Cow inventories raised for 2026, 2027

The “Mielke” Market Weekly

Some wonder whether a blue wave is coming or a red one. The U.S. Department of Agriculture predicts it will be white, as in milk and plenty of it. As reported last week, USDA raised its 2026 and 2027 milk production estimates in its latest World Agricultural Supply and Demand Estimates based on the latest milk production report. Cow inventories and output per cow were both raised for 2026 and 2027.

2026 production was projected at 237.2 billion pounds, up 600 million pounds from last month’s report. If realized, it would be up a whopping 5.5 billion pounds or 2.4% from 2025.

2027 production was projected at 238.6 billion pounds, up 600 million pounds. If realized, output would be up 1.4 billion pounds or 0.6% from 2026.[Ma1.1]

Price forecasts for both years were decreased for butter and cheese but increased for nonfat dry milk to reflect recent prices. Whey price forecasts were unchanged in 2026 but increased in 2027.

Cheese is expected to average $1.57 per pound in 2026, down from $1.7878 in 2025. The 2027 average was projected at $1.6450. Butter will average $1.5950 in 2026, according to the report, down from $2.2202 in 2025, and it is expected to average $1.6250 in 2027. The 2026 average on NDM was estimated at $1.67 per pound, up from $1.2348 in 2025, and it is expected to average $1.55 in 2027. Dry whey was projected to average 67 cents per pound in 2026, up from 59.56 cents in 2025. The 2027 average was estimated at 69 cents per pound.

Class III milk price forecasts were lowered as higher whey prices only partially offset lower cheese prices. The Class IV price forecast was raised as higher NDM prices more than fully offset lower butter prices.

The 2026 Class III was projected to average $16.20 per hundredweight, down a nickel from last month’s report, and it compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was estimated at $17.10, down 15 cents from last month’s report.

The 2026 Class IV price was estimated at $18.55, up 40 cents from a month ago, and it compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $17.55, down 35 cents from last month’s estimate.

The U.S. corn outlook is for smaller supplies, lower domestic use, unchanged exports and reduced ending stocks. Projected beginning stocks for 2026-27 were 23 million bushels lower based primarily on a larger export forecast for 2025-26. Corn production was forecast at 15.8 billion bushels, down 213 million from last month but still the second largest ever. Yield was reduced by 2.2 bushels to 178.5 bushels per acre and harvested area to 88.5 million acres. Exports were unchanged at 3.3 billion bushels. Ending stocks were lowered 86 million bushels to 1.6 billion. The season-average corn price was raised 30 cents to $4.80 per bushel.

The outlook for soybeans included higher production and exports and lower ending stocks compared to last month. Soybean production was projected at 4.5 billion bushels, up 16 million bushels, with higher harvested area and yield. Soybean yield was projected at 52.8 bushels per acre. The crush forecast was unchanged, while the export forecast was raised by 25 million bushels to 1.69 billion. Ending stocks were projected at 310 million bushels, down 10 million from last month. The season-average soybean price was forecast at $12.00 per bushel, up 60 cents from last month. Soybean meal was up $30 to $340 per short ton.

The latest crop progress report shows 86% of U.S. corn dented, as of the week ending Sept. 13, up from 76% the previous week, 3% ahead of a year ago and 2% ahead of the 5-year average. Forty-two percent was classified mature, up from 25% the previous week, 3% ahead of a year ago and 4% ahead of the average. Harvest is completed for 8%, 1% ahead of a year ago and 2% ahead of the average. Fifty-seven percent is considered good to excellent, 10% behind a year ago.

Checking the beans, 44% were dropping leaves, up from 26% the previous week, 6% ahead of a year ago and 7% ahead of the 5-year average. Fifty-eight percent of the crop is considered good to excellent, 5% behind a year ago.

“Dairy margins weakened through the first two weeks of September as the Class III market struggled to maintain the strength seen in August,” according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. “USDA’s August Class III price was $16.64 per hundredweight, up $1.12 from July, but 60 cents below a year ago, while Class IV fell 98 cents from July to $17.35 and was $1.14 below last year.”

