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 November 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 USDA’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 percent below a year ago. Feedlot placements in March were more than 7 percent 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 percent 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 percent of the cattle inventory was in an area experiencing drought, up from 29 percent a year ago, and compares to 55 percent 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.

USDA data shows 47,100 dairy cows were sent to slaughter the week ending May 2, up 2100 or 4.7 percent from a year ago. Year to date 981,400 had been culled, up 53,700 or 5.8 percent from a year ago.

Meanwhile, the latest Crop Progress report showed 76 percent of U.S. corn was in the ground, as of the week ending May 17, up from 57 percent the previous week, equaling that of a year ago, but 6 percent ahead of the five-year average. 39 percent was emerged, up from 23 percent the previous week, 8 percent behind a year ago but 2 percent ahead of the average. Soybean plantings were at 67 percent, up from 49 percent the previous week, 4 percent ahead of a year ago, and 10 percent ahead of the five-year average. Thirty-two percent was emerged, up from 20 percent the previous week, dead even with a year ago, but 9 percent 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 percent year-over-year but up 6.9 percent 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 percent to 15 percent ethanol mixed with gasoline, and in the United States, nearly all this ethanol is derived from corn.

“The March Dairy Products report showed combined production of NDM and skim milk powder at 212.7 million pounds, up 10 percent from last year. Cheese production of 1.258 billion pounds climbed 1.2 percent from a year ago although a sharp divergence in varieties was noted with Italian-style cheese production up 2.3 percent due to strong Parmesan production while American varieties declined 2.3 percent from 2025, including a 2 percent drop in Cheddar production. Butter production at 231.5 million pounds was also up 1.2 percent. USDA also reported record March exports of 568.3 million pounds in combined dairy products,” the MW concluded.

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 percent from 2025.”

Cheese imports totaled 43.9 million pounds, up 16.8 percent 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 percent. Whole milk/skim milk powder hit 197.7 million pounds, up 36.4 percent. Most of that was on whole milk powder, as skim milk powder imports were off 0.2 percent. Whey product imports, at 125.3 million pounds, were up 3.5 percent.

utter and powder nudged this week’s Global Dairy Trade higher. The weighted average was up 0.6 percent, following a 1.5 percent 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 percent, after dropping 2.6 percent on May 5. Anhydrous milkfat was down 1.6 percent however, after advancing 1.1 percent on May 5. Skim milk powder was up 0.2 percent, following a 3.0 percent jump, and whole milk powder was up 1.2 percent, following a 2.2 percent advance. Lactose was up 0.5 percent, after jumping 3.7 percent. Cheddar was down1.3 percent, after dropping 3.6 percent last time, but GDT Mozzarella was up 2.9 percent, and followed a 4.7 percent rise last time.