Milk Production Is Expected to Rise
Published: Friday, February 20, 2026
The Agriculture Department raised its 2026 milk production estimate in last week's World Agricultural Supply and Demand Estimate report, based on faster growth in milk per cow more than offsetting a lower expected cow inventory.
2026 production and marketings were projected at 234.5 and 233.5 billion pounds, respectively, up 200 million pounds on both from a month ago. If realized, both would be up 3 billion pounds, or 1.3%, from 2025.
Annual price forecasts for cheese, butter, nonfat dry milk, and whey were increased on recent prices. The 2026 Class III average was raised to $16.65 per hundredweight, up 30 cents from last month's estimate, and compares to $18.01 in 2025 and $18.89 in 2024. The Class IV was raised to $15.70, up $1.25 from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024.
This month's corn outlook was for greater exports and lower ending stocks. Exports were raised 100 million bushels, to 3.3 billion, reflecting sales and shipments to date. Export sales and inspection data continued to show robust foreign demand in January and imply that total shipments during the September-January period will likely exceed 1.3 billion bushels. Corn ending stocks are down 100 million bushels, to 2.1 billion, and the season-average corn price was unchanged at $4.10 per bushel.
Global grain was virtually unchanged at 1.590 billion tons. The supply and use outlook was essentially unchanged. Foreign corn production is down fractionally as a decline for Mexico is mostly offset by an increase for the EU. Corn exports were raised for the United States but lowered for Ukraine. Corn imports are higher for Iran, Mexico, Turkey, Lebanon and Vietnam but lowered for the EU.
Soybean supply and use projections were unchanged this month. The season-average soybean price was left at $10.20 per bushel. Soybean meal and oil prices were unchanged at $295 per short ton and 53 cents per pound, respectively. China is expected to purchase more U.S. soybeans, says the USDA.
Meanwhile, the 2025 Crop Production Summary reported U.S. corn output at a record 17 billion bushels, up 14% from the 2024 estimate. Average yield was estimated at a record 186.5 bushels per acre, 7.2 bushels above the 2024 yield. Area harvested was estimated at 91.3 million acres, up 10% from 2024.
Soybean production totaled 4.26 billion bushels, down 3% from 2024. The average yield per acre was estimated at a record 53 bushels per acre, up 2.3 bushels from 2024. Harvested area, at 80.4 million acres, was down 7%.
The Feb. 10 Daily Dairy Report stated, "Massive South American production and large U.S. harvests ensure dairy feed will remain inexpensive for at least another year. But volatility is still possible amid fraught international trade relationships."
Checking Chicago, as the old saying goes, what goes up, must come down. Most CME prices did that. After jumping 11 cents the previous week, block Cheddar fell to a Friday the 13th close of $1.3875 per pound, down 8.50 cents on the week, and 53.25 cents below a year ago. The barrels held all week at $1.44, 37.75 cents below a year ago. Only 10 loads of block were traded on the week.
Central region milk output is steady, according to Dairy Market News, and spot volumes were available. Demand was steady and prices ranged from $4-under to $1-under class at mid-week. Some cheesemakers said they were busy working through internal milk supplies and not actively purchasing spot volumes. Plants report production is steady, though some had downtime for maintenance. Food service cheese sales remain light, while retail interest is steady. Domestic cheese prices are competitive so export demand remains strong, says DMN.
Milk volumes covering contractual obligations to cheese manufacturers were stable in the West. Some milk was shifting from Class II or IV to Class III and ultra-filtered milk production was strong. Spot milk demand from cheese manufacturers and cheese production schedules varied from steady to stronger. Some cheese maker inventories are tight for spot buyers depending on the variety but generally available. Domestic retail demand is flat for the most part. Food service sales are weaker to start 2026 compared to the beginning of 2025. Export demand varies from steady to strong, according to DMN.
Butter, after gaining 13 cents the previous week, dropped 8.50 cents last Monday, then headed back up to $1.7350 per pound last Thursday, highest CME price since Oct. 3, 2025, but closed last Friday at $1.7050, a half-cent lower on the week, and 67.25 cents below a year ago. Lots of butter passed through the Windy City last week, totaling 113 loads, highest since the week of June 9, 2025.
Cream production is strong in the Midwest and spot volumes are plentiful, says DMN. Demand from Class II processors was steady to higher, while interest from butter makers was steady. Butter production increased in recent weeks amid strengthening demand and increasing prices. Plants are actively churning. Retail butter sales are steady, though food service demand is lackluster. Export interest is strong, though some contacts are concerned that rising domestic butter prices will contribute to lighter interest from international purchasers, according to DMN.
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