U.S. Milk Production Forecast at 237 Billion Pounds
Published: Friday, October 23, 2026
As reported last week the Agriculture Department lowered its 2026 and 2027 milk production forecasts in the World Agricultural Supply and Demand Estimates report. 2026 production was projected at 236.9 billion pounds, down 300 million pounds from last month's report. If realized, output would be up 5.2 billion pounds or 2.2% from 2025. 2027 production was projected to hit 238.4 billion pounds, down 200 million pounds from a month ago. If realized, it would be up 1.5 billion pounds, or .6%, from 2026.
Commercial exports for 2026 and 2027 were lowered on a fat basis due to lower-than-expected shipments of butter and cheese. Commercial exports were virtually unchanged for 2026 on a skim-solids basis but lowered slightly in 2027 due to lower expected shipments of dry whey. Commercial imports for 2026 and 2027 were raised on a fat basis on increased shipments of butter. Commercial imports on a skim-solids basis were unchanged in 2026 and 2027.
Butter and cheese price forecasts were decreased for both years based on recent prices and growth in butterfat output. Nonfat dry milk and whey forecasts were raised to reflect recent prices and strong demand for protein products.
The Class III milk price forecasts were lowered as higher projected whey prices only partially offset lower cheese prices. The 2026 average was projected at $15.80 per hundredweight, down 40 cents from last month's report, and compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was estimated at $16.90, down 20 cents from last month's report.
The Class IV forecast was raised as higher nonfat dry milk prices more than fully offset lower butter prices. It was estimated to average $18.90 in 2026, up 35 cents from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $18.90, up $1.35 from last month's estimate.
The U.S. corn outlook is for larger supplies, exports, domestic use, and ending stocks. Projected beginning stocks for 2026/27 were raised 173 million bushels based on the September 30 Grain Stocks report. Corn production was higher as well, up 234 million bushels to 16 billion, second largest crop on record, and based on a 2.7-bushel increase in yield to 181.2 bushels per acre. Harvested area was unchanged at 88.5 million acres. Total use was increased 125 million bushels to 16.3 billion. Exports were raised 25 million bushels to 3.3 billion. With supply increased more than use, ending stocks rise by 282 million bushels to 1.8 billion. The season-average corn price was lowered 10 cents per bushel to $4.70.
Soybean production was forecast at 4.56 billion bushels, up 27 million on higher yields. Harvested area was unchanged at 85.9 million acres. The soybean yield was projected at 53.1 bushels per acre, up .3 bushels from the September forecast. Soybean supplies were raised 17 million bushels to 4.9 billion on higher production partly offset by lower beginning stocks. With a 10-million-bushel increase to exports and unchanged crush, ending stocks were up 5 million bushels to 315 million. Prices were unchanged, with the U.S. season-average soybean price remaining at $12 per bushel; soybean meal and oil prices were projected at $340 per short ton and 70 cents per pound, respectively.
USDA's latest weekly slaughter data showed 53,600 dairy cows sent to slaughter the week ending Oct. 3, up 1,500, or 2.9%, from a year ago. Year to date 2,078,400 cows, have been culled, up 80,100, or 4%, from a year ago.
Checking the demand side of dairy, the USDA's August Supply and Utilization report showed total cheese use at 1.27 billion pounds, up just .4% from August 2025, with domestic use down .5%, while exports totaling 130.1 million pounds were up 9.5% and up 22.1% year to date.
HighGround Dairy cited poor food service demand for the lower domestic usage, and added "Other-cheese exports held firm, but American cheese shipments slipped lower. Still, inexpensive U.S. cheese prices relative to Europe and New Zealand should support additional exports through the end of the year."
Butter usage totaled 224.3 million pounds, off .8% from a year ago, second month in a row that it slipped. Exports were down 11.9% and domestic use was only up .1%.
Nonfat-skim milk powder disappearance fell to 177.7 million pounds, down 4.3%, again as exports plunged 19.2%, lowest level since June 2019, according to HighGround. High U.S. prices are the problem. Domestic usage was up 26.5%.
Dry whey usage climbed to 82.3 million pounds, up 18.4% from 2025, driven by exports which were up 65.8%, while domestic use was down 45.8%.
