Increase in Cow Numbers Boosts Slow Milk Supply
Published: Friday, April 17, 2026
The Agriculture Department raised its 2026 milk production estimate for the third month in a row in this week's World Agricultural Supply and Demand Estimates on increased cow numbers more than offsetting slower growth in milk per cow.
The 2026 production and marketings were projected at 235.3 and 234.3 billion pounds, respectively, up 600 million pounds on both from a month ago. If realized, both would be up 3.6 billion pounds, or 1.6%, from 2025.
Imports were lowered on a fat and skim solids basis, primarily due to recent trade data and lower expected purchases of butter, casein and milk protein concentrates, as well as processed dairy products. Exports, however, are higher on both a fat and skim-solids basis due to higher projected shipments of cheese, butter and dry whole milk.
Projected prices for 2026 cheese and nonfat dry milk were raised on recent price strength, strong domestic demand and improved price competitiveness for cheese on the international market. Butter prices were lowered on recent price declines, and whey prices were unchanged.
Class III milk prices were raised on higher cheese prices. Look for the 2026 Class III to average $16.90 per hundredweight, up 25 cents from last month's estimate, and compared to $18.01 in 2025 and $18.89 in 2024.
Class IV prices were raised on higher NDM prices offsetting lower butter prices. The 2026 Class IV is projected to average $18.60, up $1.45 from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024.
This month's 2025-26 U.S. corn outlook was unchanged from last month. Feed and residual use was unchanged at 6.2 billion bushels reflecting reported disappearance during the December to February quarter as indicated in the March 31 Grain Stocks report. Disappearance in the first half of the marketing year totaled 9.6 billion bushels, up over 1 billion from a year ago. The season-average corn price was raised a nickel to $4.15 per bushel.
Soybean supply and use included higher crush, lower exports and unchanged ending stocks. Soybean crush was raised 35 million bushels to 2.61 billion on increased domestic use. Exports were reduced 35 million bushels to 1.54 billion on pace to date and higher South American shipments. Soybean ending stocks were unchanged at 350 million bushels. The soybean price was forecast at $10.30 per bushel, up a dime. Soybean meal was increased $10 to $310 per short ton.
The USDA's first Crop Progress report of the season shows 3% of U.S. corn has been planted, as of the week ending April 5, up 1% from a year ago, and mirrors the five-year average.
HighGround Dairy warns "about 60% of the continental U.S. is in drought conditions, according to the U.S. Drought Monitor, as of March 31. This compares to just 43% a year ago on April 1. The Southeastern U.S. is especially impacted, along with Arkansas, southern Texas, Colorado, Utah, Wyoming and Nebraska. This has the potential to have an impact on crops and grazing in these regions. For staple crops like soybeans and corn, 44% of the potential growing area is in drought, while 65% of winter wheat is affected by drought," said HGD.
Dairy culling continues to run ahead of a year ago. The latest data shows 52,600 cows sent to slaughter the week ending March 28, up 3,000, or 6%, from a year ago. Year to date, 737,300 head have exited the dairy business, up 43,700, or 6.3%, from a year ago.
So-called make allowances are draining dairy farm income, due to changes made in federal milk pricing. Wisconsin-based American Dairy Coalition says the changes "erased nearly 20 years of gradual modest progress in their milk checks, virtually overnight."
The ADC called on the USDA to "bring transparency to the system," filing comments with the Agricultural Marketing Service. "These built-in processor credits now totaling $3 to $5 per hundredweight continue to cut into farmer milk checks," the ADC charged. "The filing builds on ADC's earlier request for additional time. Despite a short 30-day window and limited outreach, dairy farmers responded. Of 76 total comments, about 60 came from individual producers," the ADC reported.
"Farmers showed up because this hits their milk checks directly," said Laurie Fischer, ADC CEO. "Make allowances are not line-items farmers see when they review their milk check statements. They are embedded in the Federal Milk Marketing Order pricing formulas."
