Dairy Industry News Roundup: Week of August 1 - 7, 2026

# Dairy Industry News Roundup: Week of August 1 - 7, 2026 U.S. milk output hit 18.93 billion pounds in June 2026, up 2.4% year over year, the August Class I base skim milk price tumbled $2.73 per hundredweight from July, CME spot cheese blocks closed the week near $1.535 per pound after a volatile five sessions, and the USDA's July WASDE locked in a 2026 production forecast of 236.6 billion pounds, a figure that has the market pricing Class III and Class IV squarely in breakeven territory heading toward fall. --- ## 1. This Week From Therio The team is heads-down building this week. If you missed our recent long-form pieces from co-founder Greg Cochara, both are worth catching up on: - [Herdscripting 101: The Hidden Infrastructure Behind Every Dairy Treatment](/news/herdscripting-101) - [Interstate Movement of Dairy Cattle: The Compliance Maze Nobody Talks About](/news/interstate-movement-101) --- ## Industry News ## 2. USDA June Milk Production: 18.93 Billion Pounds, Up 2.4% as Herd Expands U.S. milk production during June totaled 18.93 billion pounds, up 2.4% from June 2025, according to USDA's National Agricultural Statistics Service (NASS). The headline number confirmed what futures traders had already priced in: the U.S. dairy herd is structurally larger and production is following it higher. Production per cow in the 24 reporting states averaged 2,051 pounds for June, 7 pounds above June 2025. The number of milk cows on farms in those states reached 9.23 million head, 185,000 head more than June 2025 and 18,000 head more than May 2026. For the entire second quarter of 2026, U.S. milk production totaled 60.2 billion pounds, up 2.4% from Q2 2025. During Q2, compared to the same period in 2025, milk production was higher in 25 states, with production increases ranging from 0.2% in Ohio to 19.8% in Kansas, and lower in 7 states with declines ranging from 0.1% in New Mexico to 7.4% in Kentucky. May's milk production estimate was revised down by 43 million pounds from the prior month's figure, so output was up 2.2% from May 2025, rather than the 2.4% initially estimated. | Metric | June 2025 | June 2026 | Change | |---|---|---|---| | Total U.S. Milk Production | ~18.49 B lbs | 18.93 B lbs | +2.4% | | Cows on Farm (24 states) | ~9.045 M head | 9.23 M head | +185,000 head | | Output Per Cow (24 states) | 2,044 lbs | 2,051 lbs | +7 lbs | | Q2 Total Production | ~58.8 B lbs | 60.2 B lbs | +2.4% | --- ## 3. USDA July WASDE: 2026 Milk Forecast Raised to 236.6 Billion Pounds At 236.6 billion pounds, the 2026 milk production estimate in the July WASDE was raised from the prior month's report and would be up 4.9 billion pounds from 2025's total of 231.7 billion pounds. The August WASDE is slated for release on August 12, outside this reporting window, making the July report the last official benchmark available this week. Milk production forecasts were raised for both 2026 and 2027 in the July report. Based on the latest Milk Production data, cow inventories were also raised for both years. Milk output per cow was reduced slightly for 2026 but left unchanged for 2027. The all-milk price for 2026 is now projected at $20.00 per cwt, 70 cents below the previous WASDE forecast. Dairy herd expansion is projected to continue from 2026 into 2027. The forecast for average dairy herd size in 2027 was revised upward by 45,000 head, bringing the projected average to 9.695 million. Yield per cow remains unchanged at 24,560 pounds, resulting in a 2027 milk production projection of 238.1 billion pounds, 1.1 billion pounds higher than the previous month's estimate. | WASDE Forecast Item | June 2026 | July 2026 | |---|---|---| | 2026 U.S. Milk Production | 235.4 B lbs* | 236.6 B lbs | | 2026 All-Milk Price ($/cwt) | ~$20.70 | $20.00 | | 2027 Avg Herd Size | Prior estimate | 9.695 M head | | 2027 Milk Production | Prior estimate | 238.1 B lbs | *May WASDE figure included for trend reference. --- ## 4. August Class I Base Price Collapses More Than $2 Per CWT The most acute producer-level story of the week is the August Federal Milk Marketing Order advance pricing announcement. The Base Skim Milk Price for Class I was set at $13.18 per hundredweight for August 2026, a decrease of $2.73 from the previous month. This