USDA left its 2025 milk production estimate unchanged in this week’s World Agricultural Supply and Demand Estimate report, but raised the 2026 estimate based on an expected higher output per cow.

2026 production and marketings were projected at 234.3 and 233.3 billion pounds, up 200 million pounds on production, and up 100 million on marketings from a month ago. If realized, production would be up 3.2 billion pounds or 1.4 percent from 2025.

The 2026 fat basis import estimate was raised on higher shipments of butterfat products and cheese. Imports were lowered on a skim solids basis. Fat basis 2025 exports were raised on strong shipments of butter and cheese. Butter and cheese are expected to remain competitive on the international market, says USDA, and 2026 fat basis exports were raised as well. Skim-solids exports in 2025 were reduced, primarily on lower whey products, with the reductions carried over into 2026.

Butter and cheese prices for 2026 were reduced on recent price weakness, but nonfat dry milk (NDM) and whey were raised on robust demand for protein.

Class III milk prices were lowered, with lower cheese prices more than offsetting higher whey. The 2025 average was $18.01 per hundredweight (cwt.), down from $18.89 in 2024, and compares to $17.02 in 2023. The 2026 average was projected at $16.35, down 70 cents from what was estimated a month ago.

The Class IV was raised on stronger NDM prices more than offsetting lower butter. The 2025 average was $17.38, down from $20.75 in 2024 and $19.12 in 2023. The 2026 average was estimated at $14.45, up a nickel from last month.

This month’s corn outlook is for larger production, higher feed and residual use, reduced food, seed and industrial use, and greater ending stocks. Corn production was estimated at 17.0 billion bushels, up 269 million or 14 percent from 2024. Average yield was estimated at a whopping 186.5 bushels per acre and a 1.3-million acre rise in harvested area, now estimated at 91.3 million, up 10 percent from 2024. The harvested area has surged 4.5 million acres since July 2025, according to the USDA, and the record crop in 2025 exceeded the prior high set in 2023 by 1.7 billion bushels or over 40 million tons.

Total corn use was raised 90 million bushels to 16.4 billion. Feed and residual use was up 100 million bushels to 6.2 billion. Corn stocks were boosted 198 million bushels to 2.2 billion. The season-average corn price was raised 10 cents to $4.10 per bushel.

Soybean production was estimated at 4.26 billion bushels, down 3 percent from 2024. Harvested area was estimated at 80.4 million acres, down 7 percent. Yield was estimated at a record 53.0 bushels per acre, up 2.3 bushels from 2024. The soybean supply for 2025/26 was raised 17 million bushels on higher beginning stocks and production. Soybean crush was raised 15 million bushels to 2.57 billion bushels.

Soybean exports were revised 60 million bushels lower to 1.575 billion on higher production and exports for Brazil. Ending stocks were projected at 350 million bushels, up 60 million. The season-average soybean price was projected at $10.20 per bushel, down 30 cents. Soybean meal was forecast at $295 per short ton, down $5.

The USDA issued the September and October Dairy Supply and Utilization reports this week. Cheese utilization totaled 1.284 million pounds in October, up just 0.7 percent from October 2024, with domestic use down 1.9 percent. Exports amounted to 121.4 million, up 35.8 percent. September usage was up 2.8 percent, with domestic use up 0.3 percent, and exports up 34.5 percent. Year-to-date cheese usage was down 1.7 percent domestically and up 19.4 percent on exports.

October butter usage totaled 215.7 million pounds, down 7.9 percent from a year ago. Domestic use was down 12.7 percent, exports were up 171.7 percent, and YTD utilization was up 141 percent from a year ago. September usage was up 8.8 percent from September 2024.

Nonfat/skim milk powder utilization came in at 172.5 million pounds in October, off 0.3 percent from a year ago. Domestic usage was down 2.6 percent while exports were up 0.3 percent. YTD powder usage was down 12.1 percent.

October dry whey usage fell to 67.5 million pounds, down 6.1 percent, with domestic use down 27.3 percent, while exports were up 19.8 percent and YTD up 6.9 percent.

Meanwhile, fluid milk sales disappointed again. The USDA’s latest data showed November packaged sales at 3.585 billion pounds, down 1.8 percent from November 2024, and follows a 0.1 percent slippage in October.

Conventional product sales totaled 3.4 billion pounds, down 1.5 percent from a year ago. Organic sales, at 234 million, were down 1.8 percent from a year ago, and represented a typical 6.5 percent of total milk sales in the month.

Whole milk sales totaled 1.3 billion pounds, up 1.3 percent from a year ago, and up 0.5 percent year to date. Whole milk represented 36.4 percent of total sales for the month, up from 35.1 percent in October.

Skim milk sales, at 141 million pounds, were down 6.0 percent from a year ago, but up 2.2 percent YTD.

Packaged fluid sales in the 11-month period totaled 38.9 billion pounds, down 1.1 percent from 2024. Conventional product sales totaled 36.1 billion, down 1.0 percent from a year ago. Organic products, at 2.7 billion pounds, were down 1.8 percent, and represented 7.0 percent of total milk sales in the 11 months. The figures represent consumption in Federal market orders which account for about 92 percent of total fluid sales in the U.S. About 7.5 percent of U.S. fluid sales are consumed in schools.

Speaking of milk in schools, President Donald Trump recently signed the Whole Milk for Healthy Kids Act of 2025 into law, clearing the way for whole and 2 percent milk to return to school cafeterias for the first time in more than a decade. The bill allows schools to provide students with a variety of fluid milk options, which can include flavored and unflavored organic or conventional whole, 2 percent, 1 percent, skim, and lactose-free milk.

The signing was praised by the National Milk Producers Federation and Michael Dykes, president and CEO of the International Dairy Foods Association, called the law “a win for our children, parents, and school nutrition leaders, giving schools the flexibility to offer the flavored and unflavored milk options, across all healthy fat levels that meet students’ needs and preferences.”

Cash cheese was bleeding this week. Block Cheddar fell to $1.2825 per pound Monday, lowest CME price since May 5, 2020, when it was $1.2575.

HighGround Dairy’s Commodity Price Forecast says the cheese market is “a supply-side game presently as cheese production gains overwhelm a tepid consumer marketplace. Greater exports helped soak up some of this excess cheese, but inventories keep rising and there does not appear to be any significant change in sight.”

StoneX broker Dave Kurzawski says dairy is starting 2026 in a “recession,” and he does not know if cheese has hit bottom. He said the International Dairy Foods Association’s annual Dairy Forum Jan. 25-28 in Palm Desert, Calif., will provide a lot of insight on how the shakers and movers view what’s ahead.