CME Cheddar block cheese plunged 10.75 cents last Wednesday and lost 1.25 cents last Thursday, falling to its lowest price in almost a month, then regained 2.50 cents last Friday to close at $1.5775, down 9.50 cents on the week, and 16.75 below a year ago. The barrels closed last Friday at $1.5750, down 1.75 cents on the week, and 23 cents below a year ago. Sales totaled 13 lots of block on the week and one barrel.
Central contacts tell Dairy Market News that large volumes of milk are readily available for the spot market. Farm output continues to trend higher as the spring flush begins. Many facilities ran busy schedules this week to build inventories after downtime the previous week due to the spring holidays. Class III spot prices at mid-week ranged $7-under to $2-under class. Spot cheese purchases were slow to steady. Export demand was lighter but expected to increase.
Spring milk production in the West is at its peak. Spot demand for Class III milk from cheese manufacturers was moderate after the holiday weekend. Cheese output is stable to stronger and inventories are not heavily building. Domestic demand was somewhat lighter to stronger while food service continues to be outpaced by demand from other sectors. Export demand is steady to strong.
Cash butter sunk to $1.7275 per pound last Wednesday, lowest since Feb. 18, but it closed last Friday at $1.7475, 4.25 cents lower on the week, and 60 cents below a year ago. There were 94 sales on the week.
Cream production is strong in the Central region, says DMN. Butter manufacturers increased production after a slower week, due to the spring holidays. Strong demand for cream from Class II and III manufacturers is keeping spot availability light. Demand for bulk butter remains strong amid favorable pricing, especially on the export market. Retail demand for butter is steady. Butter inventories are holding steady, with manufacturers keeping production in line with current demand, according to DMN.
Farm level milk output and cream production is seasonally strong in the West and up from last year. Spot loads of cream were available, but demand from butter makers was moderate, partly due to prices. Churns were active and back to seven day a week production following the holiday weekend. Domestic butter demand varies from steady to strong for bulk butter and from the retail sector. Some manufacturers report butter sales are up year over year. Export demand is strong. However, more challenging logistics and/or costs are causing hesitation for some international buyers, DMN warned.
Grade A nonfat dry milk topped $2 per pound last Wednesday and rocketed to a Friday close at $2.1150 per pound, up 14.25 cents on the week, and 94.75 cents above a year ago, on 16 sales. The previous high was $2.11 on Dec. 27, 2013.
Dry whey closed last Friday at 70.50 cents per pound, 1.75 cents higher on the week, highest since Feb. 19, and 25 cents above a year ago, with one CME sale.
The global dairy price climb halted last week, ending six consecutive gains. The Global Dairy Trade weighted average fell 3.4% last Tuesday, following a .1% increase March 17 and 5.7% on March 3. Volume fell to 36.4 million pounds, lowest since June 17, 2025, and down from 43 million pounds on March 17. The average metric ton price slipped to $4,228, down from $4,330 on March 17.
Butter led the declines, down 8.1%, after inching .9% lower on March 17. Anhydrous milkfat was down 7.1%, after leading the gains last time with a 6.4% boost. GDT Mozzarella dropped 6.2%, following a .5% increase. Cheddar was down 3.1%, after inching .1% higher.
Lactose was off .6%, following a .3% slip, and buttermilk powder was up .7%. Skim milk powder dropped 1.6%, after jumping 5.2%, and whole milk powder was off .7%, after dropping 4% last time.
StoneX says the GDT 80% butterfat butter price equates to $2.7354 per pound, down from $3.0392 on March 17, and compares to CME butter which closed last Friday at $1.7475. GDT Cheddar equated to $2.1617, down from $2.2338 last time, and compares to last Friday's CME block Cheddar at $1.5775. GDT skim milk powder averaged $1.5337 per pound, down from $1.5462, while whole milk powder averaged $1.6724, down from $1.6822. CME Grade A nonfat dry milk closed last Friday at a whopping $2.1150 per pound.