is a sharp single-month drop that will reverberate through producer milk checks issued in September. The August Class I base price dropped after July's price indicated imminent downward pressure as the result of ample milk production and weaker markets for dairy categories like cheese. Class III and Class IV prices are now in the $16.75 to $17.50 per hundredweight range from August through December, a pricing band that is drawing alarm from producer groups. The Milk Producers Council warned in its fourth-week-of-July Friday Report that "those prices are dangerously close to most dairy producers' break-even." For the sixth consecutive month, the average Federal Milk Marketing Order (FMMO) uniform milk price climbed from the month prior, but the forward curve tells a different story, with futures suggesting the streak is at risk heading into Q4. | Class Price Item | July 2026 | August 2026 | Change | |---|---|---|---| | Base Class I Skim Milk Price | ~$15.91/cwt | $13.18/cwt | -$2.73 | | Class I ESL Adjustment | | -$0.72/cwt | | | Class III Range (fwd curve) | | $16.75-$17.50/cwt | | | Class IV Range (fwd curve) | | $16.75-$17.50/cwt | | --- ## 5. CME Spot Dairy: Cheese Blocks Recover Late in the Week After Monday Selloff The CME spot market opened the week of August 3 under pressure across all commodities before staging a partial recovery by Thursday's close. The net result was a mixed week: butter and dry whey posted modest gains off the lows, NDM traded a volatile two-session range, and cheese blocks ended the week below their opening print. On Monday August 3, cash dairy prices were down across the board at the Chicago Mercantile Exchange. Forty-pound cheese blocks dropped $0.0125 to $1.56, butter fell $0.03 to $1.4850, and nonfat dry milk declined $0.0350 to $1.5250. Tuesday August 4 brought mixed action: nonfat dry milk surged $0.0450 to $1.57 on ten sales, while dry whey eased $0.0025 to $0.69. Cheese blocks and butter were both unchanged, with blocks at $1.56 and butter at $1.4850. By Thursday August 6, the market was mostly firmer. Cheese blocks recovered $0.0150 to $1.535, butter jumped $0.0675 to $1.55, and dry whey ticked up $0.0075 to $0.6950. NDM gave back $0.0350 to $1.565 on Thursday, partially reversing Tuesday's gain. | Commodity | Mon Aug 3 | Tue Aug 4 | Thu Aug 6 | Week Net | |---|---|---|---|---| | Cheese 40-lb Blocks ($/lb) | $1.5600 | $1.5600 | $1.5350 | -$0.025 | | Cheese Barrels ($/lb) | $1.5475 | $1.5475 | $1.5475 | Unch | | Butter Grade AA ($/lb) | $1.4850 | $1.4850 | $1.5500 | +$0.065 | | NDM Grade A ($/lb) | $1.5250 | $1.5700 | $1.5650 | +$0.040 | | Dry Whey Extra Grade ($/lb) | $0.6925 | $0.6900 | $0.6950 | +$0.0025 | The block-barrel spread narrowed sharply during the week. Barrels held their $1.5475 level throughout every session, while blocks oscillated, compressing the premium to near zero by Thursday, a signal that cheesemakers are not chasing additional inventory at current price levels. --- ## 6. U.S. Dairy Herd Dynamics: Expansion Broad-Based, Heifer Inventory Rebounds Recent reports confirm the U.S. dairy herd is growing, with even heifer inventory now up by 100,000 after years of declining supplies. This is a structural shift with multiyear implications for milk supply, and it substantially complicates any near-term price recovery narrative. With more cows has come more milk, and the summer heat has done little to curb production, as USDA's Milk Production report confirmed June output was up 2.3% from the year prior. Based on the latest USDA monthly Livestock Slaughter data, the number of dairy cull cows marketed through U.S. slaughter plants in June 2026 was estimated at 208,100. A cull rate of that magnitude in a month of active herd expansion signals producers are rotating out low-productivity animals rather than shrinking the herd in response to softer prices. Dairy herd expansion is projected to continue from 2026 into 2027, according to USDA's Economic Research Service July Livestock, Dairy, and Poultry Outlook. Advances in herd genetics and feeding practices are expected to support continued growth in component percentages in 2026. | Herd Metric | Year-Ago | Current (June 2026) | Change | |---|---|---|---| | Milk Cows on Farm (24 states) | ~9.045 M | 9.23 M | +185,000 | | Heifer Inventory | Multi-year