Cheese Production Climbs to a New Record in July
Published: Friday, September 19, 2025
You'll recall July milk production was up 3.4% from a year ago. Milk components were also up, leaving plenty to convert to 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 new record for the month and was a few million pounds short of the all-time record, coming in at 1.215 billion pounds, up .9% from June, and 2.1% above July 2024. Total output in the seven-month period hit 8.5 billion pounds, up 1.7% from the same period in 2024.
Wisconsin vats contributed 301.3 million pounds, up 1.7% from June, but virtually unchanged from a year ago. California produced 200.2 million pounds, down 4.3% from June, and 1.7% below a year ago. Idaho output reached 92.6 million, up 9.1% from June, and 4.4% above a year ago. New Mexico produced 73.9 million pounds, up 4.2% from June, but 5.1% below a year ago.
Mozzarella production totaled 412.3 million pounds, up 3.1% from a year ago, with year to date (YTD) output hitting 2.8 billion pounds, up 2% from 2024. American cheese, at 475.7 million pounds, was up .4% from June, and 2.3% above a year ago. YTD American hit 3.4 billion pounds, up 3.7%. Italian-style cheeses totaled 518 million pounds, up 1.5% from June, and up 4.1% from a year ago, with YTD at 3.6 billion pounds, up 2.3%.
Cheddar production slipped to 327.1 million pounds, down 4.9 million, or 1.5%, from June, but was up 20.4 million, or 6.7%, from a year ago. YTD Cheddar hit 2.3 billion pounds, up 5.6% from a year ago.
Butter output slowed some, slipping to 180.1 million pounds, down 8.2 million pounds, or 4.4%, from June, but was up 16 million, or 9.8%, from a year ago. YTD output totaled 1.4 billion pounds, up 5.4% 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% from a year ago, with output for the year so far at 3.1 billion pounds, up 8.1%. Hard ice cream, at 69.3 million pounds, was up 4.2% from 2024. YTD production reached 436.4 million pounds, down 1.3% from a year ago.
Dry whey output came in at 63.3 million pounds, down 7.4 million pounds, or 9.8%, from June, but was up 400,000 pounds, or .6%, from a year ago. YTD whey output hit 488 million pounds, down 6.2% from a year ago. Whey stocks fell to 50.7 million pounds, down 6.8 million, or 12%, from June, and down 13 million, or 20.7%, from a year ago.
The additional cheese production resulted in some added whey. The Daily Dairy Report stated, "Processors pushed as much whey as possible into high-protein concentrates and isolates. Production of whey protein concentrates (WPC) with at least 50% protein exceeded July 2024 by 8.4%, while whey protein isolate (WPI) production topped the prior year by 4.5%. Production of WPC 50-89.9% and WPI were on pace to set annual production records."
Nonfat dry milk output dropped to 129.6 million pounds, down 10.9 million, or 7.8%, from June, but was up 8.6 million pounds, or 7.1%, from a year ago. NFDM YTD came in at 1.1 billion pounds, down .3% from 2024. Stocks fell to 236.2 million pounds, down 7.8 million, or 3.2%, from June, but were up 9.3 million pounds, or 4.1%, from 2024.
Skim milk powder production dipped to 44.4 million pounds, down 12.3 million pounds, or 21.7%, from June, and down 7.5 million, or 14.3%, from a year ago. YTD SMP reached 283.2 million pounds, down 21.7% 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." That appeared to play out last week.
StoneX Sept. 8 Early Morning Update stated, "The July Dairy Products report might be an early signal that cheesemakers are getting a little more disciplined in production (existing plants cutting as new plants increase production)," but StoneX didn't see anything shocking that the markets haven't already priced in.
Meanwhile, the Agriculture Department raised its estimate of 2025 milk output for the seventh consecutive month in its latest World Agricultural Supply and Demand Estimates report issued last Friday, based on higher cow inventories and a faster rate of growth in output-per-cow. The 2026 forecast was raised for the fourth month in a row, as higher cow inventories and productivity rates are expected to carry into next year.
CME cash Cheddar block cheese closed last Friday at $1.6150 per pound, lowest since July 26, down 7.50 cents on the week, and 66 cents below a year ago when they were trading at $2.2750. The barrels closed the week at $1.6125, 8.75 cents lower, lowest since March 21, and 87.25 cents below a year ago when they were at $2.4850. The blocks drew 25 CME sales and five of barrel.
Central region milk production is steady to higher, according to Dairy Market News. Cool temperatures are contributing to an uptick in Midwest output. Cheesemakers say strong demand from Class I manufacturers was keeping spot volumes tight and trades were 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. 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 last Wednesday, first time since Dec. 2, 2021, and it closed last Friday at $1.86, down 16.25 cents on the week, lowest since Oct. 22, 2021, and $1.27 below a year ago when it was trading at $3.13 per pound. There were 28 sales on the week.
Butter markets remain bearish, says DMN, as the CME price falls and the Dairy Products report showed July butter production was up 9.8% 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 the 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% capacity.
Grade A nonfat dry milk fell to a Friday finish at $1.1650 per pound, 5.50 cents lower, lowest since April 9 and 22.75 cents below a year ago, on 34 sales.
Dry whey reached 60 cents per pound last Tuesday, highest in three weeks, but finished last Friday at 59.25 cents per pound, 2.75 cents higher on the week, but 1.25 cents below a year ago. There were eight sales for the week.
These prices would be lower if it weren't for strong exports. 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, "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.
"You don't have a real tight market unless the physical product is tight," he explained. "We had futures at $2.70 to $2.80 this summer and spot never made it over $2.60 for very long." That says we have plenty of Double-A salted butter and now we're on the other side of that, so he thinks we're pretty close to being done with the selloff. We probably went farther than we should have, he said, and with a price between $2 and $2.20 "The market should find some stability."
The Sept. 10 Daily Dairy Report had some good news on the demand side of things, stating, "The protein boom shows no sign of abating, and as a growing number of people adopt one of the popular GLP-1 drugs, demand for dairy proteins will likely only get stronger as more doctors prescribe the medications and recommend users eat protein-rich diets. While several trends are powering the ongoing protein boom, increasing adoption of GLP-1 drugs will only pour fuel on one of the hottest food trends of the decade." Dairy has a good opportunity here to promote its nutrient dense, protein rich offerings.
Unfortunately, fluid milk sales fell in July, following a slight uptick in June. The USDA's latest data showed packaged sales at 3.35 billion pounds, down 1.2% from July 2024, following a .5% gain in June. Conventional product sales totaled 3.1 billion pounds, off .8% from a year ago. Organic sales, at 242 million pounds, were down 5.7% from a year ago, but represented a typical 7.2% of total milk sales in the month.
Whole milk sales totaled 1.3 billion pounds, off .4% from a year ago, but still up .5% year to date. Whole milk represented 38.2% of total sales for the month, up from 37.8% in June. Skim milk sales, at 166 million pounds, were up 13.3% from a year ago, but down .7% YTD.
Packaged fluid sales in the seven-month period totaled 24.4 billion pounds, down 1.2% from 2024. Conventional product sales totaled 22.7 billion, down 1.2% from a year ago. Organic products, at 1.75 billion pounds, were off .2%, and represented 7.2% of total milk sales in the seven months.
The latest weekly slaughter report shows 52,200 head were culled in the week ending Aug. 30, up 900 from the previous week, but 2,000 head, or 3.7%, below a year ago. Year to date, 1,737,600 cows had been sent to slaughter, down 108,800, or 5.9%, from a year ago.
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