July butter stocks remained below those a year ago while cheese stocks were up slightly, according to the latest USDA Cold Storage report. Strong exports and good domestic demand are keeping product out of the cooler.

The July 31 butter inventory fell to 331.4 million pounds, down 24 million pounds or 6.7 percent from June, and down 21.5 million pounds or 6.1 percent from July 2024. June stocks were revised up 896,000 pounds.

StoneX says “The weak inventory number suggests disappearance is still running relatively strong. In fact the stocks/use ratio would argue for $3 plus.”

American type cheese stocks slipped to 808.3 million pounds, down 2.9 million or 0.4 percent from the June level, but were up 16.8 million or 2.1 percent from a year ago. The June total was revised up 6.1 million pounds.

The “other” cheese category holdings amounted to 585.3 million pounds, up 248,000 pounds or 0.04 percent from June, but were down 4.4 million or 0.7 percent from a year ago. The June total was revised up 924,000 pounds.

July’s total cheese inventory stood at 1.416 billion pounds, down 3.2 million pounds or 0.2 percent from June, but was up 12.6 million or 0.9 percent from a year ago. The June total was revised up 7.1 million pounds. Total stocks were above the prior year for the first time in 17 months.

The Aug. 22 Daily Dairy Report stated, “It is not uncommon for butter stocks to fall during July, but the 23.982-million-pound decrease witnessed between June and July this year was a much larger dip than usual and marks the largest drawdown for the month since 1987.” The bad news is the butter price plunged this week.

The Daily Dairy Report also warns that butter exports could be limited due to capacity. “Both European and Oceania butter specs call for 82 percent milkfat and no salt,” says the DDR, “while most product in the United States is 80 percent fat and salted. Some U.S. churns can make product for the export market according to international specifications. However, since most butter made in the U.S. is consumed stateside, processors tailor their output to meet domestic needs.”

The DDR adds that the export market prefers bulk butter versus retail sized product. “Historically, processors wait until they have export commitments to produce butter to international specs to avoid the risk of making product with limited demand in the United States.

“Putting the pieces together, even though U.S. butter is priced at a huge discount to global product and the U.S. has been a net exporter of butter so far in 2025, future shipments abroad could be constrained due to capacity and caution on the part of processors to build stores of bulk butter made for the international market. This could keep U.S. butter prices crimped and mute any price rallies this fall.”

Meanwhile, consumers are still asking “Where’s the beef?” despite the high prices and sales actually edged upward last year, according to a new research brief from CoBank’s lead animal protein economist Brian Earnest.

Speaking in the Sept. 1 Dairy Radio Now broadcast, CoBank lead dairy economist Corey Geiger said all-fresh retail beef prices hit a record $8.90 per pound, highest level in at least 25 years. He said the average American will likely consume about 60 pounds this year, despite prices being up over 9 percent.

One of the underlying factors is that the beef cattle inventory is at a 75-year low, according to Geiger. He also pointed out that Farm Credit East data shows that five years ago, cattle sales contributed just 5 percent of total income on the dairy, or about $1.12 per hundredweight. Last year that value skyrocketed 130 percent to $2.57 per hundredweight and this year’s data will likely be higher.

Other contributors are the heightened interest in dietary protein, changing health perceptions surrounding beef, and the availability of restaurant-quality beef at retail grocery stores.

Geiger said the number of people on weight loss drugs and the move to high protein diets is fueling beef demand and the dairy industry is making its contribution to the beef supply as well.

Cash block Cheddar looks like it will close the week and the month of August well below a year ago. The blocks were trading Thursday at $1.7750 per pound, as traders anticipated the Labor Day holiday weekend. It closed Friday at $1.75 while a year ago it was at $2.21 per pound.

The barrels closed Thursday at $1.78 per pound, after finishing Friday at $1.76 but down from $2.26 a year ago.

StoneX Aug. 26 Early Morning Update stated, “There is cheese available out there, but fresh 40-pound exchange-eligible Cheddar appears to be relatively in balance around current levels. It doesn’t appear there is a material worry by either spot buyers or sellers at the moment.”

Central region milk output is steady to lighter, says Dairy Market News, but up from a year ago. Class III milk demand is steady but few spot loads are available, with some cheesemakers purchasing milk from nearby plants with downtime. Spot prices at mid-week ranged from flat to $2-over. Plant managers say cheese output is steady to lighter amid declining milk output. Demand is steady from retail, while food service sales are light and down from a year ago. Cheese exports remain strong, according to DMN.

Cheese manufacturer milk needs in the West are being met however, as more educational institutions begin their school year, milk bottling is increasing and will tighten spot availability. Domestic retail cheese demand varies from steady to light. Sellers describe food service demand as down from the prior year while demand from international buyers is steady or strong.

Cash butter plunged to $2.05 per pound Wednesday, lowest CME price since Dec. 9, 2021, when the market was recovering from COVID-inspired weakness. It was bid up 3.50 cents Thursday to $2.0850, after closing Friday at $2.2350.

Cream is plentiful in the Central region and butter makers are running busy schedules, says DMN. Retail and food service butter demand is steady, but some contacts report sales are down from a year ago. Export demand for 82 percent butterfat butter is strong. Spot loads are available and some manufacturers continue to freeze product for use later in the year. Bulk demand is declining.

Western butter manufacturers report ample amounts of spot cream is available, along with contractual volumes. Butter demand is mixed. Some plants operating their churns at less than 100 percent capacity were choosing to pass up spot cream offers at current prices. Butter producers are working to build retail stocks for fourth quarter demand. Demand from international buyers is ahead of product produced for international sales while domestic demand is reported as stronger.

Grade A nonfat dry milk saw some minor fluctuations this week but was trading Thursday at $1.26 per pound, following a Friday finish at $1.26.

Dry whey climbed to 57 cents per pound Monday but was trading Thursday at 55.50 cents per pound, matching its Friday close.

Updating things on the tariff front: Canada announced that, starting Sept. 1, it would remove retaliatory tariffs on U.S. imports covered under the U.S., Mexico, Canada trade agreement (USMCA).