The USDA Department sees plenty of milk ahead. It raised its 2025 and 2026 milk production forecasts in the latest World Agricultural Supply and Demand Estimates (WASDE) report, based on the most recent data in the Milk Production report. Growth in output per cow was also increased for both years.

2025 production and marketings were projected at 229.2 and 228.2 billion pounds respectively, up 900 million on both from a month ago. If realized, both would be up 3.3 billion pounds or 1.5 percent from 2024.

2026 production and marketings were projected at 230.4 and 229.4 billion pounds respectively, up 1.3 billion pounds from a month ago. If realized, both would be up 1.2 billion pounds or 0.5 percent from 2025.

The price forecast for 2025 butter was lowered from last month’s estimate, based on recent price weakness, and is now projected at a $2.52 per pound average, down 4 cents, and compares to $2.8870 in 2024 and $2.6170 in 2023. The 2026 average was projected at $2.55, up 1.50 cents from a month ago.

Cheese is expected to average $1.84 per pound, unchanged from a month ago, and compares to $1.8634 in 2024 and $1.7593 in 2023. The 2026 average was projected to slip to $1.81, unchanged from last month’s estimate.

Nonfat dry milk will average $1.2750 per pound in 2025, up 1.5 cents from a month ago, and compares to $1.2420 in 2024 and $1.1856 in 2023. The 2026 average is expected to climb to $1.2550, up 2 cents from last month’s estimate.

Dry whey was projected to average 57.50 cents per pound in 2025, unchanged from last month’s estimate, and compares to 49.13 cents in 2024 and 36.18 cents per pound in 2023. The 2026 average will fall to 51.50 cents per pound, says USDA, unchanged from last month’s projection.

The 2025 Class III milk price was projected to average $18.50 per hundredweight, unchanged 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, also unchanged from a month ago.

The Class 2025 IV price was lowered to $18.95, down a dime from last month’s estimate, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average was estimated at $18.85, up 25 cents from a month ago.

Fluid milk sales saw more improvement in June, perhaps driven by school pipeline filling. The USDA’s latest data showed packaged sales at 3.2 billion pounds, up 0.5 percent from June 2024, which follows a 0.9 percent slippage in May.

Conventional product sales totaled just under 3.0 billion pounds, up 0.6 percent from a year ago. Organic sales, at 231 million pounds, were down 1.1 percent from a year ago, and represented a typical 7.2 percent of total milk sales in the month.

Whole milk sales totaled 1.2 billion pounds, up 1.3 percent from a year ago, and up 0.7 percent year to date. Whole milk represented 37.8 percent of total sales for the month.

Skim milk sales totaled 159 million pounds, up 12.7 percent from a year ago, but down 2.9 percent YTD.

Packaged fluid sales in the first six months of 2025 totaled 21.1 billion pounds, down 1.1 percent from 2024. Conventional product sales totaled 19.6 billion, down 1.3 percent from a year ago. Organic products, at 1.5 billion pounds, were up 0.7 percent, and represented 7.2 percent of total milk sales in the six months.

Checking the demand side of things, the June Dairy Supply and Utilization report showed that cheese usage was up slightly, according to HighGround Dairy’s Curtis Bosma in the Aug. 18 Dairy Radio Now broadcast. This was good news, considering the new processing capacity that has recently come on line. Exports have picked up the slack of domestic demand, he said, and were up almost 12 percent year to date. Domestic cheese use was only up slightly from a year ago, so the exports have helped keep that market in balance.

Butter supply is also up, due to farm milk components being “through the roof,” according to Bosma. Domestic butter demand is carrying the weight, he said, up almost 5 percent year to date, and up 7 percent in the month of June.

Nonfat dry milk and dry whey demand however continues to struggle, down 5-8 percent. He cited lower sales to our top customer for powder, Mexico, and yet Mexico was our top importer of cheese.

Block Cheddar climbed to $1.88 per pound Tuesday, highest CME price since June 10, only to plunge 10.25 cents Thursday to $1.7775. A year ago it was trading at $2.10 per pound. It closed this past Friday at $1.85.

The barrels made it to $1.86 Tuesday, also the highest since June 10, but fell back to $1.8250 Thursday. Last year they were at $2.2550 per pound. They finished Friday at $1.7975.

Milk output continues to decline in the Central region, according to Dairy Market News. Cheesemakers say there are few loads available on the spot market, but downtime at some cheese plants is keeping some available to nearby plants. Contacts report lower Class III prices at the bottom of the range this week, due to this downtime, and ranged $3-under to $2-over at mid-week. Cheese production is steady to lighter. Domestic cheese sales to retail and food service markets are light and down from a year ago while export cheese demand remains strong.

Cheese manufacturers across the West report milk remains mostly robust. Milk demand is holding steady, with availability seasonally tighter as temperatures rise again, yet generally balanced across the region. Production is running efficiently. Domestic demand is steady to light, while international buying holds firm, in some cases strengthening. U.S. cheese continues to offer attractive value on the global stage, says DMN, maintaining a competitive edge.

Butter continued its freefall that started last week. It closed Thursday at $2.28 per pound, lowest CME price since April 29, 2025, and compares to a year ago when it had peaked for the year at $3.18 per pound. It closed Friday at $2.3550.

With Central region milk output and components declining, components do remain above a year ago. Cream production is down week-to-week but up from last year. Contacts say softening demand for cream from ice cream makers is leaving plenty available for churning. Butter makers are running busy schedules. Domestic butter interest is lackluster, but has held steady in recent weeks. Spot inventories of 82 percent butterfat butter are tight, amid strong demand from international purchasers, according to DMN.

Butter manufacturers in the West continue to meet contractual needs, even as seasonal declines in milk components persist. Cream demand from ice cream production remains somewhat strong, and spot cream for butter is generally available. Churning activity is mixed, with some plants running steady schedules while others experience downtime for equipment upgrades or maintenance. Spot cream prices and availability show typical seasonal variability. Salted butter is widely available, while unsalted product is somewhat tighter. Domestic demand is steady to stronger, though some sellers note softer food service orders compared to last year. Export demand remains mostly steady.

Grade A nonfat dry milk was trading Thursday at $1.26 per pound, after closing Friday at $1.2650.