The July Federal order Class III benchmark milk price was announced at $15.52 per hundredweight (cwt.), down 46 cents from June, $1.80 below July 2025, and the lowest Class III since February. The seven-month average stands at $15.85, down from $18.76 a year ago, and compares to $17.33 in 2024. Wednesday’s futures settlements portend an August price at $16.75; September, $16.99; October, $17.31; November, $17.47; and December at $17.51 per cwt.

The July Class IV price is $18.34, down $2.62 from June, 55 cents below a year ago, and also the lowest since February. The seven-month Class IV average is $18.66, down from $18.87 a year ago, and compares to $20.33 in 2024.

U.S. dairy farmers can be mighty grateful for the export market as 547.8 million pounds left our shores in June, though it was down 4.6 percent from the near all-time high in May, according to HighGround Dairy. Exports to China were down 37 percent.

Cheese exports totaled a record 142.4 million pounds, up 23.9 percent from June 2025, and up 89.9 percent year to date. Mexican imports were up 49 percent in June.

Butter exports, at 19.2 million pounds, were up 35.4 percent, and up 89.9 percent year to date. HighGround points out, “Butter exports slipped to their lowest mark since October 2025, but historically speaking, were still quite impressive, ranking in the 89th percentile over the past five years. Imports dropped from May but were well above the prior year. Over the last few months, reported butter import levels have moved back toward the big volumes seen in second half 2024.”

The overall export decline came from nonfat dry milk (NFDM) and skim milk powder (SMP), whey protein concentrates, and lactose. NFDM/SMP shipments, at 105.8 million pounds, were down 19.1 percent and down 3.0 percent year to date. These sales would have been booked in March and April, says HGD, when U.S. prices were “wildly out of sync with world prices and global buyers shopped elsewhere.”

Dry whey exports totaled 56.5 million pounds, up 47.3 percent from a year ago, and up 54.1 percent year to date.

U.S. dairy margins were flat to slightly stronger the last half of July with mixed trends in both milk prices and feed costs, according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. “Class III milk prices rose initially in late July before selling off at the end of the month while Class IV milk displayed the opposite trend,” the MW stated.

The MW reported June Milk Production data, which I previously detailed. It stated that the U.S. milking herd is the largest in 33 years and warned “Growth in the U.S. dairy herd along with higher component output from the milk being produced has led to strong growth in both cheese and butter production in particular which is starting to weigh on dairy product prices.”

The MW also reported June Cold Storage numbers, pointing out that cheese stocks grew 1.1 percent from May: “A larger seasonal increase than normal and the highest inventory build between the two months since 2015.”

Meanwhile; lower corn and soybean prices prompted a slight increase in the June milk-feed ratio, despite a drop in the All Milk price. The Ag Prices report showed June at 2.23, up from May’s 2.21, but down from 2.34 in June 2025.

The All Milk Price averaged $21.10 per cwt., with a 4.23 percent butterfat test, down 20 cents from May’s $21.30 on a 4.31 percent test. That compares to $21.30 a year ago, which had a 4.19 percent test.

The national corn price averaged $4.28 per bushel, down 20 cents from May, and 19 cents below June 2025. Soybeans averaged $11.30 per bushel, down 30 cents from May, but 90 cents per bushel above a year ago. Alfalfa hay averaged $198 per ton, up $3 from May, and $21 above a year ago.

The June cull price for beef and dairy combined averaged $175 per cwt., up $3 from May, $25 above June 2025, and $103.40 above the 2011 base.

Economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo., says milk production margins decreased for the first time since January, losing 4 cents per cwt., and was above $11.00 per cwt. for the third month running at $11.64.

“Income over feed costs in June were above the $8 per cwt. level needed for steady to higher milk production for the 34th month in a row,” he said. “Input prices were mostly lower in June with one of the three input commodities inside of the top 10 for June all-time. Feed costs were the ninth highest ever for the month of June and decreased 16 cents per cwt. from May.

“Milk income over feed costs for 2026 (using July 31 CME settling futures prices for Class III milk, corn and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $11.19 per cwt.,” according to Brooks, “a loss of 25 cents per cwt. versus last month’s estimate. Income over feed costs in 2026 would be above the level needed to maintain or grow milk output, down $1.25 per cwt. from 2025, and 49 cents higher than the 2021-25 average.”

Milk income over feed costs for 2027 are expected to be $11.12 per cwt., a loss of 7 cents versus 2025, Brooks concludes.

It would also be above the level needed to maintain or grow milk production, up 41 cents per cwt. from the 2021-25 average and down 70 cents from the previous month.”

Farm real estate value averaged $4,500 per acre for 2026, up $150 or 3.4 percent from 2025, according to the USDA’s latest Land Values Summary. Cropland value averaged $6,020 per acre, an increase of $190 or 3.3 percent. Pasture value averaged $2,000 per acre, up $80 or 4.2 percent from 2025.

CME Cheddar block cheese fell to $1.52 per pound Wednesday, lowest since July 7, but regained 1.50 cents Thursday, climbing back to $1.5350, 31.50 cents below a year ago. It closed Friday at $1.5725. The barrels were trading Thursday at $1.5475, 25 cents below a year ago, and unchanged from Friday’s close.

The Daily Dairy Report’s Sarina Sharp reported in the July 31 Milk Producers Council newsletter: “Processors were dumping some milk in California, where production has overwhelmed local capacity. Elsewhere there are more than enough cheese vats, butter churns and dryers to absorb summer milk volumes. However, processors are making more dairy products than consumers absorb, putting pressure on prices. American dairy commodities must remain cheap enough to attract international buyers,” she warned.

Dairy Market News reports that milk production is still rebounding from the recent heat-wave in the Central region. Spot prices at mid-week ranged $1-under to $5-over Class. Interest in barrels is on the rise. Mozzarella continues to be in strong demand ahead of Cheddar but exports were slowing.

Cheese production is steady in the West. Milk production is good, with some contacts reporting availability tightening. The West is experiencing hot, seasonal weather and smoke. Cheese inventory is steady, with production matching demand. Retail and domestic demand remain steady. Strong exports continue.