Dairy Industry News Roundup: Week of July 25 - 31, 2026
U.S. dairy markets absorbed a wall of bearish data the week of July 25-31, 2026, as the USDA Milk Production report confirmed the national dairy herd hit 9.677 million head, the largest since 1993, driving June milk output up 2.3% year-over-year to 19.7 billion pounds. CME spot nonfat dry milk (NDM) tumbled 6.75 cents
# Dairy Industry News Roundup: Week of July 25 - 31, 2026
U.S. dairy markets absorbed a wall of bearish data the week of July 25-31, 2026, as the USDA Milk Production report confirmed the national dairy herd hit 9.677 million head, the largest since 1993, driving June milk output up 2.3% year-over-year to 19.7 billion pounds. CME spot nonfat dry milk (NDM) tumbled 6.75 cents on the week to a nearly six-month low of $1.4025/lb, Class III futures shed 20 to 62 cents across the August-December strip, and the Dairy Margin Coverage (DMC) program margin is now forecast below $9.50/cwt for July, edging producers toward indemnity territory. Against that backdrop, the Global Dairy Trade (GDT) auction offered a modest silver lining, with whole milk powder (WMP) rallying 1.6% and skim milk powder (SMP) gaining 2.8%, opening a potential export window for U.S. sellers.
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## 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)
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## Industry News
## 2. USDA June Milk Production: 9.677 Million Cows, Output Up 2.3%
USDA's Milk Production report, released Tuesday July 22 and digested fully by markets this week, confirmed that American dairy producers are still aggressively expanding. Producers crowded in another 19,000 cows in June alone, pushing the dairy herd to 9.677 million head. That is 192,000 more cows than there were a year ago, nearly equivalent to adding the entire dairy industries of Arizona and Indiana to the U.S. herd in a single 12-month span.
The U.S. dairy herd is now larger than it has been since 1993. While milk yields were only slightly higher than the prior year, all that additional cow power propelled U.S. milk output to 19.7 billion pounds in June, up 2.3% from June 2025.
Recent reports confirm that even heifer inventory is up by 100,000 after years of declining supplies. With more cows has come more milk, and the dog days of summer have done little to curb production.
Federally inspected dairy cow slaughter during the first five months of 2026 totaled 1.13 million head, about 43,400 head above last year's slaughter levels, suggesting producers are selective about culling even as the herd expands.
| Metric | June 2026 | June 2025 | Change |
|---|---|---|---|
| Dairy Cow Inventory | 9.677 million head | 9.485 million head | +192,000 head |
| U.S. Milk Production | 19.7 billion lbs | ~19.3 billion lbs | +2.3% |
| Dairy Cow Slaughter (Jan-May 2026) | 1.13 million head | ~1.09 million head | +43,400 head |
| Heifer Inventory Change | Up ~100,000 head | Prior year base | Expanding |
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## 3. CME Spot Markets: NDM Hits Six-Month Low, Cheese Softens
CME spot Cheddar blocks slipped 2 cents this week to $1.6075/lb. The setbacks in the spot market and the latest round of dairy data took a toll on milk prices broadly. Class III contracts lost between 20 and 62 cents this week, with August through December futures all moving lower.
The bearish production news weighed most heavily on the milk powder market. CME spot NDM fell 6.75 cents this week to $1.4025/lb, a nearly six-month low. The retreat was enough to put U.S. milk powder back into a competitive position on the world stage, especially after a rebound in milk powder prices at the GDT auction.
The prior week's CME prints from the week of July 13-17 provide useful context for the current week's direction. Grade AA butter had closed at $1.5900/lb on July 17, with a weekly average of $1.6085, a decline of $0.0415 from the prior week. Cheddar cheese barrels settled at $1.6125, while 40-pound blocks ended at $1.6275. The weekly average for barrels rose $0.0680 to $1.5950, and blocks increased $0.0905 to $1.6055.
