The Latest: August - 2026
More Cows Equals More Milk
USDA raised its estimate of June milk production as well, from an already strong 2.3% increase to an impressive 3% advance. Dairy producers did not add any cows in July, according to USDA’s best guess, but they didn’t get rid of any either. The dairy herd held steady at 9.71 million cows, up 199,000 from the year before. The U.S. dairy industry is milking more cows than it has in 33 years, and those cows are making 59% more milk than they did in 1993, the last time the herd was this large, before adjusting for today’s super-charged components.
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A blast of cold air from Canada reached as far south as Texas this week, closing schools, freezing pipes, sidelining milk trucks, and disrupting dairy processing.
View reportThe dairy trade is feeling around for the bottom in the cheese market. Cheese output remains robust, but low prices have finally attracted international attention. U.S. cheese exports topped 85 million pounds in November, the highest-ever volume for the month, up 3% from the previous monthly high, logged in November 2022. Once again, record-setting shipments to Mexico helped to offset softer demand from Japan and South Korea.
View reportMild winter conditions across most of the country have supported milk production though margins remain thin, especially for producers in the western U.S. Milk remains readily available for manufacturers.
View reportThere was a decided lack of Christmas cheer in the Class III markets this week. The January through April contracts scored life-of-contract lows. December Class III settled at $16.09 per cwt., promising Scrooge-like margins on the farm. January and February Class III looked even worse. This week January tumbled 47ȼ to $15.43 and February plummeted 54ȼ to $15.60.
View reportJanuary Class III futures dipped below the $16 mark, a level signaling plenty of red ink on the farm as well. Unfortunately, Class III prices will have a greater influence on most milk checks. Ever-expanding cheese production capacity, lower milk powder output, and depooling will water down the share of dairy producer revenue derived from the higher Class IV market.
View reportCheese vats remain full, despite lower milk output. U.S. cheese production reached 1.19 billion pounds in October, up 0.8% from the year before. Given the continued investment in U.S. cheese production capacity, cheese output is likely to grow for the foreseeable future, to the detriment of U.S. cheese and Class III prices. But the details of U.S. cheese production offered some fodder for the bulls. In October, cheesemakers shifted milk into fresh cheeses like cream cheese and Neufchatel (+6.8% year-over-year), cottage cheese (+13%), Hispanic cheeses (+5.7%), ricotta (+12.2%) and Mozzarella (+2.3%).
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