The USDA raised its 2025 and 2026 milk production forecasts from last month in its latest World Agricultural Supply and Demand Estimates (WASDE) report, based on the latest milk production data which showed increased cow numbers for 2025 and increased milk per cow for 2025 and 2026.

2025 production and marketings were projected at 227.8 and 226.8 billion pounds respectively, up 500 million on both from a month ago. If realized, both would be up 1.9 billion pounds or 0.8 percent from 2024.

2026 production and marketings were projected at 228.2 and 227.2 billion pounds respectively, up 300 million from a month ago. If realized, both would be up 400 million pounds or 0.2 percent from 2025.

Commercial export forecasts for 2025 and 2026 were raised on a fat basis, primarily due to competitively priced butter exports, as well as higher cheese and fluid product exports. On a skim solids basis, export forecasts were reduced on lower shipments of nonfat dry milk (NDM). Import forecasts for 2025 were raised on both a fat basis and skim-solids basis. Imports for 2026 were raised on a skim-solids basis, but unchanged on a fat basis.

Butter, cheese, whey, and NDM price forecasts for 2025 were raised from the previous month on recent price strength. Butter, cheese and whey price forecasts for 2026 were raised as strong demand is expected to absorb the growth in milk production. NDM prices were unchanged from the previous month.

Class III and Class IV milk price forecasts are raised as well. The Class III average was projected at $18.65 per hundredweight, down a nickel from last month’s estimate, and compares to $18.89 in 2024 and $17.02 in 2023. The 2026 average was projected at $17.80, up 30 cents from a month ago.

The 2025 Class IV is expected to average $18.85, up 40 cents from last month’s estimate, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average was estimated at $18.20, up a dime from last month.

The USDA’s weekly slaughter report showed 44,800 dairy cows were sent to slaughter the week ending May 17, down 1,100 from the previous week, and down 2,200 or 4.7 percent from a year ago. Year to date, 1,018,400 head had been culled, down 94,300 head or 8.5 percent from a year ago.

Live cattle prices hit new highs, selling at over $1,300 per head, driven primarily by supply-side constraints, according to HighGround Dairy. “Imports of Mexican cattle have been halted due to screwworm concerns, and U.S. inventories remain historically low. Seasonal demand related to grilling season is also contributing to price strength. While dairy cow culling has lagged 2024 levels, current market conditions would yield a sizable return for animals sent to the packinghouse.”

HighGround’s Curtis Bosma said in the June 16 Dairy Radio Now broadcast that historically, cull cows and beef calves didn’t represent a big portion of income but now it’s running 10-15 percent. He also pointed out that we’re at the lowest cattle inventory in the U.S. since the 1950s as we saw a lot of heifers get placed on feedlots a couple years back which reduced the herd. “We haven’t seen much of a rebuilding since then and as a result, we’re seeing this astronomical rise in cattle prices the last couple years.” He sees no sign of it stopping any time soon.

Bosma also reported on some updates to the Livestock Risk Protection program (LRP) beginning July 1. The LRP is an insurance program that dairy producers can use to secure the value of their day-old beef calves that they’re selling as well as their cull cows. He said the timing is great for such a program and his clients are eager to use it.

The National Milk Producers Federation announced a new program to boost U.S. dairy exports and replace the Cooperatives Working Together (CWT) program.

The announcement followed the Federation’s Board of Directors meeting this week which drew more than 100 farmers and cooperative leaders. It was held in conjunction with NMPF’s annual fly-in of its Young Cooperators who met with members of Congress to discuss dairy concerns and received a U.S. Capitol tour.

The member-funded export assistance program, “NMPF Exports and Trade” or NEXT, begins July 1. A majority of the milk supplied to consumers worldwide by NMPF members is supporting the NEXT program with a 2 cent per cwt. contribution through 2028, says an NMPF press release, and will support dairy exports in key global markets, including Latin America, the Caribbean and Asia.

Checking prices, after closing Friday at $1.8575 per pound, CME block Cheddar climbed back to $1.88 Monday, but was trading Thursday morning at $1.84. The barrels were at $1.85, after finishing Friday at $1.86.

Milk output varies throughout the Central region, says Dairy Market News. Contacts in the southern portion say high temperatures are contributing to lighter output, but cool temperatures in the upper-Midwest in recent weeks have kept milk output steady. Educational institutions are out for summer break, reducing demand from bottling operations and leaving additional loads for cheese making. The additional availability has pushed spot Class III milk prices lower; and were trading $7 to $1-under at mid-week. Cheesemakers continue to run busy schedules. Export demand for cheese is strong, as loads produced in the U.S. are competitively priced. Domestic demand is light.

Cheese manufacturers in the West indicate contractual milk volumes are meeting needs. Cheese production is steady for the most part. Availability of varietal cheese for spot buyers is mixed among manufacturers. Some convey that, although loads are available, stocks are tighter than anticipated due to newer built facilities not yet producing at full capacity. Domestic demand is moderate to steady, while export demand is steady to strong. Some cheesemakers note strong demand from international buyers is offsetting weaker domestic demand and keeping inventories at good levels, according to DMN.

Lots of butter got sold this week in Chicago. The price fell to $2.5050 per pound Tuesday, but was back up to $2.5450 Thursday. Sales totaled 10 loads Monday, 30 on Tuesday, 35 Wednesday, and 23 loads on Thursday.

Warmer temperatures spread throughout the Central region this week. Midwest contacts said temperatures remain comfortable for cows, keeping components steady from week-to-week and leaving plenty of cream available. Southwest temperatures were in the 90s and having a negative impact on milk production and components and cream volumes are tighter.

Churns are active in the region and some are running full schedules. Some are freezing product to build inventories for use later in the year. Domestic butter demand is steady. Internationally produced butter remains priced at a premium for Central region product and the price difference is contributing to strong export demand.

Western cream is steady or slightly tighter this week but remains sufficient to cover needs, though not robustly available. Multiples were in line with the prior week. Many plants were running churns seven days a week, building inventory to cover demand for the remainder of 2025. Some producers noted, however, that the build is lighter than a year ago due to strong export demand as U.S. butter remains competitively priced.