The USDA left its 2025 milk production estimate unchanged in this week’s World Agricultural Supply and Demand Estimate report, and lowered its 2026 estimate, based on a reduced cow inventory more than offsetting a higher rate of growth in milk per cow.

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

2026 production and marketings were projected at 234.1 and 233.2 billion pounds, down 200 million pounds on production and down 100 million from a month ago. If realized, production would be up 2.7 billion pounds or 1.2 percent from 2025.

The 2025 import forecast was lowered on a fat basis, mainly due to less expected butter imports, and unchanged on a skim-solids basis. Exports on a fat basis were raised with U.S. butter continuing to be competitive in international markets. Exports were unchanged on a skim-solids basis for 2025.

Fat basis imports for 2026 were lowered primarily on reduced demand for imported butter products. Skim-solids basis imports were raised slightly. Exports were raised on a fat basis for 2026 due to additional shipments of butter. Skim-solids basis exports were lowered due to fewer shipments of skim milk powder.

The 2025 butter price average forecast was raised slightly. The cheese price forecast was lowered on recent price weakness. The nonfat dry milk (NDM) and whey price forecasts were unchanged. The Class III milk price was lowered, while the Class IV price was raised.

The 2026 cheese and butter price forecasts were lowered as price weakness in late 2025 is expected to carry into 2026. The 2026 whey price was raised on strong demand expected to continue into next year. The NDM forecast was unchanged.

The 2025 Class III price was projected to average $18.10 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 is $17.05, down 60 cents from a month ago.

The 2025 Class IV price is estimated to average $17.40, up a nickel from a month ago, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average is projected at $14.40, down a dime from last month’s estimate.

This month’s corn outlook is for greater exports and lower ending stocks. Exports were raised 125 million bushels to 3.2 billion, up 12 percent from last year’s record high. Export data showed robust foreign demand in November and implies total shipments during the September-November quarter will likely exceed 800 million bushels, surpassing the prior high set in 2007. Corn ending stocks are down 125 million bushels to 2.0 billion. The season-average corn price was unchanged at $4.00 per bushel.

Global corn production for 2025/26 was forecast down slightly to 1.576 billion tons. The outlook is for lower production, trade and higher ending stocks relative to last month. Foreign corn production was cut with declines for Ukraine, Canada, Nigeria, Indonesia and Senegal partially offset by increases for the EU, Russia and Zimbabwe. Ukraine corn production is sharply lower with reductions to both area and yield based on reported government data to date, where harvest has been slow because of wet conditions in key growing areas.

Soybean supply, use and price projections were unchanged. Global oilseed production for 2025/26 was raised. The global soybean outlook includes higher production, increased crush, lower exports and raised ending stocks. Global soybean production was increased to 422.5 million, reflecting higher crops for Russia and India but lower output for Canada and Ukraine.

The Dec. 9 Daily Dairy Report says, “First-quarter (corn) shipments surpassed the prior record set in September through November 2007. Through early November, U.S. commitments to ship additional corn were 28 percent above last year’s pace, and full-season exports notched a new all-time high in the 2024-25 crop year.”

Soybean exports remain depressed, according to the DDR. “U.S. commitments to export soybeans through early November were 40 percent lower than the prior year, and September through November shipments lagged 2024 volumes by 45 percent. Despite U.S. assertions that China promised to buy U.S. soybeans, China’s state-owned buyers have purchased only a few U.S. cargoes,” the DDR stated.

The Trump Administration announced a $12 billion aid package this week for U.S. farmers. A USDA press release called it a “one time bridge payment in response to temporary trade market disruptions and increased production costs that are still impacting farmers. These bridge payments are intended in part to aid farmers until historic investments from the One Big Beautiful Bill Act, including reference prices which are set to increase between 10-21 percent for major covered commodities such as soybeans, corn, and wheat and will reach eligible farmers on Oct. 1, 2026.”

At first glance, the package offers nothing specific to dairy farmers and opinion varies as to market’s reaction to the latest government intervention.

Sen. Kirsten Gillibrand (D-N.Y.) introduced legislation this week to “Support family farms and grow agritourism businesses across the country.” The legislation would “Better tailor federal resources like loans, grants, broadband access, and educational programs that support family-owned and operated farms,” according to a joint press release from a bipartisan group of senators. Reps. Suhas Subramanyam (D-Va.) and Dan Newhouse (R-Wash.) introduced companion legislation in the House.

USDA Secretary Brooke Rollins announced a $700 million Regenerative Pilot Program to “help American farmers adopt practices that improve soil health, enhance water quality, and boost long-term productivity, all while strengthening America’s food and fiber supply.”

“Protecting and improving the health of our soil is critical not only for the future viability of farmland, but to the future success of American farmers,” a USDA press release stated. “In order to continue to be the most productive and efficient growers in the world, we must protect our topsoil from unnecessary erosion and improve soil health and land stewardship. Today’s announcement encourages these priorities while supporting farmers who choose to transition to regenerative agriculture.”

Meanwhile, the Federal Reserve, on a 9-3 vote, announced a 25-basis-point interest rate cut, the third since President Donald Trump has been in office.

CoBank got out its crystal ball this week and took a look into 2026. “Economic uncertainty surrounding U.S. trade policy is much lower than it was a year ago,” the report stated, “Steadying the broader outlook for 2026. The reduced market anxiety can be seen in historically low volatility metrics for equity, bond and currency markets, as well as in historically tight corporate credit spreads.

“The effective across-the-board tariff rate is now about 17 percent but based on tax collections, the actual average import tax paid is only about 10 percent,” according to the report. “That rate is expected to drop even further as the reduced tariffs on China and imported food products take effect and more bilateral agreements are finalized.”

Lead dairy economist Corey Geiger stated in the Dec. 15 Dairy Radio Now broadcast “We have sent price signals the last 10 years to dairy farmers to make more butterfat and they’re meeting the challenge, so much so that, in the last five months, butterfat production on U.S. dairy farms is up 5-6 percent.”