You’ll recall July milk production was up 3.4 percent from a year ago. Milk components were also up, leaving plenty to convert into the cheese, butter and other products we all love. The USDA’s latest Dairy Products report shows where the milk went.

July cheese output climbed to a record for the month and was a few million pounds short of the all-time record, coming in at 1.215 billion pounds, up 0.9 percent from June, and 2.1 percent above July 2024. Total output in the seven-month period hit 8.5 billion pounds, up 1.7 percent from the same period in 2024.

Mozzarella production totaled 412.3 million pounds, up 3.1 percent from a year ago, with year-to-date (YTD) output hitting 2.8 billion pounds, up 2.0 percent from 2024. American cheese, at 475.7 million pounds, was up 0.4 percent from June, and 2.3 percent above a year ago. YTD American hit 3.4 billion pounds, up 3.7 percent. Italian style cheeses totaled 518.0 million pounds, up 1.5 percent from June, and up 4.1 percent from a year ago, with YTD at 3.6 billion pounds, up 2.3 percent.

Cheddar production slipped to 327.1 million pounds, down 4.9 million or 1.5 percent from June, but was up 20.4 million or 6.7 percent from a year ago. YTD Cheddar hit 2.3 billion pounds, up 5.6 percent from a year ago.

Butter output slowed some, slipping to 180.1 million pounds, down 8.2 million pounds or 4.4 percent from June, but was up 16 million or 9.8 percent from a year ago. YTD output totaled 1.4 billion pounds, up 5.4 percent from a year ago. The Sept. 5 Daily Dairy Report says this was the highest butter volume for the month since 1942.

Yogurt production totaled 437.6 million pounds, up 8.4 percent from a year ago, with output for the year so far at 3.1 billion pounds, up 8.1 percent.

Hard ice cream, at 69.3 million pounds, was up 4.2 percent from 2024. YTD production reached 436.4 million pounds, down 1.3 percent from a year ago.

Dry whey output came in at 63.3 million pounds, down 7.4 million pounds, or 9.8 percent from June, but was up 400,000 pounds or 0.6 percent from a year ago. YTD whey output hit 488 million pounds, down 6.2 percent from a year ago. Whey stocks fell to 50.7 million pounds, down 6.8 million or 12.0 percent from June, and down 13 million or 20.7 percent from a year ago.

The additional cheese production resulted in some added whey and the Daily Dairy Report stated that “Processors pushed as much whey as possible into high-protein concentrates and isolates. Production of whey protein concentrates (WPC) with at least 50 percent protein exceeded July 2024 by 8.4 percent, while whey protein isolate (WPI) production topped the prior year by 4.5 percent. Production of WPC 50-89.9 percent and WPI were on pace to set annual production records,” the DDR stated.

Nonfat dry milk output dropped to 129.6 million pounds, down 10.9 million or 7.8 percent from June, but was up 8.6 million pounds or 7.1 percent from a year ago. NFDM YTD came in at 1.1 billion pounds, down 0.3 percent from 2024. Stocks fell to 236.2 million pounds, down 7.8 million, or 3.2 percent from June, but were up 9.3 million pounds or 4.1 percent from 2024.

Skim milk powder production dipped to 44.4 million pounds, down 12.3 million pounds or 21.7 percent from June, and down 7.5 million or 14.3 percent from a year ago. YTD SMP reached 283.2 million pounds, down 21.7 percent from 2024.

The DDR warned: “As milk powder output climbs, prices may come under increasing pressure to keep product moving. Meanwhile, rising production in Europe and Oceania and poor demand from China could further undermine global milk powder values.”

StoneX Sept. 8 Early Morning Update stated, “The July Dairy Products report might be an early signal that cheese makers are getting a little more disciplined in production (existing plants cutting as new plants increase production),” but StoneX doesn’t see anything shocking that the markets haven’t already priced in.

CME Cheddar block cheese fell to $1.62 per pound Thursday morning, lowest price since June 26, after closing Friday at $1.69. The barrels closed Thursday at $1.6350, lowest since July 28, and down from Friday’s finish of $1.70. A year ago, the blocks were at $2.2750 per pound and the barrels at $2.4850.

Central region milk production is steady to higher, according to Dairy Market News, as cool temperatures contributed to an uptick in Midwest output. Cheesemakers say strong demand from Class I manufacturers is keeping spot volumes tight and trades are limited. Class III spot prices mid-week ranged from flat to $2-over Class. Cheese production is steady. Export interest is steady and domestic demand was unchanged from recent weeks, but contacts continue to report lighter food service sales compared to 2024.

Class III milk remains sufficient for cheesemakers in the West, says DMN, despite seasonally higher bottling demands. Cheese production remains steady.

Distributors and traders report ample amounts of varietal cheese is available. Domestic demand remains unchanged while export demand is seeing more competition among sellers from various countries, according to DMN.

The CME butter meltdown fell below $2 per pound Wednesday, first time since Dec. 2, 2021, and it dropped to $1.9275 per pound Thursday, following a Friday close at $2.0225. The butter is at the lowest CME price since Oct. 25, 2021. A year ago, it was trading at $3.13 per pound.

Butter markets remain bearish, says DMN, as the CME price falls and the Dairy Products report showed July butter production was up 9.8 percent from a year ago. This, along with an uptick in cream production, is putting downward pressure on butter markets. Cream is plentiful in the Central region and multiples ranged from flat to 1.20. Domestic butter demand is light while export demand remains strong.

Plenty of cream is also available in the West. Some handlers noted that production of dairy products utilizing cream is going down, while fat components in milk are going up. Butter manufacturers are running their churns at under 100 percent capacity. Retail butter demand continues to be more robust than food service demand. Exports are steady, according to DMN.

Grade A nonfat dry milk was trading Thursday at $1.1725, lowest since April 16, 2025, after finishing Friday at $1.22.

Dry whey reached 60 cents per pound Tuesday, highest in three weeks, but lost ground from there, and fell to 58.50 cents per pound Thursday, following a Friday close at 56.50 cents per pound.

Those prices would be lower if it weren’t for strong exports and StoneX broker Dave Kurzawski acknowledged that in the Sept.15 Dairy Radio Now broadcast. He pointed out, however, that we typically export a lot more cheese than butter. He added that “the butter market is on the other side of what was going on this summer, which was a really strong demand for derivative contracts, options on futures contracts,” and the need to get hedges for the second half of the year. That drove the futures market up and helped underpin the spot price, he said.