USDA Raises Milk Production Estimates for This Year and Next
Published: Friday, September 18, 2026
The Agriculture Department raised its 2026 and 2027 milk production estimates in last Friday's World Agricultural Supply and Demand Estimates (WASDE) report, based on the latest Milk Production report. Cow numbers and output per cow estimates were raised for 2026 and 2027.
2026 production and marketings were projected at 237.2 and 236.2 billion pounds respectively, up 600 million pounds on both from last month's report. If realized both would be up a whopping 5.5 billion pounds,, or 2.4%, from 2025.
2027 production and marketings were projected at 238.6 and 237.6 billion pounds, respectively, up 600 million pounds on both. If realized, both would be up 1.4 billion pounds, or .6%, from 2026. I'll have more details next week.
Dairy culling the past couple months was running about 4.5% ahead of a year ago. USDA's latest weekly slaughter report showed 52,400 dairy cows sent to slaughter the week ending Aug. 29, up 200 or .4%, from a year ago. Year to date, 1,810,900 head had been culled, up 73,300 ,or 4.2%, from a year ago.
Cash block Cheddar closed last Friday at $1.46 per pound, down a half-cent on the Labor Day holiday shortened week, and 23 cents below a year ago. The barrels finished at $1.4625, down seven cents on the week, lowest since June 23, and 23.75 cents below a year ago. Sales totaled 7 loads of block and 10 of barrel.
Central region milk supplies tightened slightly due to another round of warmer temperatures, according to Dairy Market News. Contacts report that Class I processors continue to draw milk away from Class III production. Labor Day downtime caused some plants to offer spot milk at discounted prices. Southwest milk supplies are tighter and contacts note an absence of spot offerings.
Prices at mid-week ranged $2 under to flat-class. Outside of the holiday downtime, cheese production remained generally active throughout the region. Demand is strong for certain varieties, while others continue to experience typical seasonal slowdowns. Sales are described as balanced to slightly long, according to DMN. Regional inventories are ample.
Butter continued to weaken, falling to $1.37 per pound last Thursday, lowest CME price since Jan. 16. It stayed there last Friday, 7 cents lower on the week, and 65.25 cents below a year ago. There were 72 sales on the week and an eye catching 386 for the month of August, up from 316 in July.
Central region cream supplies are steady though the holiday contributed to reduced spot market activity. Butter makers in the region continue to report spot loads are trending toward Class II and Class III processors. Butter markets remain active but stable overall. Inventories of 80% butterfat butter remain ample, while stocks of 82% are reported to be tight, according to DMN.
The butter market tone is weak in the West. Cream is seasonally tight, though some contacts reported no downtime was taken over Labor Day, allowing limited spot availability. Milk availability continues to strengthen. No production issues were reported and butter production remains stable. Some manufacturers are intentionally keeping inventories short and only producing enough butter to avoid freezing any excess, which may lead to tighter stocks heading into the holidays. Retail and domestic butter demand remains atypical for this time of year, contrasting with the usual holiday baking purchasing patterns.
Grade A nonfat dry milk continued to climb, closing last Friday at $1.97 per pound, highest since June 8 when it stood at $2, and is 75 cents above a year ago. There were 10 sales for the week and 132 for August, down from 272 in July.
HighGround Dairy points out, "For the first time since 2022, skim milk powder (SMP) prices on the GDT auction were higher than whole milk powder (WMP). Concerns about a "super" El Niño, which has the potential to cause severe drought in New Zealand and wreak havoc on the shoulder season milk supply, along with a tight balance sheet for skim solids and protein, drove SMP prices higher. The weaker result for WMP was somewhat unexpected, as Singapore Exchange futures had been trending higher before the auction, with the market trading on weather. That said, last Tuesday's result indicates that demand may have backed off," says HGD.
Dry whey closed last Friday at 76 cents per pound, up .75 cents on the week, highest since Dec. 12, 2025, and 19.50 cents above a year ago, with 1 sale.
