US dairy farmers continue to fill their bulk tanks. The Agriculture Department’s latest data shows July output hit 19.57 billion pounds, up 3.4% from July 2024.

The 24 State output, at 18.8 billion pounds, was up 3.5%.

June production in the 50 States was revised up 5 million pounds, leaving output 2.3% above a year ago. The 24 State total was also revised up 5 million pounds, up 3.4%.

Cow numbers totaled 9.485 million, up 10,000 head from June, and 159,000 or 1.7% more than a year ago. The May count was revised up 6,000 head. The 24-State count, at 9.040 million, was up 8,000 from June and 154,000 or 1.7% above a year ago. The June count was revised, up 3,000 head.

Output per cow averaged 2,063 pounds, up 34 pounds or 1.7% from a year ago in the 50 states and averaged 2081 pounds in the top 24, up 36 pounds or 1.8%.

California milk production, now with bird flu pretty much in the rear view mirror, was up 125 million pounds or 3.8% from a year ago, thanks to 3,000 more cows and a 70 pound increase per cow. 

Michigan was up 4.1% on 17,000 more cows and a 5 pound gain per cow. Minnesota was up 1.9%, on a 30 pound gain per cow and 2,000 more cows. 

Meanwhile, the USDA’s latest Livestock, Dairy, and Poultry Outlook says “With a combined total of 140,000 head (dairy cows) added in June 2025 compared to last year, Texas, Idaho, Kansas and South Dakota continue to lead dairy herd expansions. Milk per cow per day increased across most of the 24 production states selected. Exceptions include Utah, Arizona, Oregon and Washington. Notably, milk per cow in California was higher year over year for the first time since September 2024 when the first cases of herds impacted by highly pathogenic avian influenza were reported in the state. Since then, the monthly number of reported outbreaks has declined significantly both in California and elsewhere.”

Dairy margins nationally were flat the first half of August as milk prices were mixed while feed costs diverged with corn making new contract lows and soybean meal rallying in response to USDA’s August World Agricultural Supply and Demand Estimates report. That according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

“Milk prices have been holding steady as milk production and dairy product output increases with strong demand, particularly in the export market, helping to absorb the additional supply,” the MW stated.

Exports are vital to the U.S. dairy industry and President Donald Trump’s upsetting of the tariff apple cart has affected all types of trade, including dairy. Speaking in the Aug. 25 Dairy Radio Now broadcast, Rabobank’s Lucas Fuess said the U.S. received in writing this week the verbal trade agreement between the U.S. and EU and called it a “win for both sides.” He said there’s not a lot of dairy that leaves the U.S. for Europe but there is a significant amount of high-end cheese and butter that comes to the U.S. from Europe. The agreement impacts many other items.

He also said U.S.-China trade negotiations have been extended until November after seeing tariffs in April and into May of up to 145 percent on U.S. imports of Chinese goods. That also decimated U.S. whey and permeate trade, he said, however there was a strong recovery in June when those tariffs were rolled back.

China’s dairy imports showed a lot of negatives in July but one of the positives was whey. Whey imports hit 151.4 million pounds, up 17 percent from a year ago, highest volume since May 2021 on a 30-day adjusted basis, according to HighGround Dairy. Sailings from the U.S. were up 22 percent, as China and the U.S. came to a trade “truce” on May 13, and HGD says “It is likely buyers piled on additional shipments following the reduced tariff announcement. However, trade relations between the two nations remain strained driving China to seek alternative origins like Belarus and Turkey.”

Lactose imports marked a new-all time high, adds HGD, and the U.S. remained the top origin nation, accounting for 60 percent of total market share. Following the trade truce, sailings of lactose jumped 36 percent. China continued to diversify their lactose purchasing, also buying product from Germany, Denmark and Italy.

Cheese imports hit 42.1 million pounds, up 20.8 percent, highest level on a 30-day adjusted basis since March 2021, according to HGD, with New Zealand accounting for 65 percent of those imports. More cheese also came from Australia and the United Kingdom, while imports from the U.S. were down 44 percent.

Combined whole milk and skim milk powder imports were down 19.0 percent and butter was down 6.3 percent.

The September Federal order Class I base milk price was announced at $18.70 per hundredweight, down 23 cents from August and $2.90 below Sept. 2024. It equates to $1.61 per gallon, down from $1.86 a year ago. The average stands at $19.37, down from $19.67 a year ago, and compares to $19.05 in 2023.

Cash block Cheddar cheese reversed last week’s downturn and marched to $1.8675 per pound Wednesday, but dropped 8.75 cents Thursday, falling back to $1.78, after closing Friday at $1.7750. The barrels gained 3 cents Monday, hitting $1.81, and that’s where they stood Thursday following their Friday close at $1.78.

StoneX Aug. 19 Early Morning Update says “There appears to be a seasonal uptick in U.S. cheese demand underway. And while there is reportedly a good deal of Cheddar in the country today, less of it seems to fit the spec of what can be brought to the CME spot market than a month or so ago.

“There is some concern that firming prices (north of $1.90) will shut off the much needed export market the U.S. has enjoyed this year. We agree with this in theory, but upside risks remain as we enter the time of year in which U.S. demand even for just a few weeks drives cheese price action. If, and this is a big if, U.S. domestic demand heats up more, spot cheese can exit the pricing zone needed to export as the market rations demand. We’re not there yet but it’s on our radar.”

Dairy Market News reports “Milk output in the Central region is mostly steady but still trending lower, as variable heat and stormy weather continue to influence conditions. Cheese production is steady to lighter. Domestic demand from retail and foodservice is steady, while export interest remains solid.

Contractual milk volumes are being met for cheese manufacturers in the West despite some lighter milk output, says DMN, and is likely ample, with bottling seasonally lighter for a couple more weeks. Cheese output is steady. Sellers describe domestic demand as moderate, steady, or somewhat stronger, and U.S. prices keep it attractive to international buying which is steady to stronger.

Cash butter had fallen to $2.24 per pound Thursday, lowest CME price since April 29, after finishing Friday at $2.30 per pound.

Cream is ample in the Midwest. Milk production is seasonally low but components are comparatively higher than in recent years. Softening demand of cream for ice cream is leaving plenty of cream available for churns.

Spot cream is tighter in the West due to lighter milk production. Some butter producers churning at less than full capacity were choosing to pass up available loads.

Those actively churning were generally running steady output, with many more focused on retail production and building inventories for fourth quarter.