some contacts say interest is down from last year. Food service butter demand is light. Export demand remains strong due to bargain U.S. prices.

Declining milk output in the West is contributing to reduced cream production. This, along with strong demand, is reducing availability. Multiples at mid-week were are up slightly. Butter makers are running steady production, though some note high cream multiples are preventing them from purchasing additional volumes. Domestic demand is steady. Retail sales are up but food service sales are down. Strong export demand is keeping inventories from growing, says DMN.

Grade A nonfat dry milk got a little support from the GDT this week and closed Thursday at $1.29, highest since Feb. 13, after finishing Friday at $1.2675.

StoneX broker Dave Kurzawski said in the July 21 Dairy Radio Now broadcast, “There’s so much in flux right now with tariffs being on again, off again.” He said Mexican buyers may be front loading purchases until the situation is resolved. He adds that domestic disappearance has been good on powder as well.

New plants are adding product and when asked if exports will keep up with the supply, he said, if U.S. prices stay at $1.70 or below, exports will remain strong as U.S. cheese has the lowest price globally. The big question is demand. Domestic demand has been “stable at best,” he concluded, but we don’t have a huge overhang of stocks. “We haven’t had a chance to build those up.”