The MW detailed the July dairy products report and warned, “The continued growth in cheese production is keeping pressure on Class III markets, while tighter butter supplies have provided some support to Class IV. The powder complex remains the strongest portion of the dairy market. July nonfat dry milk production for human consumption increased 26.6% from a year ago.”

“Nonfat dry milk prices rallied nearly 19% during August before becoming more volatile in September, with the spot market reaching $2.035 per pound Sept. 15. Strength in powder markets has provided an important source of support for milk values despite continued growth in U.S. milk production. Seasonal demand from the return to school should continue to support fluid milk and dairy product consumption, while high-protein products remain an important outlet for the growing U.S. milk supply,” the MW stated.

Chicago Mercantile Exchange block cheddar fell to a Friday close at $1.35 per pound, the lowest CME price since Jan. 22, and down 11 cents on the week, the fifth consecutive week of decline and 30 cents below a year ago. Barrels sunk to $1.44 Monday, the lowest since June 17, but they finished Friday at $1.4525, a penny lower on the week and 18.75 cents below a year ago. Sales totaled 30 loads of block and one of barrel for the week.

Milk supplies in the Central Region tightened this week, according to Dairy Market News, and contacts reported that corn silage production fell short of expectations, creating supply pressure for farms. Spot milk availability was limited, and overall market activity was slow. Mid-week Class III prices ranged from flat-class to $2 over, with premiums trending higher in response to market tightness. Retail cheese sales remain firm, although food service demand is below anticipated levels.

Milk and cream production remain steady in the West, but availability is tightening due to increased milk movement to Central and Eastern regions. Manufacturing facilities continue to be fully supplied, and cheese production is stable. Spot loads remain available, and traders report they are holding stocks of block cheese while waiting for improved prices. Exports remain strong, with cheddar showing year-over-year growth to buyers in the Asia Pacific corridor, according to DMN.

CME butter slipped to $1.3450 per pound Thursday, the lowest since Jan. 15, but it closed Friday at $1.37, unchanged on the week but 38 cents below a year ago. There were 63 sales on the week.

Central milk output declined again this week, and contacts reported continued movement of milk to the Central region for Class I processing. Cream was steady, though butter makers noted that spot cream continues to move to Class II processors, leaving limited loads available. Cream exports to Mexico continue.

The tone in the Western butter market diverges between domestic and international demand. Domestic demand remains flat to weak, with contacts reporting weak retail sales and steady food service sales. Several contacts noted they would not be surprised to see holiday butter discounts used to move product. International demand is strong, with reported sales up year over year. Demand for 82% unsalted butter continues to grow; the multiple market streams include Oceania, South America, Asia and the European Union, says DMN.

Grade A nonfat dry milk shot up to $2.05 per pound Wednesday and added 3 cents Friday to close at $2.08, up 11 cents on the week, the highest since June 4 and 93.25 cents above a year ago. There were 30 sales on the week.

Dry whey saw its Friday finish at 78 cents per pound, 2 cents higher on the week, the highest since Nov. 20, 2025, and 14 cents above a year ago. There were three CME sales put on the board this week.

The quest for protein is driving the whey market. The Sept. 14 Daily Dairy Report stated, “As cheese production increases, so does the nation’s whey stream. From 100 pounds of milk, about 10 pounds becomes cheese, and 90 pounds turn into liquid whey. This whey is further processed into approximately 5.9 pounds of sweet whey powder, or 7.2 pounds of 34% whey protein concentrate (WPC-34), or 1.1 pounds of WPC-80, or less than a pound of whey protein isolate (WPI). These numbers illustrate the difficulty of producing high protein whey.”

The DDR says today’s new cheese plants have invested in advanced whey processing for high-protein ingredients, while some older facilities have upgraded their processing. Others sell their liquid whey. Bottom line, the dairy industry is rising to the occasion and producing products that consumers want.

Checking demand, the USDA’s Dairy Supply and Utilization data show July cheese utilization was up 1.3% from July 2025, fueled by strong exports of 143.9 million pounds, the highest ever, and up 25%. Unfortunately, domestic use was down 1%; HighGround Dairy cited sputtering American cheese demand.

Butter usage was up 2.9%, thanks primarily to strong domestic usage, which was up 4.0%. Exports were down 8.5%; however, exports account for just 10% of total use and have begun to slip. HighGround stated, “The discount U.S. butter held to global competitors has narrowed in 2026 from 2025, and nations such as Belgium and the Netherlands are now returning to their domestic sources rather than the U.S.”