NDM Grade A had closed at $1.4700 the prior week with a weekly average of $1.5045, down $0.0115, and extra grade dry whey closed at $0.6950 with a weekly average of $0.6940, up $0.0150.
| CME Spot Commodity | Week of July 25-31 (est.) | Week of July 13-17 Close | Change |
|---|---|---|---|
| Cheddar Blocks (40 lb) | $1.6075 | $1.6275 | -$0.0200 |
| Cheddar Barrels | ~$1.59-1.61 | $1.6125 | Lower |
| Grade AA Butter | ~$1.59 | $1.5900 | Steady/Mixed |
| NDM Grade A | $1.4025 | $1.4700 | -$0.0675 |
| Dry Whey (Extra Grade) | ~$0.6950 | $0.6950 | Flat/Near flat |
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## 4. July WASDE: 2026 Milk Forecast at 236.6 Billion Pounds, Price Outlook Cut
The July WASDE (WASDE-673), released July 10, set the analytical foundation for this week's market reaction. USDA's July WASDE raised the 2026 milk production forecast slightly to 236.6 billion pounds on expectations of a larger cow herd and a decrease in milk output per cow.
At 236.6 billion pounds, the 2026 milk production estimate was raised from last month's report and would be up 4.9 billion pounds from 2025's total of 231.7 billion pounds. For 2026, price forecasts were lowered for NDM, cheese, and butter due to continuing strong growth in the milk supply. The whey price forecast was left unchanged from last month.
Milk production forecasts were raised for both 2026 and 2027. Based on the latest Milk Production report, cow inventories were raised for both 2026 and 2027. Output per cow was reduced slightly for 2026 but left unchanged for 2027.
For 2026, commercial export forecasts were raised on a skim-solids basis, primarily due to increased shipments of cheese and whey-containing products, but left unchanged on a fat basis. For 2027, exports were also raised on both a fat and skim-solids basis due to increased shipments of cheese, butter, and whey-containing products.
| WASDE-673 (July 10, 2026) | 2026 Forecast | 2025 Actual | Y/Y Change |
|---|---|---|---|
| U.S. Milk Production | 236.6 billion lbs | 231.7 billion lbs | +4.9 billion lbs |
| NDM Price Forecast | Lowered | N/A | Bearish revision |
| Cheese Price Forecast | Lowered | N/A | Bearish revision |
| Butter Price Forecast | Lowered | N/A | Bearish revision |
| Whey Price Forecast | Unchanged | N/A | Neutral |
| Corn Season-Avg Price | $4.40/bu | $4.15/bu | +$0.25/bu |
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## 5. FMMO Class Prices and DMC Margin: Squeeze Tightens
The base Class I price for July 2026 is $21.33 per cwt, a decrease of $0.85 per cwt compared to June 2026. After four consecutive months of the advanced Class I base price climbing, July's price showed some retreat at $21.33 per cwt.
For July 2026, the advanced Class IV skim milk pricing factor is $15.91/cwt, the Class II skim milk price is $16.61/cwt, and the Class II nonfat solids price is $1.7860/lb.
Class III and Class IV futures are now in the $16.75-$17.50/cwt range from August through December, a significant pullback from the second-quarter highs.
The DMC margin situation is turning critical entering the second half of 2026. In the Milk Producers Council Weekly Friday Report from the fourth week of July, analyst Sarina Sharp noted that prices are "dangerously close to most dairy producers' break-even costs, especially after the other commodity markets foretold a jump in feed expenses and a drop in beef revenues." As of July 24, market conditions forecast a DMC margin below $9.50/cwt for July, setting the stage for potential indemnity payments.
If conditions hold, the year will close with an average DMC margin of $9.39/cwt, as the average all-milk price comes to $19.78/cwt and the average feed cost lands at $10.39/cwt.
The August Class I base price dropped after July's price indicated imminent downward pressure as the result of ample milk production but weaker markets for dairy categories like cheese.
| FMMO Price Metric | July 2026 | June 2026 | Change |
|---|---|---|---|
| Advanced Class I Base | $21.33/cwt | $22.18/cwt | -$0.85/cwt |
| Class II Skim Milk Price | $16.61/cwt | N/A | N/A |
| Class IV Skim Milk Factor | $15.91/cwt | N/A | N/A |
| Forecast DMC Margin (July) | Below $9.50/cwt | $10.62/cwt (May) | Declining |
| Forecast Full-Year DMC Avg | $9.39/cwt | N/A | Below $9.50 threshold |
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## 6. Global Dairy Trade Auction: Powders Rally, Export Window Cracks Open
The retreat in U.S. NDM prices was enough to put American milk powder back into a competitive position on the world stage, especially after a rebound at the Global Dairy Trade auction held Tuesday. At the GDT event, whole milk powder rallied 1.6% and skim milk powder prices jumped 2.8%. The U.S. is now better positioned to step up exports after lackluster sales so far this year.