HighGround stated, "The ban on Canadian whey imports took effect September 29, and combined with a reported production issue, these factors are tightening supply at a time when demand, especially exports, are soaring.
It was a week of rebound at the CME, particularly for cheese. Block Cheddar soared to a Friday close at $1.6825 per pound, up 29.75 cents on the week, highest since Oct. 31, 2025, but still 9.25 cents below a year ago. The barrels were bid to $1.62 Friday, after parking at $1.4525 since September 16. They were up 16.75 cents on the week, highest since July 27, 2026, and 15 cents below a year ago. There were 17 sales of block on the week and no barrel.
Cooler weather is improving milk availability across much of the Central region, according to Dairy Market News. Forecasted cooler temperatures are supportive and, while milk supplies have increased, spot load availability remains limited for Class III producers as Class I and Class IV production increases. Elevated temperatures in the Southwest persist, and milk supplies remain tight. Mid-week Class III spot milk prices ranged from flat-class to $3-over. Cheese makers report steady Cheddar production, while inventories remain ample across the region. Market participants note mozzarella and parmesan orders and sales are strong while inventories are light. Contacts also indicate that seasonal factors are contributing to increased artisan cheese production in the region.
Cheese is long and the tone is flat in the West. Contacts are offsetting the low cheese prices with returns from whey production and running at full capacity. Contractual milk loads are being met and cheese production remains steady, generally operating seven days a week. Cream cheese production is ramping up to meet fall baking and retail demand. Swiss cheese demand is down according to some. Spot cheese is available and inventories remain strong. Domestic retail demand is steady while export demand is stable and continues to command higher prices. Sellers report some booking activity for first quarter 2027, according to DMN.
Cash butter clawed its way back to $1.3650 per pound last Friday, up 9 cents on the week, highest since Sept. 28, but still 23 cents below a year ago. There were 27 loads that found new homes on the week.
Contacts in the Central region report that cream availability is tightening as Class II processors increase production and take in the maximum amount of cream. Spot loads remain available throughout the region. Reports are of increased production of cream cheese and extended shelf-life products, while ice cream production is declining seasonally. Butter production remains steady as cream continues to move to regional churns. Inventories of 80% butterfat butter remain ample, while 82% remains tight, according to DMN.
Cream supplies in California and Arizona are reported as tight, while the Mountain region has more spot-load availability.
Churns operate at full capacity across the West, with 80% salted butter and 80% unsalted butter being churned. A shift toward higher domestic butter demand emerged this week, driven by stronger retail activity. Contacts also reported improved fourth quarter butter demand year over year. International demand remains strong, and contacts note that 2027 contracts for unsalted butter are being secured, with close attention being paid to fuel expense considerations in all agreements, says DMN.
Grade A nonfat dry milk saw its first price decline since Sept. 2 on last Tuesday and fell to $2.15 per pound last Thursday, lowest since Sept. 23, but it regained 1.25 cents last Friday, and closed at $2.1625, 10.50 cents lower on the week, but $1.0525 above a year ago. There were 29 sales on the week.
The Daily Dairy Report's Sarina Sharp wrote in the Oct. 9 Milk Producers Council newsletter: "The gap between U.S. and international milk powder values has widened to a chasm, and even buyers in Mexico are starting to look elsewhere. After glancing at prices across the border, Mexican buyers stepped up the volume of their bids at the GDT. That's evidence of a downshift in U.S. trade prospects, which were already in decline. In August, the U.S. sent just 101 million pounds of nonfat and skim milk powder abroad, the smallest monthly volume in over seven years. But production is also scant," says Sharp.
Dry whey closed last Friday at a new record high of 89.50 cents per pound, up 3.50 cents on the week, besting the 86.75 cent peak of Feb. 2, 2022, and is 24 cents above a year ago. There were four CME sales on the week.
The Oct. 14 Daily Dairy Report says, "U.S. whey exporters stand to gain from Thailand's booming high-protein milk market. Thailand's ready-to-drink high-protein beverage market climbed an impressive 117% between 2023 and 2025, from $73.4 million to $159.5 million, or from 20 million liters to 41 million liters, according to a recent Global Agricultural Information Network report."
"Once a niche product for bodybuilders, high-protein milk has become a mainstream daily habit among urban Thai consumers, fueled by an aging population, rising health consciousness, and rapid urbanization," the DDR says.
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