You’ll recall July milk production was up 2.2 percent from a year ago, plenty to process, but it was compounded by a 10-day outage at all four Fairlife facilities, which the Daily Dairy Report says added milk that would have gone to the bottle.

The USDA’s latest Dairy Products report shows cheese production climbed to 1.264 billion pounds, up 2.3 percent from June, and 2.1 percent above July 2025. Year-to-date (YTD) output hit 8.75 billion pounds, up 2.4 percent from 2025.

Italian style cheeses totaled 551.1 million pounds, up 5.5 percent from June, and up 4.1 percent from a year ago. Mozzarella cheese totaled 433.3 million pounds, up 2.9 percent from a year ago. American cheese, at 479.8 million pounds, was down 0.6 percent from June, and down 1.1 percent from a year ago.

Cheddar output fell to 328.6 million pounds, down 6.9 million or 2.1 percent from June’s total which was revised down 2.6 million pounds, and was down 5.8 million or 1.7 percent from a year ago. YTD Cheddar hit 2.3 billion pounds, up 0.1 percent from 2025.

Butter production fell to 189.2 million pounds, down 18.7 million pounds or 9.0 percent from June, but was up 9.8 million pounds or 5.5 percent from a year ago. YTD, 1.5 billion pounds had been churned, up 5.9 percent from a year ago.

Yogurt production totaled 477.7 million pounds, up 6.3 percent from a year ago. Hard ice cream came in at 69.3 million pounds, off 0.3 percent from a year ago.

Dry whey slipped to 80.9 million pounds, down 900,000 pounds or 1.2 percent from May, but up 11.8 million or 17.3 percent from a year ago. YTD 544 million pounds had been produced, up 8.3 percent. Whey stocks grew to 68.4 million pounds, up 3.3 million or 5.2 percent from June, and up 18.3 million pounds, or 36.5 percent from a year ago.

Nonfat dry milk output climbed to 165.1 million pounds, up 1.3 million pounds or 0.8 percent from June, and up 34.6 million or 26.6 percent from a year ago. YTD output hit 1.2 billion pounds, up 10.6 percent. Stocks fell to 232.8 million pounds, down 10.4 million or 4.3 percent from June, and down 12.1 million pounds or 5.0 percent from 2025.

Skim milk powder dropped to 22 million pounds, down 6.7 million or 23.1 percent from June, and down 22.4 million or 50.3 percent from a year ago. YTD skim milk powder stood at 205.8 million pounds, down 13.3 percent from a year ago.

Block Cheddar was trading Thursday morning at $1.46 per pound, following the Labor Day holiday, 23 cents below a year ago. It closed Friday at $1.4650. The barrels dropped 7 cents Thursday, dipping to $1.4625, lowest CME price since June 23, and 23.75 cents below a year ago. They closed Friday at $1.5325.

Central region milk supplies tightened slightly due to another round of warmer temperatures, according to Dairy Market News. Contacts report that Class I processors continue to draw milk away from Class III production. Labor Day downtime caused some plants to offer spot milk at discounted prices.

Southwest milk supplies are tighter and contacts note an absence of spot offerings. Prices at mid-week ranged from $2 under to flat-class. Outside of the holiday downtime at the start of the week, cheese production remained generally active throughout the region. Demand is strong for certain varieties, while others continue to experience typical seasonal slowdowns. Sales are described as balanced to slightly long. Regional inventories are ample, says DMN.

Cheese production in the West remains steady, supported by strengthening milk volumes, as cooler weather has benefited the region. Cheese plants are running consistently. Food-service demand remains soft. Domestic demand is light, though DMN reported a 23 percent increase in conventional cheese ads last week, aimed at capturing additional retail interest. Cheese promotions have increased in the West with strong activity for block and shredded products.

The Northwest typically posts slightly higher sliced-cheese prices, while the Southwest aligns closely with national averages, especially for block and shredded cheese. International demand remains strong. Contacts report fourth-quarter export growth from the West, particularly to Asia and Mexico, with Cheddar dominating. DMN warned that evolving global trade conditions and broader geopolitical uncertainties continue to present potential market impacts.

Butter continued to weaken, falling to $1.37 per pound Thursday, lowest CME price since Jan. 16, and 65.25 cents below a year ago. It closed Friday at $1.44 per pound.

Central region cream supplies are steady though the holiday contributed to reduced spot market activity. Butter makers continue to report spot loads are trending toward Class II and Class III processors. Butter markets remain active but stable overall. Inventories of 80 percent butterfat remain ample, while stocks of 82 percent are reported to be tight, according to DMN.

The butter market tone is weak in the West. Cream is seasonally tight, though some contacts reported no downtime was taken over Labor Day, allowing limited spot availability. Milk availability continues to strengthen.

No production issues were reported and butter production remains stable. Some manufacturers are intentionally keeping inventories short and only producing enough butter to avoid freezing any excess, which may lead to tighter stocks heading into the holidays. Retail and domestic demand remains atypical for this time of year, contrasting with the usual holiday baking purchasing patterns. Retail butter prices in the West show moderate stability with slight weekly variation, and small regional premium swings are noted in the Northwest. International demand remains strong, though DMN warns, “Evolving global trade conditions and broader geopolitical uncertainties are continually monitored for potential market impacts.”

Grade A nonfat dry milk continued to climb, hitting $1.94 per pound Thursday, highest since June 8 when it stood at $2. It is 72 cents above a year ago after closing Friday at $1.88 per pound.

HighGround Dairy points out, “For the first time since 2022, skim milk powder (SMP) prices on the GDT auction were higher than whole milk powder (WMP). Concerns about a “super” El Niño, which has the potential to cause severe drought in New Zealand and wreak havoc on the shoulder season milk supply, along with a tight balance sheet for skim solids and protein, drove SMP prices higher. The weaker result for WMP was somewhat unexpected, as Singapore Exchange futures had been trending higher before the auction, with the market trading on weather.