This GDT result stands in contrast to recent weakness. The Global Dairy Trade Price Index had decreased by 4.9% at the most recent prior trade event earlier in July, creating concern among U.S. exporters about demand sustainability.
Spot prices for NDM at the CME had decreased during June and through the week ending July 10, with NDPSR weekly average prices following a similar pattern. According to USDA NASS, NDM production in May 2026 was 10.3% higher year over year. NDM stocks at the end of May 2026 were 3.9% below ending stocks for May 2025, providing some structural support beneath prices.
| GDT Event (July 29, 2026) | Result | Prior Event Change |
|---|---|---|
| Whole Milk Powder (WMP) | +1.6% | After -4.9% GDT index drop prior event |
| Skim Milk Powder (SMP) | +2.8% | Positive reversal |
| U.S. NDM Export Position | Improving | CME NDM at ~6-month low aids competitiveness |
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## 7. NDPSR: Reported Trade Prices Confirm Directional Weakness
USDA National Dairy Products Sales Report data for the week ending July 18, 2026, showed Grade AA butter prices received averaged $1.64/lb for 25-kilogram and 68-pound boxes.
Cheddar Cheese prices received for 40-pound blocks averaged $1.49/lb for the week ending July 18, 2026. The U.S. price per pound decreased 0.4 cents from the previous week.
Dry whey prices received for bag, tote, and tanker sales meeting USDA Extra Grade standards averaged 65.3 cents/lb for the week ending July 18, 2026. The U.S. price per pound increased 0.6 cents from the previous week.
Nonfat dry milk prices received for bag, tote, and tanker sales meeting USDA Extra Grade or USPHS Grade A standards averaged $1.64/lb for the week ending July 18, 2026.
These NDPSR prints trail the CME spot market by roughly a week, and given the sharp NDM drop at the CME this week, next week's NDPSR data is expected to reflect a meaningful step lower in reported trade prices.
| NDPSR (Week Ending July 18, 2026) | Avg. Price | W/W Change |
|---|---|---|
| Grade AA Butter | $1.64/lb | N/A |
| Cheddar 40-lb Blocks | $1.49/lb | -0.4 cents |
| NDM (Extra/Grade A) | $1.64/lb | N/A |
| Dry Whey (Extra Grade) | $0.653/lb | +0.6 cents |
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## 8. Cold Storage and Dairy Products: Butter Stocks Building, Cheese Lean
Cold storage dynamics heading into the final week of July show a market where butter supply is building while cheese stocks remain relatively lean. As of July 1, 2026, butter stocks totaled 68,992 pounds (thousand), an increase of 5,317 pounds or 8% from the mid-June reading. Cheese inventories stood at 84,726 pounds (thousand), a decrease of 199 pounds from the earlier date.
Cold storage data as of June 29 had shown butter inventories at 67,021 thousand pounds, up 3,400 thousand pounds from June 1. Cheese stocks stood at 84,702 thousand pounds, a decline of 1,223 thousand pounds from the start of the month.
The butter inventory build is consistent with the price softness seen throughout July. Butter inventories show 80% butterfat loads readily available, while 82% stocks remained snug. Bulk butter overages ranged from 3 cents below to 5 cents above market across all regions.
Dry whey prices in the East moved higher, supported by reported trading activity. Manufacturers continue to prioritize whey protein concentrate 80% and whey protein isolate production due to active demand from sports nutrition and protein-enhanced food formulations.
| Cold Storage Snapshot | July 1, 2026 | June 1, 2026 | Change |
|---|---|---|---|
| Butter Stocks | 68,992 thousand lbs | ~63,675 thousand lbs | +8% |
| Cheese Stocks | 84,726 thousand lbs | ~85,925 thousand lbs | Declining |
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## 9. H5N1 / HPAI in Dairy Cattle: NMTS Surveillance Continues, Quarantine Relief in California
The HPAI H5N1 situation in U.S. dairy cattle remains a background variable in herd management, biosecurity costs, and interstate movement logistics heading into late July 2026. On February 27, 2026, the California Department of Food and Agriculture (CDFA) released all dairies under quarantine for H5N1. This was described as an important step forward for California's dairy industry. However, California is still considered affected by H5N1.