Dry whey utilization was up 1.1%, thanks to exports, which were up 76.2% and hit an all-time high, according to HGD, a level that has stood since 2007. Domestic usage was down 65.5%. “U.S. dry whey prices are at a discount to Europe,” says HGD.

Nonfat-skim milk powder utilization was up 13.0%, with domestic usage up 126.1%. Exports fell 23.3% as the U.S. priced itself out of the market.

July U.S. fluid milk sales remained above a year ago. The USDA’s latest data showed packaged sales totaled 3.36 billion pounds, up 0.2% from July 2025, which followed a 3.3% rise in June. Conventional product sales came in at 3.1 billion pounds, up 0.5% from a year ago. Organic sales, at 235 million, were down 3.0% from a year ago but represented 7.0% of total sales in the month.

Whole milk sales totaled 1.35 billion pounds, up 5.5% from a year ago and up 3.5% for the 7-month period. Whole milk represented 40.2% of total sales for the month. Skim milk sales, at 124 million pounds, were down 25.1% from a year ago and down 13.3% year to date.

Packaged fluid sales, January to July, totaled 24.5 billion pounds, up 0.1% from 2025. Conventional product sales totaled 22.7 billion pounds, up 0.2% from a year ago. Organic products, at 1.7 billion pounds, were down 0.6% and represented 7.1% of total milk sales for the year so far.

USDA’s weekly slaughter data showed 55,200 dairy cows were sent to slaughter the week ending Sept. 5, up 7,700 or 16.2% from a year ago. Year to date, 1,866,100 cows have been culled, up 81,000 or 4.5% from a year ago.

Prices weakened in Tuesday’s Global Dairy Trade as the weighted average fell 1.1% after inching 0.9% higher Sept. 1. Volume slipped to 93.6 million pounds, down from 96.9 million Sept. 1. The average metric ton price was $3,868 U.S., down from $3,910.

Butter led the declines, down 5.7% after slipping 0.8% Sept. 1. Anhydrous milkfat was down 3.0%, following a 1.3% decline. Lactose was down 4.3% after gaining 2.0% last time. Buttermilk powder was off 0.5% after jumping 4.6%. Whole milk powder was down 0.8%, following a 0.1% slip, while skim milk powder inched 0.1% higher after posting a 5.3% gain last time. Cheddar jumped 16.5% after leading the declines last time with a 6.6% plunge. GDT mozzarella dropped 6.0% this time, after inching up 0.3% last time.

StoneX says the GDT 80% butterfat butter price equates to $2.1066 U.S. per pound, down from $2.2251 Sept. 1, and it compares to CME butter, which closed Friday at a bargain $1.37. Cheddar equated to $1.8483, up from $1.5889 last time, and it compares to Friday’s CME block cheddar at a cheap $1.35. GDT skim milk powder averaged $1.6731 per pound, down from $1.6759, while whole milk powder averaged $1.6169, down from $1.6260. CME Grade A nonfat dry milk closed Friday at a pricey $2.08 per pound.

In politics, the Senate Agriculture Committee approved and delivered a new 5-year farm bill to the full Senate. National Milk Producers Federation President and CEO Gregg Doud said the legislation includes “key provisions that support and strengthen the dairy industry. With a farm bill already through the House, we’re hopeful that both chambers can now work together on full congressional passage in 2026 that gives dairy farmers the certainty they deserve.”

USDA announced this week that it was ending dairy checkoff funding for “environmental, social, and governance overregulation.”

“This action aligns research and promotion activities with the department’s priorities and the original mission of the checkoffs,” a USDA press release stated. “American dairy producers, cattle ranchers and farmers pay checkoff assessments so those dollars can build demand for their products, not bankroll radical climate agendas that raise costs and constrain production,” said Agriculture Secretary Brooke Rollins.

To the chagrin of President Trump, the Federal Reserve raised interest rates by a quarter-percent this week, the first raise in three years. The decision came despite its new chairman, Kevin Warsh, who was nominated by Trump to replace Jerome Powell. Trump sharply criticized the move in his Truth Social post.