The Fed, to the President Donald Trump’s chagrin, elected to hold interest rates steady for the time being, though there was some dissension among the ranks concerned over rising inflation.

Meanwhile, U.S. butter stocks headed lower in June and remained below those a year ago, as good domestic demand and exports kept it and a lot of cheese out of the cooler.

The USDA’s latest Cold Storage report showed June 30 butter stocks at 332.1 million pounds, down 3.2 million or 1.0 percent from May, and down 23.4 million pounds or 6.6 percent below June 2025. There was no revision in the May total.

American type cheese stocks jumped to 822.8 million pounds, up 9.7 million or 1.2 percent from the May level, which was revised down 3.8 million pounds. American stocks were down 14.1 million pounds or 1.7 percent from a year ago.

The “other” cheese inventory totaled 586.2 million pounds, up 7.3 million pounds or 1.3 percent from May, and up 1.2 million or 0.2 percent from a year ago. The May total was revised down 2.3 million pounds.

Cheese stocks totaled 1.433 billion pounds, up 16.2 million or 1.1 percent from May, but were down 11.8 million or 0.8 percent from those a year ago. The May data was revised down 6.2 million pounds from last month’s report.

StoneX called the report “bearish” relative to forecasts. “We’d be hard pressed to say we expect any market weakness from current levels based on these numbers. Especially in light of the current weather market the U.S. dairy industry seems to be flirting with.”

Cash block Cheddar was trading Thursday morning at $1.5325 per pound, lowest CME price since July 8, and 17.25 cents below a year ago, after closing Friday at $1.6075. The barrels fell to $1.5475 Thursday, lowest since July 8, and 16.25 cents below a year ago, after finishing Friday at $1.63.

Milk output rebounded slightly in the Central region, according to Dairy Market News, as contacts said cooler temperatures contributed to increased cow comfort in the last week. However, contacts say spot milk offers remain limited as cheesemakers are primarily using the additional milk being produced within their network to run busy schedules. Spot milk prices at mid-week ranged from $1-over to $5-over Class.

Cheese production is steady to stronger, as some plants with downtime in recent weeks were back to full schedules this week. Demand for cheese is steady. Contacts report strong interest for Mozzarella and say inventories are tighter, while Cheddar remains available, according to DMN.

Milk volumes are seasonally low in the West but higher than previous weeks, due to lower temperatures. Cheesemakers are keeping production busy as demand for Mozzarella and Cheddar are on the rise. Retail cheese demand is steady to strong, says DMN, food service demand is light. Bulk cheese demand is increasing as demand from Mexico is increasing and bulk sales are better now than this time last year. Cheese inventories are balanced with production.

Cash butter fell to $1.38 per pound Tuesday, lowest CME price since Jan. 16, but it was trading Thursday morning at $1.48, 96.50 cents below a year ago. It closed Friday at $1.5075. Wednesday saw 78 loads trade hands, second highest volume in a single day since Nov. 21, 2003, which had 107.

Abundant butter supplies resulting from strong milk production and high butterfat levels are pressuring prices, keeping them competitive on the global market. Thankfully, exports plus consumer demand are keeping inventories in check. The 2027 CME butter price peaked at $2.1375 per pound on March 3 and it seems like a lifetime since butter saw $3; Sept. 18, 2024, to be exact.

While mild weather in the Central region has led to a slight uptick in milk output, component levels remain down from early July. Cream production is steady, and contacts say spot offers are somewhat limited. Class II processors continue to claim most of the spot cream. Churns are primarily running on contracted cream though some butter makers were purchasing spot product to maintain steady production. Demand for butter is steady from retail and food service customers and export demand remains strong. Plenty of 80 percent butterfat salted butter is available.

Improved milk production in the West was providing plenty of cream for butter manufacturing. Cream multiples are rising in the region and most spot volumes are going to Class II and III facilities. Churns are operating at seasonally busy schedules and scheduling down time and maintenance is difficult due to the abundance of milk and cream. Butter volumes are readily available for export and buyers are taking advantage. Eight-two percent butterfat butter is also available in the region.

The National Milk Producers Federation points out that getting whole milk back in school meals this fall is a “big deal.”

“Thanks to the Whole Milk for Healthy Kids Act and demand from parents across the country, the most popular variety of milk in the U.S. is back on lunch trays, benefiting the next generation of milk drinkers,” says NMPF.

“The return of whole and 2 percent varieties also will absorb a lot of U.S. butterfat, a boon for dairy producers who have struggled with a supply imbalance. A reasonable estimate of how much whole milk will be consumed by American schoolkids shows additional demand that would be equivalent to nearly 24 million pounds of milkfat, for perspective, that’s enough to make almost 120 million sticks of butter, in additional market need. That boosts dairy demand and improves prices for farmers,” says NMPF.

Grade A nonfat dry milk was having a good week, closing Thursday at $1.50 per pound, 21.25 cents above a year ago, following its Friday finish at $1.4025. 

USDA data reported that 49,500 dairy cows were sent to slaughter the week ending July 11, up 100 or 0.2 percent from a year ago. Total to date, 1,447,500 head had been culled, up 70,300 head or 5.1 percent from a year ago.

USDA’s semi-annual Cattle inventory report showed that U.S. dairy cow numbers were up 200,000 head on July 1 from a year ago and there were 100,000 more heifers. The Daily Dairy Report’s Sarina Sharp says, “The increase in heifers was somewhat expected, but still marks an important inflection point after years of declines in U.S. dairy heifer supplies.”

It’s certainly not news that retail U.S. beef prices are high, much of it due to beef cow numbers being the lowest since 1951, as western droughts, high feed and operational costs, shrinking grazing land, and aging cattlemen have taken a toll. Adding to the short supply was the cessation of imports from Mexico due to the New World screwworm (NWS) outbreak.

The Agriculture Department is attempting to fix that, and announced a phased reopening of southern cattle ports, “contingent on Mexico’s adherence to the Joint Action Plan.”

A USDA press release stated, “Beginning Aug. 24, 2026, USDA will open the Douglas, Ariz., port of entry to cattle trade, while simultaneously initiating the operational steps for subsequent openings at Santa Teresa, N.M., and Columbus, N.M. Every animal entering the U.S. through these ports will undergo a full USDA inspection to ensure it is free of any signs of New World screwworm.”