California remains in Stage 3, which means testing and monitoring will continue. CDFA continues testing milk from dairy herds across the state, as wild birds can spread the virus during spring migration and low levels of the virus are still occasionally found in some animals and wildlife.
There are currently no restrictions on moving dairy cattle within California, but the Federal Order still requires testing for cattle leaving the state.
Wisconsin's monitoring program continues under the NMTS framework. In May 2025, Wisconsin began testing milk samples from milk quality laboratories for HPAI in accordance with the federal USDA National Milk Testing Strategy. Bulk tank milk samples submitted to quality laboratories from Grade A dairies are tested monthly.
Since April 2024, there have been 9,461 raw milk samples tested for inter- and intrastate animal movement in Wisconsin. Of those, there have been zero positives.
The USDA voluntary Dairy Herd Status Program continues to offer dairy producers the option to monitor their herds via weekly HPAI testing of bulk tank milk samples.
| H5N1 / HPAI Tracker | Status (as of Late July 2026) |
|---|---|
| California quarantine status | All dairies released from quarantine (Feb. 27, 2026) |
| California stage | Still in Stage 3 (ongoing monitoring) |
| Interstate movement requirement | Federal Order testing still required to leave CA |
| Wisconsin NMTS movement tests | 9,461 samples tested; zero positives |
| USDA Voluntary Herd Status Program | Active; weekly bulk tank testing offered |
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## 10. Feed Costs and Weather: Summer Heat Pressures Cow Comfort, Corn at $4.40/bu
Weather was a significant dairy story in the week of July 25-31, with heat events across multiple dairy regions exacerbating the production outlook for the second half of summer. Parts of the eastern dairy region, particularly Pennsylvania, experienced an abnormally high heat wave creating uncertainty in short-term milk output. Idaho recorded its hottest weekend of 2026, which processors say is affecting cow comfort, milk production, and milk components.
Scorching summer temperatures had heated up Class III markets in the first three weeks of July, but milder Midwest weather this week brought a chill to LaSalle Street commodity trading, contributing to the bearish price tone.
On the feed cost side, the projected season-average corn price received by producers is $4.40/bushel, unchanged from the prior WASDE and up a quarter from the 2024-25 average of $4.15/bushel. USDA's July WASDE corn outlook is for smaller supplies, greater exports, and reduced ending stocks. Corn production for 2026-27 is up fractionally based on updated planted and harvested area from the June 30 Acreage report.
Analyst Sarina Sharp of the Milk Producers Council noted in her fourth-week-of-July Friday report that commodity markets are "foretelling a jump in feed expenses and a drop in beef revenues," compressing margins from both sides.
| Feed/Weather Metric | Current Level / Status |
|---|---|
| Season-Avg Corn Price (2026-27) | $4.40/bu (WASDE, unchanged) |
| Corn Y/Y Change | +$0.25/bu vs. 2024-25 avg |
| Corn Ending Stocks | Reduced (July WASDE) |
| Central Region Heat Impact | Milk components under pressure |
| Idaho Heat | Hottest weekend of 2026; cow comfort disrupted |
| Pennsylvania Heat | Abnormal heat wave; short-term output uncertain |
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## 11. Retail Fluid Milk and Consumer Demand: April Volumes Slightly Higher, Organic Trails
April 2026 estimated sales of packaged fluid milk products were 3.5 billion pounds shipped by milk handlers, 0.3% higher than a year earlier. Estimated sales of total conventional fluid milk products increased 0.6% from April 2025, while estimated sales of total organic fluid milk products decreased 4.0% from a year earlier.
Weekly grocery store activity showed conventional dairy ads up 2% and organic ads up 17% in Week 25. Ads increased for most commodities, though in the conventional aisle ads declined for butter, cottage cheese, and sour cream.
The organic fluid milk decline is a notable structural signal. The 4.0% year-over-year drop in organic fluid milk sales, while conventional volumes nudged higher, may reflect price-sensitive consumers trading down amid grocery inflation and the steady widening of conventional-to-organic price premiums. Retail promotional intensity in the organic segment (ads up 17%) appears to be compensating for softer underlying demand rather than reflecting genuine velocity growth.
