It was a hot smoky week, particularly in the Great Lakes, Upper Midwest, New York, Washington D.C., and parts east, as well as the other Washington out west, courtesy of wildfires mostly in Canada.

Rising dairy cow numbers meanwhile, kept milk output above a year ago. The USDA’s latest data has June Dairy Month output at 19.7 billion pounds, up 2.3 percent from June 2025, which follows a 2.1 percent rise in May. The 24-state total came in at 18.9 billion pounds, up 2.4 percent from a year ago.

StoneX points out that fat and protein in the milk were also up from last year, which pushed component adjusted production up 3.7 percent from last year.

“The majority of the heat waves seen in the U.S. this summer happened in July, so we likely won’t see the effects of that until the next production report. That began to underpin cheese markets along with stronger EU prices due to a heat wave there as well in July. Nonetheless, temperatures have cooled moving into the end of July which should help milk production recover a bit short term.”

May milk output in the 50 states was revised down 36 million pounds to 20.5 billion, still up 2.1 percent from a year ago, instead of the 2.3 percent originally announced. The 24-state total was revised down 43 million pounds, to 19.7 billion, up 2.4 percent.

June cow numbers totaled 9.677 million, up 19,000 from the May count, which was revised down 7,000 head, but was up 192,000 or 2.0 percent from a year ago, and a 33-year high, according to the Daily Dairy Report. The 24-state count, at 9.231 million head, was up 18,000 from May’s total, which was revised down 12,000 head, but was up 185,000 or 2.0 percent from a year ago.

June milk per cow averaged 2,036 pounds in the 50 states, up 6 pounds or 0.3 percent from a year ago. The 24-state average, at 2,051 pounds, was up 7 pounds or 0.3 percent from 2025. The May average was revised down 2 pounds in both.

The USDA’s weekly data shows 45,100 head of dairy cattle were sent to slaughter the week ending July 4, up 4,900 or 12.2 percent from a year ago. Total to date, 1,398,300 head have retired from the dairy industry, up 70,200 head or 5.3 percent from a year ago.

The August Federal order Class I base milk price is $18.76 per hundredweight, down $2.57 from July, and 17 cents below a year ago. It equates to $1.61 per gallon, down from $1.63 a year ago. The eight-month Class I average stands at $18.45, down from $19.45 a year ago, and compares to $19.43 in 2024.

The Daily Dairy Report’s Monica Ganley Quarterra wrote in the July 17 Milk Producer Council newsletter, “U.S. consumers felt a bit of relief in June as prices eased somewhat. The Consumer Price Index, published by the Bureau of Labor Statistics (BLS), eased to 3.5 percent during the month, down 0.7 percentage points from May due especially to softer energy prices. Lower gasoline prices were also the key driver that boosted the Consumer Sentiment Index (CSI), which rose to 54.4 points in the preliminary July reading published by the University of Michigan. The CSI now sits at its highest reading since February, before the conflict in Iran began. While lower inflation and stronger consumer sentiment are undeniably favorable, the outlook remains fraught as the recent breakdown in the ceasefire between the U.S. and Iran has raised gasoline prices anew.”

She adds that “Food price inflation also slowed in June though menu price increases continue to outpace those of grocery stores. BLS data showed that the price of food consumed outside the home was up 3.4 percent versus the same month last year. However, this marks the lowest year over year gain since 2020 when pandemic related complications drove restaurant prices dramatically upward.”

Reports from the National Restaurant Association indicate that conditions improved slightly in May, but that falling foot traffic remained a challenge. Meanwhile, the price of food consumed at home rose 2.7 percent compared to June 2025, similar performance to what has been recorded the last few months.”

China’s dairy appetite remains strong. The latest data showed cheese imports in June were up 43.4 percent from June 2025, with most coming from New Zealand and Australia, however U.S. cheese saw a significant boost. Year-to-date cheese imports were up 24.8 percent. Butter imports were up 6.4 percent and up 11.3 percent YTD.

Combined whole milk and skim milk powder imports were up 15.1 percent, with whole milk powder up 26.9 percent, third-largest June on record, according to HighGround Dairy. HighGround says New Zealand accounted for 94 percent of the month’s total.

Whey product imports were up 33.6 percent from a year ago, and that despite China’s aggressive move to reduce the nation’s hog population, says HGD. Whey imports from the U.S. were up 145 percent.

Checking CME prices, after closing Friday at $1.6275 per pound, the Cheddar blocks were trading Thursday morning at $1.67, highest since April 7, and three cents above a year ago, as traders anticipated the June Cold Storage report Friday afternoon. The barrels were at $1.63 Thursday, highest since Nov. 14, 2025, and a half-cent above a year ago, after closing Friday at $1.6125.

High summer temperatures in the Central region continue to negatively impact milk output, according to Dairy Market News. Spot prices for Class III milk ranged from flat-Class to $5-over at mid-week. Some cheesemakers got offers of milk last week from plants with down time but those offers dried up this week. Cheese output was steady to lighter, as some plants didn’t have the milk for full schedules. Domestic demand for cheese is starting to pick up. Export interest is steady. Inventories of cheese barrels are expected to tighten in the coming weeks.

Milk output continues to fill cheese manufacturing in the West. In a few parts, some unforeseen plant downtime kept spot milk loads more available than anticipated. Domestic cheese demand is steady, while export demand varies from steady to stronger.

Cash butter sunk to $1.51 per pound Thursday, lowest CME price in four weeks and 95.50 cents below a year ago. It closed Friday at $1.59.

Central region cream production was lighter this week. Downtime at production plants was having a negative impact. Most spot cream is going to Class II processors and some butter makers were searching for it to keep churns active. Butter production was steady and demand was unchanged in domestic markets, but export interest is strong. Inventories are not excessive, according to DMN.

Cream production in the West was fulfilling manufacturer needs, although cream multiples were increasing.

Butter production was busy and many butter makers said cream volumes continue to push anticipated downtime back.

Grade A nonfat dry milk dropped to $1.40 per pound Thursday, lowest since Jan. 28, but still 11.25 cents above a year ago. It closed Friday at $1.47.

Dry whey was trading Thursday at 69 cents per pound, 15 cents above a year ago, following a Friday finish at 69.50 cents per pound.