low | Rebounding | +100,000 | | Cull Cows Marketed (June) | N/A | 208,100 | Active rotation | | 2027 Projected Avg Herd | Prior est. | 9.695 M | +45,000 vs. prior | --- ## 7. H5N1 / HPAI in Dairy Cattle: NMTS Surveillance Ongoing, Vaccine Candidates in Field Trials The H5N1 situation in U.S. dairy cattle remains a background risk factor for the market this week, with no new mass outbreak declared but surveillance infrastructure continuing to expand. USDA currently has 100 herds across 18 states enrolled in its Secure Our Herds program. The agency continues to support the rapid development and timely approval of an H5N1 vaccine for dairy cows, and several vaccine candidates are currently undergoing field trials. USDA APHIS, in partnership with state veterinarians, is implementing a National Milk Testing Strategy (NMTS) that facilitates comprehensive H5N1 surveillance of the nation's milk supply and dairy herds. The strategy is designed to increase understanding of the virus's spread, support rapid implementation of enhanced biosecurity measures, and inform efforts to protect farmworkers. The H5N1 strain of highly pathogenic avian influenza is present in wild birds worldwide and has been causing outbreaks in U.S. domestic birds and dairy cattle. Earlier in 2025, USDA NVSL confirmed the detection of a second H5N1 genotype in dairy cattle: using whole genome sequencing, NVSL confirmed the presence of HPAI H5N1 clade 2.3.4.4b, genotype D1.1, marking the first time that genotype had been detected in dairy cattle. The detection was the result of state tracing and investigation following positive results from silo testing under USDA's NMTS. As of this reporting week, the interstate movement Federal Order requiring pre-shipment testing of lactating dairy cattle remains in force. USDA Federal Orders require HPAI testing and reporting in livestock and milk, including testing of lactating dairy cows before interstate shipment. --- ## 8. Feed Cost Outlook: Corn Steady at $4.40/Bu, But Crop Concerns Linger Ahead of August WASDE Feed costs are a critical input variable for dairy producers staring down Class III/IV prices in the $16.75 to $17.50 per cwt range. The July WASDE corn picture offers modest relief but not a free pass. The July WASDE corn outlook called for smaller supplies, greater exports, and reduced ending stocks. Corn production for 2026-27 was up fractionally based on updated planted and harvested area from the June 30 Acreage report, the yield remained unchanged at 183 bushels per acre, and total use was raised 50 million bushels on an increase in exports. The projected season-average corn price received by producers was unchanged at $4.40 per bushel, up $0.25 from the 2024-25 average of $4.15. The August WASDE, scheduled for release on August 12, will be the first report to incorporate field-survey-based yield estimates for corn. The August report delivers the first field-survey-based yield estimate for corn and soybeans, replacing model-based forecasts, which makes it the highest-impact WASDE of the year for feed cost projections. Any downward revision to the 183 bu/acre yield could tighten the already strained margin picture for dairy producers. | Feed Cost Item | 2024-25 | 2025-26 (July WASDE) | Change | |---|---|---|---| | Season-Avg Corn Price ($/bu) | $4.15 | $4.40 | +$0.25 | | Corn Yield (bu/acre) | Actual | 183 (proj.) | Unch from June | | Total Corn Use (2026-27) | Prior est. | +50 M bu | +Exports | | Corn Ending Stocks | Prior est. | Reduced | Tighter | --- ## 9. FMMO Class Prices and Producer Milk Check Implications The August advanced pricing announcement is the main FMMO story of the week. The Base Skim Milk Price for Class I was $13.18 per hundredweight for August 2026, a decrease of $2.73 from the previous month. The Class I Extended Shelf Life (ESL) Adjustment was negative $0.72 per hundredweight for August 2026. The July 2026 Base Class I Price was $21.33, a decrease of 85 cents from June but still $2.51 above the year-ago level. The August print at $13.18 base skim represents a dramatic acceleration in that downward trend, driven by the combination of surging milk supplies and deteriorating spot commodity values in cheese and NDM. Over the last month, component values have begun to realign with global market prices. While this development is positive for U.S. dairy exports, it has caused milk class prices to stumble heading into fall, with Class III and Class IV now in the $16.75 to $17.50 per cwt range from August through December. For the sixth consecutive month, the average FMMO uniform milk price climbed from the month prior, but the August advance pricing data strongly implies that streak will be difficult to sustain into September's announcement. --- ## 10. 