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## 12. Australia and New Zealand: Southern Hemisphere Supply Adds Global Competition
Southern hemisphere dairy dynamics are adding to the competitive global supply picture that is already pressuring U.S. export ambitions. Australia's May 2026 milk production was 654.0 million liters, up 33.7 million liters or 5.4% year-over-year. A forecasting group in Australia raised its opening milk price for the 2026-2027 season by 15 cents per kilogram of milk solids, to a range of $8.80 to $9.60 per kgMS.
New Zealand's May 2026 milk output was 1.02 million metric tons, up 3.6% year-over-year, with milk solids rising 5.0% to 108.7 million kg. The value of New Zealand's milk powder, butter, and cheese exports in May 2026 totaled $2.3 billion, an increase of 6.9% compared to the prior year.
Dairy Australia reports that Australian milk exports from July 2025 to May 2026 are higher, and June 2026 production inputs saw a sharp decline in overall prices, with fuel prices falling 15% as global oil values eased.
Oregon's production profile diverges from some regional peers. According to USDA NASS, Oregon's milk cow numbers increased and Washington's decreased in May 2026 compared to the same month last year, with Oregon showing a 7.1% milk production increase.
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## Quick Hits
- June U.S. milk production was up approximately 2.3% from USDA estimates a year earlier, with dairy herd growth the primary driver over yield improvement.
- The Class I Extended Shelf Life (ESL) Adjustment for July 2026 was -$1.46/cwt, with the price per cwt increasing $0.05 from the previous month.
- The average FMMO uniform milk price climbed 85 cents in May for an average price of $20.87/cwt across all 11 orders, the high-water mark before the current pullback.
- Manufacturers continue to prioritize whey protein concentrate 80% and whey protein isolate production due to active demand from sports nutrition and protein-enhanced food formulations, keeping whey markets relatively firm even as Class III softens.
- Based on the latest USDA monthly Livestock Slaughter data, the number of dairy cull cows marketed through U.S. slaughter plants in June was estimated at 208,100.
- In the Central region, high temperatures were expected to negatively impact milk components in coming weeks, and milk production in the Central region was declining due to heat affecting cow comfort.
- As of July 9, 2026, USDA has reported 19 active cases of New World Screwworm in sheep and cattle in Texas, a separate animal health concern demanding producer vigilance in border states.
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## What to Watch Next Week
**USDA Agricultural Prices Report (July 31):** The actual June DMC margin will be announced July 31 following the release of the USDA Agricultural Prices report. This will be the most market-moving single data point of the coming days. If the June margin prints below $10/cwt, DMC enrollment discussions for the second half of 2026 will accelerate.
**August WASDE (August 12):** The next WASDE release will incorporate the June Milk Production data fully and is expected to further revise 2026 production upward and price forecasts downward given this week's bearish CME direction.
**CME Spot Market Direction:** With NDM already at a six-month low and Class III futures under sustained pressure, watch whether buyers step in at $1.40 NDM or whether the market continues lower toward the mid-$1.30s seen earlier in 2026.
**GDT Follow-Through:** The July 29 GDT bounce in WMP (+1.6%) and SMP (+2.8%) needs confirmation at the next auction (August 12) to validate a genuine demand recovery rather than a one-event technical rebound.
**Heat Stress Watch:** Idaho, Pennsylvania, and Central region heat impacts on August milk components will set the tone for Class III pricing into September. Watch USDA DMN regional cream and milk availability reports.
**DMC Margin Enrollment Decisions:** Market conditions have forecast a DMC margin below $9.50/cwt for July, with conditions set to remain beneath the indemnity payment threshold for the second half of the year. Producers who enrolled at higher coverage tiers will want to confirm their positions before the August sales window closes.
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*The Therio Dairy Newsdesk is produced weekly for dairy producers, cooperatives, processors, lenders, and industry professionals. Our mission is to translate USDA reports, CME market action, FMMO pricing mechanics, and global trade data into clear, actionable intelligence for the U.S. dairy industry. Reach out to the Therio team for custom market analysis, risk management benchmarking, and herd financial modeling.*