The Agriculture Department raised its 2026 and 2027 milk production estimates in this week’s World Agricultural Supply and Demand Estimates (WASDE), based on the latest Milk Production report, cow inventories, and milk per cow.

2026 production and marketings were projected at 236.4 and 235.4 billion pounds respectively, up 1 billion pounds on both from a month ago. If realized, both would be up 4.7 billion pounds or 2.0 percent from 2025.

2027 production and marketings were projected at 237.0 and 236.0 billion pounds respectively, up 1 billion on both. If realized, both would be up 600 million pounds or 0.3 percent from 2026.

The 2026 nonfat dry milk (NDM), cheese and whey price forecasts were lowered from the previous month on recent price declines. The butter price was raised on stronger demand expected in the second half of the year. The Class III and Class IV price forecasts are both lowered.

The 2027 price forecasts for NDM and butter were unchanged. The Class III price forecast was unchanged as lower cheese prices are offset by higher whey prices. The Class IV price forecast was unchanged due to no changes in the butter or NDM price outlook.

The 2026 Class III milk price was projected to average $16.60 per hundredweight, down 40 cents from last month’s estimate, and compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was projected at $17.55.

The 2026 Class IV price was expected to average $19.35, down 60 cents from last month’s report, and compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $18.60.

The USDA’s weekly slaughter report showed 45,900 dairy cows sent to slaughter the week ending May 23, up 400 head or 0.9 percent from a year ago. Year to date, 1,118,500 had been culled, up 54,600 head or 5.1 percent from a year ago.

April U.S. dairy exports continued to impress and set records, hitting 568.9 million pounds on a 30-day basis, up 16.9 percent from April 2025. HighGround Dairy says “Strong sales of value-added products pushed exports, on a dollar basis, to over $900 million for the second time.”

Cheese sailings totaled 141.5 million pounds, up 29.9 percent from April 2025, and set a record for the third month in a row. Year-to-date exports were up 12.3 percent. HighGround reports that demand from Mexico in April was particularly impressive, up 28 percent, and the highest level ever.

Butter exports hit 21.4 million pounds, up 103.9 percent, with YTD up 108.4 percent. U.S. butter imports totaled 22.1 million pounds, up 121.7 percent from a year ago.

Nonfat/skim milk powder exports totaled 124.3 million pounds, up 9.5 percent from a year ago and up 6.1 percent YTD.

Dry whey hit 58.5 million pounds, up 72 percent, and up 44.4 percent YTD. But, while dry whey and WPC<80 exports were up, WPC≥80 exports fell for the sixth time in seven months. HGD stated “Record prices seem to be affecting international demand for the high-protein commodity, with sailings to China, Japan, the Netherlands, South Korea and Australia dropping by 200MT or more.”

There was good news on the demand side. The USDA’s April Dairy Supply and Utilization report showed total cheese utilization at 1.28 billion pounds, up 1.4 percent from April 2025. HighGround Dairy credited “incredible export levels,” up 29.8 percent, which helped offset slightly lower domestic consumption, down 1.3 percent.

Butter utilization was up 9.0 percent, with domestic usage up 4 percent and exports up 103.8 percent. HGD points out “Although Easter was in early April, demand stateside was ravenous, and domestic disappearance easily set a record for the month.”

Nonfat-skim milk powder utilization was up 1.5 percent, with domestic use up 10.2 percent and exports up 9.5 percent. HGD points out however “April 2025 was the lowest total for the month since 2014, and 2026 ranks just ahead of it, meaning usage was not much to write home about.

“What is lacking in domestic demand is being made up for in impressive exports of dry whey and whey protein concentrate,” says HGD. “Mexico, Canada, and China increased dry whey imports in April, with exports now accounting for 75 percent of total use.”

CME block Cheddar fell to $1.46 per pound Wednesday, lowest CME price since Feb. 17, 2026, but was trading Thursday at $1.49, 34.75 cents below a year ago. It closed Friday at $1.4725. The barrels were at $1.42 Thursday, lowest since Feb. 3 and 41.50 cents below a year ago, after closing Friday at $1.44.

Milk production destined for Class III use was balanced this week in the Central region, according to Dairy Market News. Spot milk trade was more active with some facilities needing to move milk due to unscheduled downtime and production issues. Mid-week spot prices ranged from $7-under to Flat Class. Contacts were closely watching weather forecasts as warmer temperatures were expected to give way to rain and cooler days, providing more cow comfort and thus increased milk volumes. Cheesemakers are operating busy schedules to match current demand for bulk cheese. Some contacts indicate spot volumes are being purchased as soon as they are offered. Export demand is strong.

Cheese manufacturers in the West report that milk production is meeting their needs, despite seasonally lighter output. Spot loads were more available, with downtime at some Class II and IV facilities. Most cheese plants continue to use much of their capacity as they work through milk intakes. Domestic cheese demand is steady. Demand from retail and other food manufacturers continues to outpace food service demand. International buying is steady, according to DMN.

Cash butter fell to $1.64 per pound Thursday, 93 cents below a year ago, following a Friday finish at $1.6925. There were 101 sales so far on the week, 51 on Monday alone, up from 72 for all of last week.

DMN warned that, while milk and cream production are strong in the Central region, some contacts are concerned with increasing temperatures affecting farm output. Cream demand from Class II and III facilities remains strong, leaving very little spot cream available for Class IV use. Some facilities were bringing in spot cream from other regions to keep churns operating seven days a week. Domestic spot sales of 80 percent butter are steady and 82 percent product destined for export is in demand due to lower prices compared to other international producers. Retail sales are steady to strong while food service demand is light.

Milk output in the West continues to readily fill cream processor needs. Some Class II manufacturing downtime was freeing up more spot cream in parts of the region. Demand from butter manufacturers was not heavy though churns are very active with contractual cream intakes and running well. Inventories are generally stable or building. Domestic demand is steady, international buying is mixed. Spot loads of 80 percent and 82 percent butterfat butter are available, says DMN.