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 1.59 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 US 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 Dairy Market News.
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 Dairy Market News.
Butter, after gaining 13 cents the previous week, dropped 8.5 cents Monday, then headed back up to $1.735 per pound Thursday, highest CME price since Oct. 3, 2025, but closed Friday at $1.705, a half-cent lower on the week, and 67.25 cents below a year ago. Lots of butter passed through the windy city this 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 Dairy Market News. 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 Dairy Market News.
Strong milk production in the West continues to provide plenty of cream. Demand from butter producers was mixed but production is strong. Butter producers continue building inventory, but 80% butterfat butter was widely available. Eighty-two percent loads remain tight for spot buyers. Domestic retail demand is lighter to steady. Some buyers were hesitant due to the bullish price movements. Domestic food service demand is moderate. Export demand is steady to strong, says Dairy Market News.
A side note on butter, the Feb. 6 Daily Dairy Report says Canada has been the largest buyer of U.S. butterfat, accounting for 37% in 2025 and running nearly 50% ahead of 2024’s volume. “Highly competitive US pricing also helped capture market share in Mexico, the second largest destination at 11%. During 2023–24, the United States supplied 13.5% of Mexico’s butterfat imports. Through Nov. 2025, US butterfat exports to Mexico reached 12,200 metric tons and lifted US market share to 35%, while New Zealand’s share slipped from 80% to 60%.”
Grade A nonfat dry milk fell from last week’s lofty $1.64 per pound perch and closed Friday at $1.60, 4 cents lower on the week, but still 32 cents above a year ago. There were 17 loads that found new homes on the week.
Dry whey finished Friday at 72 cents per pound, down a penny on the week, but 16.50 cents above a year ago. There was only one sale on the week.
USDA’s latest slaughter data showed 54,700 dairy cows sent to slaughter in the week ending Jan. 31, down 6,100 from the previous week, and 2,800 head or 4.9% less than a year ago. Year to date 281,100 cows have exited the dairy business, up 14,600 or 5.5% from a year ago.
The Agriculture Department released its November Dairy Supply and Utilization report Thursday, still behind, due to the recent government shutdown. The report showed cheese utilization totaled 1.27 billion pounds, up 6.5% from November 2024, with domestic utilization reaching a record 1.2 billion, up 4.8%. Exports, at 111.9 million pounds, were up 28%, thanks to low U.S. prices.
Butter usage totaled 202.2 million pounds, down 16.7%, with domestic usage at 177.1 million, down 24.8%, the smallest November volume since 2012, according to HighGround Dairy’s analysis, “A significant low during the typical peak demand month. Since domestic consumption accounts for the majority of total use, overall volumes fell year over year despite seeing the second highest export levels of all-time at 25.1 million pounds, up 243.8%,” says HighGround Dairy.
Nonfat/skim milk powder usage came in at 159.3 million pounds, down 4.5% from a year ago. Domestic usage was down 16.8% while exports were up 0.2%.
Dry whey totaled 59.8 million pounds, up 2.7%, thanks to strong exports, which were up 18.1% from a year ago. “Exports helped offset the weakest domestic use on a 30-day adjusted basis since March 2014,” says HighGround Dairy.
Fluid milk sales looked a little brighter in December. USDA data showed packaged sales at 3.804 billion pounds, up 1.2% from Dec. 2024, which followed a 1.8% slippage in November.
Conventional product sales totaled 3.5 billion pounds, up 1.5% from a year ago. Organic sales, at 263 million, were down 2.7% from a year ago, and represented 6.9% of total milk sales in the month.Whole milk sales totaled 1.4 billion pounds, up 4.6% from a year ago, and up 0.9% for all of 2025. Whole milk represented 37.4% of total sales for the month, up from 36.4% in October. Skim milk sales, at 145 million pounds, were down 5.5% from a year ago, but were up 1.6% for the year.
Packaged fluid sales in the 12-month period totaled 42.7 billion pounds, down 0.9% from 2024. Conventional product sales totaled 39.7 billion, off 0.8% from a year ago. Organic products, at just under 3 billion pounds, were down 1.9%, and represented 7% of total milk sales for the year. The figures represent consumption in Federal market orders which account for about 92% of total fluid sales in the U.S. About 7.5% U.S. fluid sales are consumed in schools.
