2026 Milk Output Expected to Be 234 Billion Pounds
Published: Friday, January 23, 2026
The Agriculture Department left its 2025 milk production estimate unchanged in last week's World Agricultural Supply and Demand Estimate report (WASDE), but raised the 2026 estimate, based on an expected higher output per cow.
2026 production and marketings were projected at 234.3 and 233.3 billion pounds, up 200 million pounds on production, and up 100 million on marketings from a month ago. If realized, production would be up 3.2 billion pounds, or 1.4%, from 2025.
The 2026 fat basis import estimate was raised on higher shipments of butterfat products and cheese. Imports were lowered on a skim solids basis. Fat basis 2025 exports were raised on strong shipments of butter and cheese. Butter and cheese are expected to remain competitive on the international market, says USDA, and 2026 fat basis exports were raised. Skim-solids exports in 2025 were reduced, primarily on lower whey products, with reductions carried into 2026.
Butter and cheese prices for 2026 were reduced on recent price weakness, but nonfat dry milk (NDM) and whey was raised on robust demand for protein.
Class III milk prices were lowered, with lower cheese prices more than offsetting higher whey. The 2025 average was $18.01 per hundredweight, down from $18.89 in 2024, and compares to $17.02 in 2023. The 2026 average was projected at $16.35, down 70 cents from what was estimated a month ago.
The Class IV was raised on stronger NDM prices more than offsetting lower butter. The 2025 average was $17.38, down from $20.75 in 2024 and $19.12 in 2023. The 2026 average was estimated at $14.45, up a nickel from last month.
This month's corn outlook is for larger production, higher feed and residual use, reduced food, seed and industrial use, and greater ending stocks. Corn production was estimated at 17 billion bushels, up 269 million, or 14%, from 2024. Average yield was estimated at a whopping 186.5 bushels per acre and a 1.3-million acre rise in harvested area, now estimated at 91.3 million, up 10%. The harvested area has surged 4.5 million acres since the July 2025 WASDE, according to the USDA, and the record crop in 2025 exceeded the prior high set in 2023 by 1.7 billion bushels or over 40 million tons.
Total corn use was raised 90 million bushels to 16.4 billion. Feed and residual use was up 100 million bushels to 6.2 billion. Corn stocks were boosted 198 million bushels to 2.2 billion. The season-average corn price was raised 10 cents to $4.10 per bushel.
Soybean production was estimated at 4.26 billion bushels, down 3% from 2024. Harvested area was estimated at 80.4 million acres, down 7%. Yield was estimated at a record 53 bushels per acre, up 2.3 bushels from 2024. The soybean supply was raised 17 million bushels on higher beginning stocks and production. Soybean crush was raised 15 million bushels to 2.57 billion bushels.
Soybean exports were revised 60 million bushels lower to 1.575 billion on higher production and exports for Brazil. Ending stocks were projected at 350 million bushels, up 60 million. The season-average soybean price was projected at $10.20 per bushel, down 30 cents. Soybean meal was forecast at $295 per short ton, down $5.
The Agriculture Department issued the September and October Dairy Supply and Utilization reports last week. Cheese utilization totaled 1.284 million pounds in October, up just .7% from October 2024, with domestic use down 1.9%. Exports hit 121.4 million, up 35.8%. September usage was up 2.8%, with domestic use up .3%, and exports up 34.5%. Year-to-date cheese usage was down 1.7% domestically but up 19.4% on exports, according to HighGround Dairy analysis.
October butter usage totaled 215.7 million pounds, down 7.9% from a year ago. Domestic use was down 12.7%, exports were up 171.7%, and YTD utilization was up 141% from a year ago. September usage was up 8.8% from September 2024, with domestic use up 4.1% and exports up 167.9%.
Nonfat/skim milk powder utilization came in at 172.5 million pounds in October, off .3% from a year ago. Domestic usage was down 2.6% while exports were up .3%. YTD powder usage was down 12.1%.
October dry whey usage fell to 67.5 million pounds, down 6.1%, with domestic use down 27.3%, while exports were up 19.8% and YTD exports up 6.9%.
Meanwhile, fluid milk sales disappointed again. The USDA's latest data showed November packaged sales at 3.585 billion pounds, down 1.8% from November 2024, and follows a .1% slippage in October.
