Dairy demand remained strong in June according to the USDA’s latest Supply and Utilization data. Starting with cheese, disappearance totaled 1.24 billion pounds, up 0.9 percent from June 2025.

HighGround Dairy reported that record cheese exports narrowly offset the loss in domestic consumption. Domestic use was down 1.5 percent.

HighGround cited “Poor food service demand, particularly for pizza, while even grocery purchasing ticked lower. Inexpensive U.S. cheese compared to global competitors, however, kept exports moving at a strong clip.” Exports totaled142.4 million pounds, up 23.8 percent from a year ago, and up 23.8 percent year to date (YTD).

Butter utilization hit 228.4 million pounds, first time ever to top 200 million pounds for the month of June, according to HGD, and up 10.3 percent from a year ago. Domestic usage was up 8.4 percent while exports were up 35.2 percent from a year ago.

Nonfat and skim milk powder usage totaled 195.8 million pounds, down 7.6 percent. Domestic use was up 11.1 percent, while exports dropped 19.1 percent. HighGround blamed high U.S. prices and volatility. June exports fell to their lowest 30-day adjusted level since January 2025, says HGD, and the smallest for the month since 2019.

Dry whey disappearance slipped to 79.1 million pounds, down 2.7 percent from a year ago. Domestic use was down 47.3 percent, while exports were up 47.1 percent.

HighGround stated that export volumes and dollar values indicate that the data may include lower-value items like whey permeate. “Given this possibility, the data becomes more convoluted, meaning June’s impressive upswing may not necessarily be greater international demand for U.S. dry whey. Domestic use is substantially lower because Americans prefer high-protein products, which come from whey protein concentrate and whey protein isolates rather than sweet whey powder so the outcome is not entirely unexpected.”

China’s July demand numbers had a lot of negatives. Combined whole milk and skim milk powder imports were down 40.3 percent from a year ago. HighGround Dairy points out “Whole milk powder imports dropped to their lowest level since last October and marked the weakest July volume observed since 2011. Given the growth in inventories within China, paired with lackluster consumption, the pullback is not all that surprising, especially after Chinese buyers pulled demand forward aggressively earlier in the year.”

HighGround adds that import volumes remain higher on year-to-date basis, up 3.2 percent.

“However, domestic milk and milk powder production have dropped like a stone, while buyers are becoming increasingly nervous about potential El Niño impacts later in the year. That combination is expected to bring China back to the market for additional product, and we saw some evidence of that buying interest come through at this week’s GDT event.”

Whey product imports were down 30.6 percent and down 7.1 percent year to date.

Butter imports were up13.4 percent, and up 11.5 percent year to date. Cheese was down 30.1 percent, but up 16.0 percent YTD.

The September Federal order Class I base milk price was announced by the USDA at $17.04 per hundredweight, down $1.72 from August, $1.66 below September 2025, and the lowest Class I price since March. It equates to $1.47 per gallon, down from $1.61 a year ago. The nine-month Class I average stands at $18.29, down from $19.37 a year ago, and compares to $19.67 in 2024.

The USDA’s monthly Livestock, Dairy, and Poultry Outlook, issued Aug. 18, mirrored milk price and production projections in the Aug. 12 World 

Agricultural Supply and Demand Estimates report.

The outlook stated “Dairy replacement heifer supplies remain tight. According to the recent USDA NASS Cattle report, milk replacement heifers totaled 3.600 million head as of July 1, 2026, an increase of 100,000 head from July 1, 2025. The ratio of replacement heifers to milk cows remained at 37 percent as of July 1, 2026, compared to a year ago.”

Based on dairy cow numbers and dairy slaughter, the 2026 forecast for the annual average number of dairy cows was revised upward by 5,000 head to 9.665 million. 2026 milk per cow is expected to average 24,480 pounds, 15 pounds lower than the previous forecast.

CME block Cheddar fell to $1.5325 per pound Thursday, 21.75 cents below a year ago, after closing Friday at $1.60. The barrels were trading Thursday at $1.5650, 19.50 cents below a year ago, following Friday’s close at $1.5625. Traders were anticipating Friday afternoon’s July Milk Production report.

StoneX dairy broker Dave Kurzawski expects milk output to slow from 2.3 percent in June to 1.8 percent in July. “Farmers likely continued to add cows with the herd forecast up 1.8 percent, but hot and smokey weather likely dented milk production per cow which we expect will slow from plus 0.3 percent year over year in June to flat against last year. Components in the milk continue to grow.”

The protein content of milk pooled in Federal Milk Market Orders in July was up 1.2 percent from last year which was weaker than the plus 1.7 percent in May and plus 1.6 percent in June,” says Kurzawski. Fat content in July was up 1.4 percent from last year, stronger than June, which was only up 1.1 percent but weaker than May, which was up 1.7 percent. I’ll have complete milk production details next week.

Speaking of milk output, cooler than usual August weather in the Central region is improving cow comfort and supporting steadier milk flows, according to Dairy Market News. Contacts say spot milk is available and volumes are moving at both sides of the price range. Some reported purchasing spot loads below Class prices due to plant down time. Central region spot prices lowered on both ends of the range from $1.00 under to $3.00 over, at mid-week. Cheese demand is good, says DMN, and inventories are high due to active cheese production schedules.

Retail and food service cheese demand was holding steady in the West. Milk availability was mixed, with milk readily available in California, but more limited in the Northwest due to ongoing hot weather, smoke, and haze. No changes are reported in production capabilities. Cheese markets are mixed, says DMN.

Cream availability was unchanged from last week in the Central region and remains somewhat mixed. Class II processors continue to purchase the bulk of the spot cream, constraining some loads for making butter. Churns are running primarily on contracted cream, with limited reliance on spot loads.