The USDA raised its latest 2026 and 2027 milk production forecasts in this week’s World Agricultural Supply and Demand Estimate report, based on the latest milk production data where milk cow numbers and output per cow were raised for both years. “Strong milk prices and supplemental income from calf sales are expected to continue to support herd growth,” explains USDA.

2026 production and marketings were projected at 237.7 and 236.7 billion pounds respectively, up 800 million pounds on both from last month’s report. If realized, both would be up a whopping 6.0 billion pounds or 2.6 percent from 2025.

2027 production and marketings were projected at 240.7 and 239.7 billion pounds respectively, up 2.3 billion pounds on both. If realized, both would be up 3.0 billion pounds or 1.3 percent from 2026.

Commercial imports on a fat basis for both years were unchanged while imports on a skim solids basis were lowered to reflect expected reduced shipments of yogurt, whey and milk proteins. Exports on a skim solids basis were raised to reflect the continued strength of exports of nonfat dry milk (NDM), whey protein concentrates, and lactose exports.

Exports on a fat basis for 2026 were reduced due to lower-than-expected butter exports in third quarter. Exports on a fat basis for 2027 were raised as butter exports are expected to increase due to increased price competitiveness.

Price forecasts for both NDM and whey for both years were increased to reflect recent price strength and continued strength of consumer demand for high protein products. The price forecast for butter was lowered for both 2026 and 2027 due to growth in the milkfat supply outpacing demand. The cheese price was raised for 2026 based on recent price strength but lowered for 2027 due to expected continued supply growth.

The 2026 Class III milk price was raised on higher cheese and whey prices but lowered for 2027, as higher whey prices are expected to only partially offset lower cheese prices. The 2026 Class III was projected to average $16.05 per cwt., up 25 cents from last month’s report, and compares to $18.01 in 2025 and $18.89 in 2024. The 2027 average was estimated at $16.85, down a nickel from last month’s report.

The Class IV milk price forecast was raised for both years as higher NDM prices more than offset the effect of lower butter prices. The Class IV was estimated to average $19.10 in 2026, up 20 cents from a month ago.

That compares to $17.38 in 2025 and $20.75 in 2024. The 2027 average was projected at $19.10, up 20 cents from last month’s estimate.

You’ll recall that September milk production was up 2.6 percent, providing plenty for processors and evidenced in USDA’s latest Dairy Products report.

September cheese output slipped to 1.233 billion pounds, down 2.5 percent from August, but 0.7 percent more than Sept. 2025. Year-to-date U.S. cheese output hit 11.25 billion pounds, up 2.3 percent from a year ago.

Italian style cheeses totaled 541.8 million pounds, down 2.4 percent from August, but 4.7 percent more a year ago, putting YTD output at 4.9 billion pounds, up 4.6 percent from a year ago. Revisions added 17.9 million pounds to the August total.

American output fell to 464.3 million pounds, down 3.0 percent from August, and down 2.5 percent from a year ago. YTD 4.3 billion pounds had been produced, down 0.3 percent.

Cheddar production fell to 310.2 million pounds, down 16.4 million or 5.0 percent from August, and down 13.6 million or 4.2 percent from a year ago. YTD Cheddar hit 2.99 billion pounds, down 0.6 percent from 2025.

Butter output jumped to 204.0 million pounds, up 16.6 million pounds or 8.9 percent from August, and up 20.1 million pounds or 10.9 percent from a year ago. YTD, 1.9 billion pounds had been churned, up 6.5 percent from a year ago.

Lots of cheese results in lots of whey and dry whey output came in at 71.7 million pounds, down 2.3 million pounds or 3.1 percent from August, but up 2.6 million or 3.8 percent from a year ago. Output for the nine months hit 690.6 million pounds, up 7.8 percent from a year ago. Whey stocks fell to 58.4 million pounds, down 4.8 million or 7.6 percent from August, but were up 6.4 million pounds, or 12.3 percent from a year ago.

Processors continued to route whey solids toward highest value uses, according to the Daily Dairy Report. Production of whey protein isolates and whey protein concentrates with more than 50 percent protein were up 8.9 percent and 6.9 percent, respectively.

Nonfat dry milk output came in at 129.4 million pounds, about the same as in August, but 4.5 million pounds or 3.7 percent more than a year ago. YTD output hit 1.4 billion pounds, up 9.6 percent. Stocks fell to 206.7 million pounds, down 9.6 million or 4.5 percent from August, and down 10.7 million pounds or 4.9 percent from 2025.

Skim milk powder production dropped to 19.1 million pounds, down 9.8 million pounds or 33.8 percent from August, and down a whopping 27.3 million or 58.8 percent from a year ago. YTD skim milk powder hit 275.9 million pounds, down 25.7 percent.

September fluid milk sales slipped from those a year ago, according to the USDA’s latest data. Packaged sales totaled just under 3.6 billion pounds, off 0.7 percent from September 2025, and were unchanged last month from a year ago.

Conventional product sales hit 3.3 billion pounds, off 0.4 percent from a year ago. Organic sales, at 238 million, were down 5.2 percent from a year ago, and represented a typical 6.7 percent of total milk sales in the month.

Whole milk sales totaled 1.3 billion pounds, up 5.4 percent from a year ago, and up 3.8 percent for the nine-month period. Whole milk represented 36.7 percent of total milk sales for the month.

Skim milk sales, at 128 million pounds, were down 25.5 percent from a year ago and down 16.3 percent year to date.

Packaged fluid sales from January to September totaled 31.5 billion pounds, unchanged from 2025. Conventional product sales totaled 29.3 billion pounds, up 0.1 percent from a year ago. Organic products, at 2.2 billion pounds, were off 0.8 percent, and represented 7.0 percent of total milk sales for the year so far. The figures represent consumption in Federal market orders which account for about 92 percent of total fluid sales in the U.S. About 7.5 percent U.S. fluid sales are consumed in schools.

USDA’s weekly slaughter data showed 53,200 dairy cows were sent to slaughter the week ending Oct. 24, up 600 or 1.1 percent from a year ago. Year to date, 2,237,400 cows, had been culled, up 81,200 head or 3.8 percent from a year ago.

Checking Chicago, block Cheddar looked like it was heading toward a big Friday the 13th jump in price, having gained 5.25 cents Tuesday and another 5.50 cents Wednesday. But it gave back 6 cents Thursday, falling to $1.62, though 8 cents above a year ago. It closed Friday at $1.5675. The barrels were trading Thursday at $1.6650, 2.25 cents above a year ago, but follows a Friday finish at $1.70.