The world’s eyes are once again on the Middle East where war is raging between Israel and Iran. Lots of angst in the U.S. as we await how or if the U.S. will respond.

Meanwhile, the USDA’s latest Dairy Supply and Utilization report had good news for the dairy industry. April cheese utilization hit 1.2 billion pounds, up 1.5 percent from April 2024, an all-time high on a 30-day adjusted basis, says HighGround Dairy.

Speaking in the June 23 Dairy Radio Now broadcast, HighGround’s Curtis Bosma said it was a good thing that demand was so strong because April cheese production was the highest as well. Domestic demand was up 1 percent and characteristically makes up 90 percent of the usage, but exports were up a strong 6.8 percent, totaling 108.9 million pounds.

Butter disappearance, at 209.9 million pounds, was up 24.4 percent, a record high for the month of April as the Easter holiday drove domestic consumption up 36.3 million pounds, up 22.3 percent, compared to a year ago. Exports remain elevated due to the substantially discounted U.S. prices compared to the rest of the world. They were down from the high observed in March, but still up 87.5 percent from a year ago.

Nonfat and skim milk powder use totaled 189.3 million pounds, down 2.7 percent, but that was the smallest year over year loss since January 2023, according to HGD. “Greater domestic utilization helped to partially offset the decline in exports,” says HGD, “which marked the lowest April since 2016.”

Dry whey utilization, at 70.7 million pounds, was down 21.4 percent from a strong 2024, says HGD. Exports were down 2.9 percent. “Increased trade tensions with China in 2025 resulted in a barrage of new tariffs on U.S. goods,” explains HGD. “Although China and the U.S. announced a trade truce in June, lowering tariffs, the back and forth in April saw less whey moving to China, the top destination country, and thus reduced exports overall.”

The USDA’s latest Livestock Slaughter report showed an estimated 196,700 dairy cows were slaughtered under federal inspection in May, down 10,500 head from April, and 19,300 head or 8.9 percent below May 2024. Total to date, 1.1 million head had been culled, down 181,700 or 15.1 percent from 2024.

The USDA’s latest Livestock, Dairy, and Poultry Outlook, issued June 18, mirrored milk price and production projections in the June 12 World Agricultural Supply and Demand Estimates report. The Outlook stated “With favorable farm margins and low dairy cow slaughter rates, the national dairy herd continued to expand in April despite tight numbers of replacement heifers and lingering highly pathogenic avian influenza (HPAI) concerns.”

April was the seventh consecutive month of year-over-year growth in dairy livestock inventory.” The recent Milk Production report showed the average number of cows in April was 9.425 million, up 89,000 from a year ago, and 5,000 more than March. The milk-per-cow estimate was 2,055 pounds, up 0.5 percent from April 2024. Driven by both a higher number of cows and higher productivity, April milk output was estimated at 19.37 billion pounds, up 1.5 percent from a year ago.

The year-over-year increase in the numbers of dairy cows and milk per cow was unevenly distributed among the top 24 states, according to the Outlook. “Texas, Idaho, Kansas, and South Dakota led the expansion by adding a total of 110,000 head. Additional milk processing capacity has been added and/or is expected to come online in some of these states. Milk per cow per day increased across most of the 24 states. Exceptions included Iowa, Oregon, Washington and California. California registered the largest decline on a percentage basis. California is the state with the highest number of dairy herds impacted by HPAI from September through December 2024. Since then, the monthly number of reported outbreaks has declined significantly both in California and elsewhere. However, as of June 16, the majority of 2025 outbreaks (139 out of 156 nationwide) were in California and Idaho,” the Outlook reported.

Cheese prices fell in the Juneteenth-holiday shortened week. The markets were closed Thursday but CME block Cheddar had fallen to $1.69 per pound Wednesday, lowest price since April 7, as traders were anticipating Friday afternoon’s May Milk Production report. The barrels were also trading at $1.69 Wednesday, lowest since April 24. The cheese closed Friday at $1.8375 and $1.8350 per pound respectively.

StoneX warned “U.S. domestic Cheddar consumption, our largest cheese market, has been the worry this month on top of waning export demand. Nonetheless as U.S. cheese markets have been weaker, EU mozzarella prices are only down 3-5 cents this month to about $2.25 per pound. So, the gap between these two markets is widening again with a U.S. dollar that is still weak, we can’t discount another wave of export demand in the short term that could tighten spot supplies”

Warmer weather is contributing to lighter milk output in much of the Central region, according to Dairy Market News, but cheesemakers say unplanned downtime at some plants left plenty of milk available. Spot loads traded $7-under to flat this week. Cheese production remains strong in the region, though the plant down time contributed to lighter output overall. Domestically produced cheese is priced competitively in international markets and contributing to strong exports. Domestic demand is mixed. Retail demand is steady, but food service sales are declining, says DMN, and more cheese made its way to the CME.

Class III milk demand from western cheese manufacturers is strong, says DMN. Availability varies. Cheese production is steady and some producers say inventories for spot buyers are extremely tight, however, are available. Domestic demand is steady. Export demand is stronger.

Butter climbed to $2.5925 per pound Monday, highest since Jan. 13, 2025, but it closed Wednesday morning at $2.5275. Its Friday finish was at $2.57 per pound.

Cream output is declining in the Central region as warmer temperatures negatively impact milk components. Components are down week-to-week but fat content is up from a year ago, leaving plenty of cream available. Ice cream makers continue to pull on available cream and butter makers are actively churning as they work to stock butter for use later in the year. Domestic butter demand is steady to lighter. High prices for butter produced internationally are contributing to strong exports. Some plants are increasing their 82 percent butterfat product to meet this export demand and reducing 80 percent output, says DMN.

Western butter makers convey cream is being received, but spot load availability is tighter in some parts of the region. Butter output varies from steady to strong. In a few cases cream availability is limiting stronger churning. Butter manufacturers are seasonally building stock.

StoneX predicts May milk production will be up 1.7 percent from last year and possibly stronger. “Production continues to improve in California and it doesn’t seem like there is any shortage of milk in other parts of the country and we are going to be lapping over weak production last year as the first wave of bird flu was depressing production.” Additionally, “Fat and protein in the milk pooled in May was up from last year, but the gains in fat were a little slower than recent months,” says StoneX.