The Daily Dairy Report's Sarina Sharp points out in the Sept. 4 California Milk Producers Council newsletter, "The trade has assumed that greater whey protein concentrate (WPC) and whey protein isolate (WPI) production has restrained dry whey output. Manufacturers are indeed making as much WPC and WPI as possible, but there's still whey leftover for dryers."
"Production of dry whey for human consumption topped prior-year volumes by 18.7%, and it's up 12% for the year to date. Exports are the real story. The rest of the world is hungry for protein too, and the U.S. is the supplier of first choice. Dry whey exports jumped 75% year over year in July. For the year to date, whey powder exports are record high, up 57% from the first seven months of 2025. Exports are lapping up all the growth in output and then some. In fact, whey exports grew nearly three times faster than output in January through July. Robust international demand, particularly from China, has pushed CME spot whey powder to calendar-year highs," according to Sharp.
Meanwhile, the US is accelerating efforts to increase protein in milk to "align with global demand trends and keep pace with export competitors," according to CoBank, "But while butterfat levels have risen sharply the last decade, gains in protein have been comparatively modest, according to CoBank's new report.
"That dynamic is beginning to change," says CoBank, "as milk component pricing formulas and other incentives have shifted the economic premium from butterfat to protein. The report says "U.S. milk protein production began outpacing butterfat last August, when protein values surpassed butterfat for the first time in recent years. It notes that "a more balanced composition of butterfat and protein will help keep the U.S. competitive with the world's other leading dairy exporters in addition to supporting domestic cheesemakers."
"U.S. butterfat gains have doubled protein growth over the past decade, driven largely by demand to fill underserved domestic butterfat markets," says Corey Geiger, lead dairy economist. "The dairy industry has successfully met that challenge, and U.S. butter exports are now historically high.
At the same time, higher butterfat yields have led to some significant challenges for Cheddar and American-style cheesemakers, who rely on a more balanced ratio of butterfat and protein for optimal cheese quality and production yields."
"Despite recent progress in growing protein content in milk and restoring the ratio preferred by cheesemakers, the U.S. still trails its key export market competitors in overall milk protein levels," says CoBank. "The European Union, New Zealand and U.S. account for two-thirds of global dairy exports, and both the EU and New Zealand have increased protein at a faster pace than butterfat, more closely matching global trends in dairy product and ingredient demand."
"Although cheese making formulas vary by variety, a protein-to-fat ratio above .80 is generally preferred for cheese production. While some cheese types always require added milk protein solids, those additions have become standard for nearly all U.S. cheesemakers as the protein-to-fat ratio tumbled from .83 to .77 over the past decade," says CoBank.
Fluid Milk Sales
You'll recall that June fluid milk sales were up 3.3% from a year ago, with whole milk sales up 7% from a year ago and up 3.1% year to date. Skim milk sales have been slipping as consumers return to the better flavor and mouth feel of whole milk and turn away from plant based beverages and low fat milks.
The Economic Research Service annual report on fluid sales provided some interesting data. The report covered the years 1975 to 2025 and showed 2025 fluid sales totaled 42.8 billion pounds, down from 43.2 billion, or .8%, from 2024.
Whole milk sales in 1975 stood at 36.2 million pounds, but fell yearly, with some minor oscillations until it bottomed out in 2013 at 13.8 million pounds. It started climbing from there, with 2021 seeing a one year downturn, but climbed back to 16.96 million in 2025, claiming 40% of fluid sales that year.
Reduced fat 2% sales in 1975 totaled 8.7 million pounds and climbed steadily from there, exceeding whole milk sales in 1993, but whole milk soon regained dominance though sales were close.
Whole milk sales certainly trailed combined 2%, 1% and skim milk sales, but whole milk's popularity has returned as health studies have helped sales and it has been reintroduced in schools. Fluid milk is still an important market for dairy and the industry must continue to innovate and promote this valuable commodity.
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