The USDA left its 2026 milk production estimate unchanged in the latest World Agricultural Supply and Demand Estimates (WASDE) report, but lowered its 2027 estimate. Based on the latest Milk Production report, cow inventories were raised for 2026 and unchanged for 2027. Output per cow was reduced slightly for both 2026 and 2027.

2026 production and marketings remained at 236.6 and 235.6 billion pounds respectively. If realized, both would be up 4.9 billion pounds or 2.1 percent from 2025.

2027 production and marketings were projected at 238.0 and 237.0 billion pounds respectively, down 100 million pounds on both. If realized, both would be up 1.4 billion pounds or 0.6 percent from 2026.

Commercial export forecasts for 2026 were lowered on a skim-solids basis primarily on reduced shipments of lactose and nonfat dry milk (NDM) but increased on a fat basis on increased shipments of butter. Exports for 2027, on a skim-solids basis, were lowered on reduced shipments of NDM, while exports on a fat basis were raised on increased shipments of butter and cheese.

Imports were increased on both a fat and skim-solids basis for 2026 due to increased shipments of butter, cheese, and milk proteins. Imports were also increased on a skim-solids basis for 2027 on increased shipments of milk proteins and prepared foods. Imports, however, were decreased on a fat basis on the expectation of reduced imports of butter in 2027.

Price forecasts for 2026 were decreased for butter and NDM but increased for cheese and whey. As a result, the Class III milk price forecast was raised, and the Class IV price was lowered. The Class III is now projected to average $16.25 per cwt., up a dime from last month’s report, and compares to $18.01 in 2025 and $18.89 in 2024. The 2026 Class IV is estimated at $18.15, down 25 cents from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024.

Price forecasts for 2027 were lowered for butter, increased for whey, and unchanged for cheese and NDM. Consequently, the Class III price was increased and the Class IV price was lowered. The 2027 Class III is expected to average $17.25 per cwt., up 20 cents from last month’s estimate. The Class IV was projected at $17.20, down 20 cents from last month’s projection.

The Daily Dairy Report’s Sarina Sharp wrote in the Aug. 7 Milk Producer Council newsletter, “Regular rains and a break from the heat dragged on crop values once again this week. This year’s harvest isn’t likely to top last year’s bumper crop; yields are expected to be the second highest ever. But exports are booming and, with Russia and Ukraine attacking one another’s export infrastructure and drought in Europe, the U.S. may be called upon to supply a greater share of the world’s grain.”

USDA’s weekly slaughter report shows 51,500 dairy cows were sent to slaughter the week ending July 25, up 100 or 0.2 percent from a year ago. Year-to-date data has 1,547,700 head culled from the herd, up 67,700 or 4.6 percent from a year ago.

You’ll recall June milk production was up 2.3 percent from a year ago, leaving plenty to process. Starting with cheese, USDA’s latest Dairy Products report shows production hit 1.231 billion pounds, down 4.1 percent from May, but 1.1 percent above June 2025. Output for the six-month period hit 7.5 billion pounds, up 2.4 percent from 2025.

Wisconsin produced 307 million pounds of the June total, off 0.2 percent from May, but up 4.1 percent from June 2025. California provided 197.6 million pounds, down 5.3 percent from May, and 9.1 percent less than a year ago. Idaho cheese, at 86.1 million, was down 4.4 percent from May, but 1.4 percent more than a year ago.

Italian style cheese totaled 521.6 million pounds, down 6.8 percent from May, and off 0.3 percent from a year ago, putting YTD output at 3.2 billion pounds, up 4.2 percent.

Mozzarella totaled 405.7 million pounds, down 2.4 percent from a year ago. Year to date, 2.5 billion pounds had been produced, up 2.3 percent from 2025.

American cheese, at 484.9 million pounds, was down 2.6 percent from May, but up 1.1 percent from a year ago. YTD 2.9 billion pounds have been produced, up 0.2 percent.

Cheddar output fell to 338.1 million pounds, down 8.3 million or 2.4 percent from May’s total which was revised down 4.1 million pounds, but was up 3.2 million or 1.0 percent from a year ago. YTD Cheddar hit 2.0 billion pounds, up 0.3 percent from a year ago.

Butter production dropped to 208.2 million pounds, down 16.1 million pounds or 7.2 percent from May, but up 16.4 million pounds or 8.5 percent from a year ago. YTD, 1.3 billion pounds had been churned, up 6.0 percent from a year ago.

Yogurt production totaled 446.3 million pounds, up 2.2 percent from a year ago, with YTD output hitting 2.8 billion pounds, up 5.5 percent. Hard ice cream came in at 68.7 million pounds, up 5.2 percent from a year ago, with YTD output hitting 381.6 million pounds, up 3.9 percent.

Dry whey production slipped to 80.9 million pounds, down 1.3 million pounds or 1.6 percent from May, but was up 5.5 million pounds or 7.3 percent from a year ago, due to the higher cheese output.

YTD 463.6 million pounds had been produced, up 6.9 percent. Whey stocks grew to 65 million pounds, up 1.9 million or 3.1 percent from May, and up 7.7 million pounds, or 13.5 percent from a year ago.

Nonfat dry milk output fell to 164.9 million pounds, down 8.4 million pounds or 4.8 percent from May, but was up 20.5 million or 14.2 percent from a year ago. YTD output hit 997.6 million pounds, up 8.5 percent. Stocks slipped to 243.2 million pounds, down 1.8 million or 0.8 percent from May, and down 900,000 pounds or 0.4 percent from 2025.

Skim milk powder production dipped to 28.7 million pounds, down 800,000 pounds or 2.7 percent from May, and down 25.2 million or 46.8 percent from a year ago.

Cash block Cheddar gained a nickel Monday, then added a half-cent Thursday, hitting $1.61 per pound, highest CME price since July 23, but 16.50 cents below a year ago, after closing Friday at $1.5550. The barrels gained 1.50 cents Thursday, climbing to $1.5625, highest since July 28, but 21.75 cents below a year ago. They had been holding at $1.5475 since July 30.

Central region contacts tell Dairy Market News that mild weather has improved cow comfort and helped stabilize milk output. Class I demand is strengthening as bottlers prepare for school openings, keeping spot availability limited. Spot milk was slightly long in some parts of the region, and a few loads moved at class price. At mid-week prices ranged from flat-Class to $5.00 over. Cheesemakers noted strong demand, and some indicate milk availability is tight. Cheese production remains active, supported by firm demand.

Milk and cream production are mixed in the West, and production was being affected by hot weather, fires and smoke. Milk availability in the Northwest is tight but contacts in the Southwest say availability is good, with some noting higher production than in previous weeks.