In politics, the Senate Finance Committee held a hearing Thursday on the United States-Mexico-Canada Agreement. Ted Vander Schaaf, an Idaho dairy farmer and member-owner of Northwest Dairy Association, represented the National Milk Producers Federation, and testified on the importance of the United States-Mexico-Canada Agreement to the U.S. dairy industry and the improvements needed for the agreement.
VanderSchaaf stated “Strong, enforceable trade agreements are critically important to the U.S. dairy industry. The United States exported approximately $9 billion in dairy products in 2025, including a record 559,000 metric tons of cheese last year through November.”
NMPF adds “Mexico and Canada are critical markets for US dairy, purchasing $3.6 billion in American dairy products in 2024 and accounting for 44% of total US dairy export value. However, Canada’s ongoing, blatant disregard of key USMCA obligations has undermined the agreement, and Mexico’s strong collaboration and partnership with the US has yet to extend to its intellectual property office, as it pertains to common food names.”
Vander Schaaf highlighted Canada’s “continued manipulation of its dairy tariff-rate quotas and its circumvention of USMCA dairy protein export disciplines, which have limited US producer’s ability to compete in Canada and other markets.” He noted “While Mexico has been a great partner, it has not fully met its commitments to protect common cheese names such as parmesan and feta.”
Agriculture Secretary Broke Rollins joined Texas Governor Greg Abbott at Moore Air base Monday to commemorate what they called “A significant achievement in the fight against New World Screwworm (NWS) with the completion of a US-based sterile fly dispersal facility in Edinburg, Texas.”
“The facility expands USDA’s ability to disperse sterile flies along the border and into the United States, if necessary,” according to a USDA press release. Rollins said, “This new facility is a monumental achievement for our domestic preparedness efforts, but we are also diligently working to stop the spread of screwworm in Mexico, conduct extensive trapping and surveillance along the border, increase US response capacity, and encourage innovative solutions.”
Meanwhile, the Feb. 12 Daily Dairy Report stated that “The first case of avian flu in a dairy cow was recently detected in the Netherlands, while a milk cow in Wisconsin tested positive in December. The Dutch case marks the first time the virus has been detected in a dairy cow outside of North America, while Wisconsin’s case is the first to have occurred in the state,” according to the Daily Dairy Report.
National Milk, the U.S. Dairy Export Council and the Consortium for Common Food Names celebrated the signing last week of a U.S.-Argentina Agreement on Reciprocal Trade and Investment that includes tariff and nontariff barrier concessions for U.S. dairy exports.
“Argentina commits in the trade deal to eliminate tariffs that currently range up to 28% on select dairy products,” says a joint press statement, “including milk powders, dairy proteins, lactose, and other dairy ingredients. The agreement also establishes a 1,000 metric ton quota for certain US cheeses. In addition to tariff reductions, Argentina agrees to prevent several nontariff barriers, including refraining from imposing processing facility registration requirements on US dairy exports and providing explicit protections for 39 common cheese names.”
The signing of a landmark trade agreement between the U.S. and Taiwan was also celebrated last week which will eliminate tariffs on all U.S. dairy products and preempt nontariff barriers that could otherwise limit the full potential of bilateral dairy trade. Taiwan is the third-largest fluid milk destination for U.S. exports.
Finally, a word to the wise from the Wisconsin-based American Dairy Coalition, after a Wisconsin dairy farmer’s recent post on X went viral concerning information being solicited by his processor. An American Dairy Coalition press release asks dairy farmers for “additional input to understand the levels of proprietary information being solicited and if this is a ‘default’ requirement under the appearance of ‘voluntary’ compliance.”
American Dairy Coalition CEO Laurie Fischer said: “Some milk buyers seem to be pressuring farmers to hand over detailed operational data, from cropping maps to utility bills, under the guise of sustainability. ADC believes farm-level data should be treated with the same legal protections as medical or financial records.” Complete details can be found at americandairycoalitioninc.com.
Last week’s Global Dairy Trade Pulse was the 100th and the first one to offer Fonterra butter and anhydrous milkfat.
Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota, and can be contacted at lkmielke@juno.com.
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