Conventional product sales totaled 3.4 billion pounds, down 1.5% from a year ago. Organic sales, at 234 million, were down 1.8% from a year ago, and represented a typical 6.5% of total milk sales in the month.
Whole milk sales totaled 1.3 billion pounds, up 1.3% from a year ago, and up .5% year to date. Whole milk represented 36.4% of total sales for the month, up from 35.1% in October.
Skim milk sales, at 141 million pounds, were down 6% from a year ago, but were up 2.2% YTD.
Packaged fluid sales in the 11-month period totaled 38.9 billion pounds, down 1.1% from 2024. Conventional product sales totaled 36.1 billion, down 1% from a year ago. Organic products, at 2.7 billion pounds, were down 1.8%, and represented 7% of total milk sales in the 11 months. About 7.5% U.S. fluid sales are consumed in schools.
Speaking of those schools, President Trump signed the Whole Milk for Healthy Kids Act into law last week, clearing the way for whole and 2% milk to return to school cafeterias for the first time in more than a decade. The bill allows schools to provide a variety of fluid milk options which can include flavored and unflavored organic or conventional whole, 2%, 1%, skim and lactose-free milk.
The signing was praised by the National Milk Producers Federation and Michael Dykes, president and CEO of the International Dairy Foods Assn., called the law "a win for our children, parents and school nutrition leaders, giving schools the flexibility to offer the flavored and unflavored milk options, across all healthy fat levels that meet students' needs and preferences."
Cash cheese was bleeding last week. Block Cheddar fell to $1.2825 per pound last Monday, lowest CME price since May 5, 2020 when it was at $1.2575. It closed last Friday at $1.29, 2.50 cents lower on the week, and 15.50 cents below a year ago. The barrels closed last Friday at $1.3575 per pound, down 4.25 cents on the week, lowest since July 5, 2023 and are 11 cents below a year ago and 6.75 cents atop the blocks. Sales totaled 20 loads of block on the week and no barrel.
HighGround Dairy's Commodity Price Forecast says the cheese market is "a supply-side game presently as cheese production gains overwhelm a tepid consumer marketplace. Greater exports helped soak up some of this excess cheese, but inventories keep rising and there does not appear to be any significant change in sight."
StoneX broker Dave Kurzawski told the Mielke Market Weekly that dairy is starting 2026 in a "recession," and he does not know if the cheese price has hit bottom. He said the upcoming International Dairy Foods Assn.'s annual Dairy Forum, Jan. 25-28 in Palm Desert, Calif. will provide a lot of insight on how the shakers and movers in the dairy industry view what's ahead.
Dairy Market News reported that Central region milk production is steady. Class I demand was steady to stronger compared to recent weeks but not meeting some stakeholders' expectations, leaving plenty on the spot market. Class III demand is steady week-to-week, but contacts report light interest from cheesemakers. Class III spot milk mid-week ranged from $4-under to 25 cents-over class. Cheese production is strong, though some regional plants reported unplanned downtime last week for maintenance. Retail cheese demand is strong, but food service sales remain light. Export sales are strong, according to DMN.
Milk production is strong and sufficient in the West. Some cheese makers were securing spot loads while prices are more favorable, says DMN. Cheese production was steady to stronger and a few manufacturers noted extremely tight spot inventories. Demand from domestic retail buyers and further processed food manufacturers is stronger. Food service demand varies from lighter to steady. Domestic prices are competitive against loads produced outside the U.S., which is strengthening demand from international buyers, according to DMN.
Butter saw its Friday finish at $1.3550 per pound, up 5.50 cents on the week, but $1.19 below a year ago. There were 51 loads that exchanged hands.
HighGround said, "Butter holds a historically low premium over NFDM, averaging just 4.5 cents per pound this week, levels not seen since 2014." Prices will recover, adds HGD, but will likely take time, barring a major fundamental shock.
Cream is plentiful in the Central region amid strong production, says DMN, with strong demand from Class II and III processors, while light from butter makers. Butter production is strong. Domestic demand is steady overall. Retail sales are strong while food service demand is light. Export interest is outpacing production of 82% butterfat butter and keeping inventories tight, according to DMN.
Cream is also plentiful in the West, and butter production is robust. Manufacturers continue to build inventories to more comfortable quantities. Eighty percent butterfat butter is widely available. Domestic butter demand is strong for the most part while export interest is mixed. Some say international buying is lighter than last quarter, while others report demand is outpacing 82% butterfat butter availability.
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