Analyst Dustin Winston said, "North Asia's share of the volume was up slightly from the last event, but down significantly from last year. The stand-out buyer was Southeast Asia where the share of volume was up significantly from last event and last year. The share of purchases by the Middle East were down significantly from the prior GDT event but only down a little from last year."
HighGround Dairy wrote, "After months of hand-to-mouth buying to refill pipelines, escalating Middle East tensions have finally stayed key buyers' hands heading into April, with uncertainty driving up the true cost of doing business. Commodity values are only one piece of the equation, layer in insurance, freight and storage, and it becomes expensive to move product and hold it during a period of potential demand erosion."
The National Milk Producers Federation Exports and Trade member cooperatives accepted 413 offers of export assistance in the first quarter of 2026, helping capture sales contracts for 50.7 million pounds of American-type cheese, 14.3 million pounds of butter, 3.9 million pounds of anhydrous milkfat, 15 million pounds of whole milk powder, and 2.5 million pounds of cream cheese.
NEXT also supported an additional 17.6 million pounds of skim milk powder and 1.1 million pounds of milk protein concentrate in first quarter through the program's tariff mitigation pilots. NEXT supported export volume destined for customers in Asia, Central America, the Caribbean, Europe, Middle East-North Africa, Eurasia, North America, Oceania, South America and Sub-Saharan Africa to be delivered through December 2026.
National Milk also reports that after signup rates were lagging previous years for the Dairy Margin Coverage Program, a full-court communications press from NMPF helped push enrollment above year-ago levels. Participation in USDA's Dairy Margin Coverage program rose to 13,349 this year, up from 12,989 in 2025. Currently, 57% of dairy farms are enrolled, compared to 53% last year.
"The gain came after a comprehensive NMPF effort to get the word out and the growth highlights that farmers continue to recognize the importance of this safety net and benefit from its support. Congress improved DMC as part of farm-support provisions in last year's budget reconciliation bill, with an updated production history and an increase in the amount of milk covered under the program."
"As that effort was under way, the February margin under USDA's Margin Coverage Program was generating another month of payments, with a reported margin for the month of $8.46 per hundredweight, up 65 cents per hundredweight from the month before. Farmers who elected coverage at the maximum $9.50 per hundredweight level received a payment of $1.04 per hundredweight for the month," NMPF stated.
"An 80 cent per hundredweight increase in the all-milk price from January drove the higher margin, which was tempered by 15 cent per hundredweight gain in the February DMC feed cost formula, due primarily to a higher soybean meal price."
The DMC Decision Tool on the USDA website projected at the end of March that February's payment might be the year's last, or a possible small one for March. USDA expected margins to average $10.61 per hundredweight for the year, NMPF concluded.
Bovine tuberculosis has been detected in two herds in Michigan. The Michigan Department of Agriculture and Rural Development reported the herds from Alpena and Presque Isle counties and said the cases were detected during annual whole-herd surveillance tests.
"Both herds are located in areas where bovine TB is known to be present in the free-ranging white-tailed deer population, and both herds illustrate why it is so crucial to consistently perform surveillance testing and actively manage this disease," said State Veterinarian Nora Wineland. "The most effective way to prevent bovine TB from infecting cattle herds is to protect cattle from contact with wild deer and the disease they could be carrying, which takes the collective efforts of hunters, producers, industry and government agencies in Michigan."
Meanwhile, the USDA's Animal and Plant Health Inspection Service announced an updated New World Screwworm Response Playbook, a comprehensive guide designed to support coordinated, science-based action should NWS be detected in the U.S.
"USDA continues to execute Secretary Rollins' five-pronged plan to keep NWS out of the United States," said USDA Undersecretary for Marketing and Regulatory Programs Dudley Hoskins. "While we are aggressively safeguarding American agriculture and working with Mexico to prevent further northward spread, we must also ensure that our domestic response plans are ready for immediate activation. Strong coordination with states, producers, veterinarians, sportsmen and other partners is essential to achieving that goal."
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