2026 Production Trajectory: Year Could Deliver a Record 236.6 Billion Pounds The cumulative weight of all reports published this week points to one overarching theme: the U.S. is on track for what would be a record milk supply year. At 236.6 billion pounds, the 2026 milk production estimate would be up 4.9 billion pounds from 2025's total of 231.7 billion pounds. Recent reports confirm the U.S. dairy herd is growing, with heifer inventory up by 100,000 after years of declining supplies. Advances in herd genetics and feeding practices are supporting continued growth in milk component percentages. These twin forces, more cows and higher component yields per cow, create a compound volume expansion effect that is difficult for demand growth to absorb in the near term. The all-milk price for 2026 is now projected at $20.00 per cwt, 70 cents below USDA's previous forecast. That compares to earlier-in-the-year projections that were closer to $20.70, indicating USDA itself has been repeatedly surprised by the speed of the supply buildup. | Year | Total U.S. Milk Production | All-Milk Price Est. | |---|---|---| | 2025 (Actual) | 231.7 B lbs | ~$21.17/cwt | | 2026 (July WASDE) | 236.6 B lbs | $20.00/cwt | | 2027 (ERS July Proj.) | 238.1 B lbs | Not yet announced | --- ## 11. Global Context: Component Values Re-Aligning With World Markets One constructive development within an otherwise bearish domestic price environment is the realignment of U.S. component values with global benchmarks. Component values have begun to realign with global market prices over the last month, which is good news for U.S. dairy exports, though it has also caused milk class prices to stumble heading into fall. NDM, which traded at $1.525 on Monday and recovered to $1.565 by Thursday on the CME spot market, is the commodity most directly linked to global skim milk powder (SMP) trade flows. The NDM price range of $1.525 to $1.57 seen this week aligns more closely with international SMP prices expressed in U.S. dollar terms than has been the case for much of the first half of 2026, when domestic NDM lagged global benchmarks. A tighter block-barrel spread and lower butter values similarly narrow the gap with Oceania and European quotations. The Global Dairy Trade Price Index rose 1.5% at the most recent auction, with the majority of product prices increasing, providing some external support for U.S. export ambitions. Export competitiveness is a key variable for absorbing the record domestic milk supply, and the re-alignment of component values, while painful for Class III/IV prices in the short run, may be a necessary condition for sustained export demand growth. | U.S. Commodity | Week Close ($/lb) | GDT Trend | Export Competitiveness | |---|---|---|---| | NDM / SMP | $1.5650 | Rising +1.5% | Improving | | Butter | $1.5500 | Mixed | Near parity | | Cheese Blocks | $1.5350 | Softer | Moderate | | Dry Whey | $0.6950 | Firm | Adequate | --- ## 12. Herd Genetics and Technology: Component Growth Driven by Genomic Selection Advances in herd genetics and feeding practices are expected to see continued growth in milk component percentages in 2026, as genomic selection accelerates component trait expression across the national herd. This is not a one-season phenomenon; the trend has been building for several years and is now materially visible in the monthly NDPSR component data. The commercial-scale deployment of genomic testing, accelerated genetic improvement through sexed semen and in-vitro fertilization embryo transfer, and precision nutrition programs are compressing the generational interval for trait expression. For producers, higher component yields per cow improve milk check revenue under component pricing used in most FMMOs, even when base cwt prices are soft. For the broader market, however, higher components per pound of raw milk mean