The government is back at work however the issue may be revisited next year. The deal funds the government through Jan. 30, 2026, as HighGround Dairy points out, with the exception of agriculture, military construction, veteran’s affairs, and the legislative branch. These three were part of a “minibus” appropriations package, and their budgets were approved for one full year.

The USDA raised its estimate of 2025 milk output, the eighth consecutive month to do so, in its World Agricultural Supply and Demand Estimates (WASDE) report, citing higher milk cow inventories and robust milk per cow through the third quarter of 2025 as reported in the September Milk Production report. The 2026 forecast was also raised, as the higher inventories and increased productivity are expected to carry into 2026.

2025 production and marketings were projected at 231.4 and 230.5 billion pounds respectively, up 1.4 billion on both from a month ago. If realized, both would be up a hefty 5.5 billion pounds or 2.4 percent from 2024.

2026 production and marketings were projected at 234.3 and 233.3 billion pounds respectively, up 300 million pounds from a month ago. If realized, both would be up 2.9 billion pounds or 1.3 percent from 2025.

The 2025 butter price forecast was reduced as increased supplies of milkfat have resulted in sharply lower prices in third and fourth quarter. Cheese and nonfat dry milk (NDM) prices were also lowered as increased milk supplies put downward pressure on prices. The whey price forecast was raised on strong demand.

Butter, cheese and NDM prices for 2026 were lowered, based on increased milk supplies. The whey price forecast was raised, as strong demand is expected to continue into 2026.

Class III milk prices were reduced, as lower cheese prices more than offset higher whey prices. The 2025 average was lowered a nickel from last month’s report, to $18.15 per hundredweight (cwt.), and compares to $18.89 in 2024 and $17.02 in 2023. The 2026 average was raised 25 cents to $17.65 per cwt.

Class IV milk prices were reduced on lower butter and NDM prices. Look for the 2025 average to come in at $17.35 per cwt., down 80 cents from a month ago, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average was projected at $14.50, down $2.75 from last month’s estimate.

U.S. dairy exports totaled 235,210 MT in August, up 3.7 percent from August 2024, but down on a monthly basis for the second month in a row. HighGround Dairy says, “Trade woes earlier in 2025, when July and August’s sales were likely booked, probably weighed on values, causing them to fall. Softness in some of the powders, specifically, whey protein concentrate 80 percent protein, lactose, and nonfat dry milk/skim milk powder shipments drug the totals down.”

.Cheese exports totaled an impressive 119.3 million pounds, up 28.1 percent from a year ago, a record high on a 30-day adjusted basis, according to HighGround’s Cara Murphy in the Nov. 24 Dairy Radio Now broadcast, and was the fourth time in 2025 that a new highwater mark was set, “highlighting just how much cheese the U.S. has sent abroad.” Mexico was the top destination, with a 31 percent market share, followed by South Korea, Japan and Australia. Cheddar set a record for the third time in 2025, with 24.3 million pounds exported, up 139.7 percent.

She warned, however, that European cheese prices fell substantially in October and are trending around $1.50 per pound, very close to those in the U.S. so 2026 exports may not look as strong as those in 2025.

Butter sailings, at 17.7 million pounds, fell from July’s level, but were up 190.5 percent from a year ago. HighGround adds that U.S. butter imports slowed to their lowest level since January 2021. New Zealand and European butter prices remain at about $1.50 premium to the U.S. so U.S. exports may remain strong, she said.

Nonfat/skim milk powder exports amounted to 124.4 million pounds, down 17.6 percent as U.S. prices are not competitive globally. Exports to Mexico were down sharply as were sailings to the Philippines and Indonesia. Dry whey exports totaled 39.9 million pounds, up 10.6 percent from 2024, with strong sales to China.

The world has plenty of milk, according to Murphy, and output is up substantially in Europe and New Zealand, even in Latin America and China.

Speaking of China, the latest data shows October whey product imports hit 142.3 million pounds, up 14.4 percent from a year ago, highest October on record, according to HighGround Dairy. The U.S. saw increased sales but was “somewhat surprising, given the Chinese government’s recent directive to reduce hog production, though it may still be too early for that policy to materially affect whey demand for pig feed.”

The U.S. remains the top origin for lactose imports, though October volumes slipped 2.6 percent. Year-to-date, U.S. market share has also declined from 74 percent in 2024 to just 60 percent, says HighGround, “as trade disputes continue to weigh on Chinese purchases of U.S. goods.”

Cheese imports, at 28.4 million pounds, were up 30.7 percent. Butter amounted to 12.5 million pounds, down 4.4 percent.

CME cash block cheese, after plunging almost 24 cents the previous three weeks, was trading Thursday morning at $1.56, up 2 cents on the week so far but 8.50 cents below a year ago, as traders anticipated Friday afternoon’s October Milk Production and August Dairy Production reports. It closed Friday at $1.54. The barrels were at $1.6050 Thursday, lowest since March 21, 2025, after finishing Friday at $1.6425.

Central region cheese producers continued to run busy schedules this week to fill orders, according to Dairy Market News, as many facilities will take some downtime Thanksgiving week. Milk production is steady in the region and some plants were sending larger than normal volumes of spot milk to bottlers. Class III spot demand is moderate as some cheesemakers reported multiple spot sales of milk. Prices at mid-week ranged $1.50-under to $1.50 over class. Retail cheese demand is strong and exports strengthened this week due to lower CME prices.

Cheese manufacturers in the West report Class III spot milk varies from steadily available to tighter. Cheese production is strong as we approach the remaining 2025 holidays. Domestic cheese demand is flat to strengthening. Export demand is steady to strong, according to DMN.

Butter continued its meltdown, falling to $1.4775 per pound Thursday, lowest since Feb. 26, 2021, and $1.0625 below a year ago. It closed Friday at $1.5750.

There is no shortage of milk in the Central region, says DMN, and components are up significantly from last year. Cream was becoming more available as the holiday approached. Churns are operating at or near capacity, but some plants are planning for slower production Thanksgiving week. There were some spot sales of cream to churns this week, but the majority went to Class II and III producers as multiples are higher for those commodities.

Retail butter sales have increased dramatically. Store promotions are up in frequency and prices are dropping, contributing to the increased sales. Food service sales are light, with little reported activity. Export demand is steady, with domestic 82 percent butterfat butter remaining competitive on the global market, according to DMN.