Benchmark Milk Price to Average $17.05 in 2027
Published: Friday, July 24, 2026
As reported last week, USDA raised 2026 and 2027 milk production estimates in the latest World Agricultural Supply and Demand Estimates (WASDE), based on the latest milk production data and raised cow numbers for both years. Output per cow was reduced slightly for 2026 but was unchanged for 2027.
Class III and Class IV milk price forecasts were lowered. Look for the 2026 Class III price to average $16.15 per hundredweight, down 45 cents from last month's projection, and compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was lowered 50 cents to $17.05.
The 2026 Class IV average was projected at $18.40, down 95 cents from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $17.40, down $1.20 from last month's report.
The U.S. corn outlook was for smaller supplies, greater exports, and reduced ending stocks. Beginning stocks were cut 125 million bushels to 2 billion, reflecting an increase in feed and residual use partly offset by a reduction in corn used for ethanol. Feed and residual use was raised 150 million bushels based on indicated disappearance in the June 30 Grain Stocks report. Through the first three quarters of the marketing year, feed and residual use totaled just over 5.6 billion bushels, compared to about 4.8 billion a year ago.
Corn production is up fractionally based on updated planted and harvested area. The yield was unchanged at 183 bushels per acre. Total use was raised 50 million bushels on an increase in exports. Exports were higher reflecting expectations of continued global demand. Ending stocks were down 170 million bushels to 1.8 billion. The season-average was unchanged at $4.40 per bushel.
Soybean production was projected at 4.475 billion bushels, up 40 million on higher harvested area, which was projected at 84.4 million acres, up slightly from last month. The soybean yield was unchanged at 53 bushels per acre. Supplies were raised 30 million bushels as higher production was partly offset by lower beginning stocks. The U.S. season-average was forecast at $11.40 per bushel.
Dairy margins continued flat to slightly weaker over the first half of July as higher milk prices were offset by increasing feed costs with both corn and soybean meal advancing," according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.
The MW stated that USDA's July WASDE lowered corn ending stocks more than expected due to higher demand forecasts, with recent hot and dry weather adding risk premium to the market for both corn and the soybean complex.
The MW warned, "Recent bombing exchanges between Russia and Ukraine in the Black Sea, as oil tankers are being targeted, threatens wheat exports from the region, which has caused the wheat market to surge."
While summer heat is taking a toll on U.S. milk production and its components, the Daily Dairy Report's Monica Ganley Quarterra stated in the July 10 Milk Producer Council newsletter that U.S. cows aren't the only ones suffering.
"Record high temperatures and dry conditions are also weighing on milk production in Europe," wrote Sharp. "While monthly data won't be available for some time, weekly collection data is beginning to show dramatic declines, particularly in places like France and the UK where the heat wave has been severe. Yet, even as heat stress accelerates the typical seasonal decline in production in the Northern Hemisphere, global milk production remains robust. Producers in South America and Oceania continue to post volume gains, further contributing to global supply," according to Sharp.
Checking the demand side of things, the USDA's May Dairy Supply and Utilization report showed cheese utilization rose for the 17th month in a row, hitting 1.3 billion pounds, up 2.2% from May 2025. Domestic use, at 1.17 billion pounds, was up .7%, while exports hit 135.3 million, up 18.4%.
HighGround Dairy points out however, "Domestically, natural American cheese fell to its lowest level for the month since May 2022, as weak foodservice sales dampened stateside consumption."
Butter use totaled 215.5 million pounds, up 10.6%, with domestic usage up 5.6% and exports up 88.8%. HighGround says year-to-date butter utilization through May surpassed the 1 billion pound mark, the earliest that has ever happened.
Nonfat-skim milk powder utilization came in at 204.3 million pounds, down 8.5%, as exports plunged 20.1% due to high U.S. prices. Domestic usage was up 9.7% and HGD says that elevated domestic demand may help keep U.S. prices from falling back to the $1.20 per pound level seen at the start of the year.
Dry whey disappearance totaled 80.5 million pounds, up 14.5% from a year ago. Domestic use was down a whopping 52.2%, however exports soared 112.3%. HighGround said "U.S. prices have been discounted relative to Europe, which may be one reason for the strong shipments."
U.S. fluid milk sales headed south in May, likely impacted by some school closings for summer. The USDA's latest data showed packaged sales at 3.5 billion pounds, down 2.1% from May 2025, after inching up .3% in April.
Conventional product sales came in at 3.2 billion pounds, down 2.2% from a year ago. Organic sales, at 250 million, were down 1%, and represented a typical 7.2% of total milk sales in the month.
Whole milk sales totaled 1.3 billion pounds, up .1% from a year ago, and up 2.4% for the five-month period. Whole milk represented 37.1% of total sales for the month. Skim milk sales, at 134 million pounds, were down 11.3% from a year ago, and down 8.9% year to date.
Packaged fluid sales, January to May, totaled 17.8 billion pounds, down .5% from 2025. Conventional product sales totaled 16.5 billion pounds, off .4% from a year ago. Organic products, at 1.3 billion pounds, were down .9%, and represented 7.1% of total milk sales for the year.
CME block Cheddar closed last Friday at $1.6275 per pound, up 8 cents on the week, highest since May 13, but still 1.50 cents below a year ago. The barrels finished at $1.6125, 5.25 cents higher, but 4.75 cents below a year ago. There were 27 loads of block that traded hands on the week and seven of barrel.
High temperatures in the Central region continue to negatively impact cow comfort and milk output, according to Dairy Market News. Cheese production was lighter as lighter milk output and limited spot availability had an impact. Cheese demand was steady in both domestic and international markets. Barrel availability was tighter than blocks. Some cheesemakers anticipate that lighter production will cause spot inventories to tighten in the coming weeks.
Peak spring milk production is in the rearview mirror as temperatures also heated up in the West. Idaho handlers saw the hottest weekend of the year so far. Cheese output was stable and on pace or somewhat ahead of demand for most types. Demand from domestic and international buyers was steady. Retail demand remains heavier than food service demand, according to DMN.
Cash butter saw its Friday close at $1.59 per pound, down 6 cents on the week, and 92.25 cents below a year ago. There were 57 sales on the week.
Central region contacts report that milk component levels and cream production are declining at a more rapid pace than expected.
Butter output was steady to lighter, as some plants had downtime this week. Domestic butter demand was unchanged. Export interest is strong, says DMN.
Grade A nonfat dry milk continued its downward slide, dropping to $1.47 per pound last Friday, 8.50 cents lower on the week, lowest CME price since Feb. 2, but still 18 cents above a year ago. There were 37 sales on the week.
Dry whey lost a penny last Monday, dropping to 68 cents per pound, but regained 2 cents last Tuesday, and ended the week at 69.50 cents per pound, a half-cent higher on the week, and 13.75 cents above a year ago. There were three trades.
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