more butter and protein is entering the system per hundredweight marketed, amplifying the supply-side pressure on component commodity prices. Even heifer inventory is now up by 100,000 after years of declining supplies, meaning the genetic pipeline is being refilled with animals that carry the genomic selections of the last three to five years of intense breeding pressure. The commercial impact of that cohort will arrive in milk tanks beginning in 2027, supporting the ERS projection of 238.1 billion pounds of production that year. --- ## Quick Hits - The next WASDE report is scheduled for August 12, 2026, and will deliver the first field-survey-based estimates for 2026 corn and soybean yields, replacing the model-based forecasts that have been used since spring. - Dairy cull cow marketings through U.S. slaughter plants in June 2026 were estimated at 208,100 head, reflecting active herd rotation rather than liquidation-level culling. - Butter saw 79 sales reported on Thursday August 6 ranging from $1.515 to $1.555, making it the most actively traded CME spot commodity of the week by transaction count. - The Class I ESL Adjustment was set at negative $0.72 per cwt for August 2026, an additional headwind for fluid milk processors using extended shelf life technology. - USDA continues to support rapid development and timely approval of an H5N1 vaccine for dairy cows, with several vaccine candidates currently in field trials. - The milk cow count in the 24 NASS reporting states reached 9.23 million head in June 2026, 18,000 head above May 2026, confirming month-over-month expansion continues. - USDA ERS has lowered the 2026 all-milk price projection to $20.00 per cwt, 70 cents below the previous forecast, in response to stronger-than-anticipated supply data. --- ## What to Watch Next Week 1. **August 12 WASDE Release (12:00 PM ET):** The most important single data point of the month. Watch for revisions to the 236.6 billion pound 2026 milk production estimate, any change to the $20.00/cwt all-milk price projection, and the first field-survey corn yield estimate that will directly affect dairy feed cost margins. Any downward surprise on corn yield could provide a mild positive for margins, while an upward milk production revision would add to bearish Class III/IV price pressure. 2. **CME Spot Market Direction:** With butter staging a strong $0.0675 intraday recovery on Thursday, watch whether that momentum carries into the following week or whether it was a one-session short-covering move. Cheese block resilience above $1.50 will be the key technical level to monitor for Class III price support. 3. **NMTS Weekly Silo Testing Results:** USDA APHIS continues to publish National Milk Testing Strategy results on a rolling basis. Any new positive detections flagged through bulk tank silo testing, particularly in states that have not recently reported active H5N1 herds, would draw immediate market and regulatory attention. 4. **FMMO Uniform Price Announcements:** With the August advance prices now in hand, the June 2026 FMMO uniform prices are due for final announcement. Producers and cooperatives will use these figures to reconcile June milk settlements. 5. **GDT Auction:** The next Global Dairy Trade auction will provide a critical read on international SMP and butter demand following the GDT Price Index's recent 1.5% gain. A second consecutive positive auction would reinforce the case that U.S. export competitiveness is improving as component values realign. 6. **Feed and Weather Reports:** The USDA Crop Progress report will update corn and soybean condition ratings ahead of the critical August WASDE yield survey. Any deterioration in the Corn Belt crop condition scores would support corn futures and raise dairy margin headwinds. --- *The Therio Dairy Newsdesk publishes weekly U.S. dairy industry analysis every Friday, covering markets, policy, animal health, genetics, and the full supply chain from cow to consumer. Therio's editorial team draws on USDA reports, CME data, APHIS surveillance releases, FMMO announcements, and primary industry sources to deliver data-forward coverage for producers, cooperatives, processors, traders, and allied industry professionals. For subscription and submission inquiries, contact the Therio Dairy Newsdesk directly.*