Dairy Industry News Roundup: Week of July 4 - 10, 2026
The USDA July WASDE landed on July 10 with a bullish production headline and bearish price revisions, CME spot markets traded through a holiday-shortened week with cheese blocks settling near $1.45/lb and butter holding above $1.65/lb, and USDA APHIS continued refining its National Milk Testing Strategy framework as va
# Dairy Industry News Roundup: Week of July 4 - 10, 2026
The USDA July WASDE landed on July 10 with a bullish production headline and bearish price revisions, CME spot markets traded through a holiday-shortened week with cheese blocks settling near $1.45/lb and butter holding above $1.65/lb, and USDA APHIS continued refining its National Milk Testing Strategy framework as vaccine field trials advanced for H5N1 in dairy cattle across at least 18 affected states. Those three threads defined a pivotal holiday week for U.S. dairy, against a backdrop of a 2026 national milk supply forecast now set at 236.6 billion pounds, an all-milk price under downward pressure, and summer heat beginning to bite in Idaho, Pennsylvania, and the Central region.
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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. July WASDE: USDA Lifts 2026 Milk Output to 236.6 Billion Pounds, Cuts Commodity Prices
USDA's July WASDE raised 2026 milk production 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 from 2025's total of 231.7 billion pounds. Milk production forecasts are raised for both 2026 and 2027. Based on the latest Milk Production report, cow inventories are also raised for both 2026 and 2027. Milk output per cow is reduced slightly for 2026 but unchanged for 2027.
The price side of the ledger moved in the opposite direction. For 2026, the price forecasts are lowered for nonfat dry milk, cheese, and butter due to continuing strong growth in the milk supply. The whey price is unchanged from last month. The July 10 release landed on the same day markets were heading into the Independence Day weekend wind-down, amplifying the bearish tone across deferred futures contracts.
| Metric | June WASDE | July WASDE | Change |
|---|---|---|---|
| 2026 Milk Production (bil. lbs.) | 236.4 | 236.6 | +0.2 |
| 2025 Milk Production (bil. lbs.) | 231.7 | 231.7 | Unchanged |
| NDM Price Forecast | Prior estimate | Lowered | Negative |
| Cheese Price Forecast | Prior estimate | Lowered | Negative |
| Butter Price Forecast | Prior estimate | Lowered | Negative |
| Dry Whey Price Forecast | Prior estimate | Unchanged | Flat |
The July WASDE's 2026-27 U.S. 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. The yield is unchanged at 183 bushels per acre. Total use is raised 50 million bushels on an increase in exports. At $4.40 per bushel, the projected season-average corn price received by producers is unchanged from the previous report.
## 3. CME Spot Markets: Cheese Inches Higher in Shortened Holiday Week, Butter Firms Above $1.65
The July 4 holiday compressed the trading week to four sessions, but participants wasted no time putting prices to work. Cash dairy prices were mostly up Monday, July 6, at the Chicago Mercantile Exchange. Dry whey was down $0.0100 at $0.6750 with no sales reported. Forty-pound cheese blocks were up $0.0150 to $1.4475, with one sale recorded at $1.45. Cheese barrels were up $0.0100 to $1.4850 with no sales reported. Butter was up $0.0125 to $1.65, with four sales recorded ranging from $1.6350 to $1.6450. Nonfat dry milk was down $0.0050 to $1.50, with twelve sales recorded ranging from $1.50 to $1.5050.
The week's price action reflected a divergence between fat and protein complex dynamics that has defined 2026 trading. Butter prices received for 25-kilogram and 68-pound boxes meeting USDA Grade AA standards averaged $1.66 per pound for the week ending July 11, 2026. Cheddar cheese prices received for 40-pound blocks averaged $1.50.
| CME Product | Monday July 6 Close | Week End Close | Direction |
|---|---|---|---|
| 40-lb Cheese Blocks | $1.4475/lb | ~$1.50/lb | Up |
| Cheese Barrels | $1.4850/lb | Firm | Up |
| Grade AA Butter | $1.6500/lb | $1.66/lb avg. | Up |
| Grade A NDM | $1.5000/lb | $1.50/lb | Flat/Soft |
| Extra Grade Dry Whey | $0.6750/lb | ~$0.68/lb | Mixed |
The prior week's reference point (ending July 3) provides useful context: on the Chicago Mercantile Exchange, Grade AA butter closed at $1.6375 per pound on July 2, with a weekly average of $1.6788. Cheese barrels settled at $1.4750, while 40-pound blocks closed at $1.4325. The weekly average for barrels was $1.4763 and for blocks was $1.4288. Grade A nonfat dry milk closed at $1.5050, with a weekly average of $1.5919. Extra grade dry whey closed at $0.6850 with a weekly average unchanged at $0.6850.
## 4. FMMO Class Prices: July Advance Class I Dips to $21.33 After Four-Month Run Higher
The base Class I price for July 2026 is $21.33 per cwt, a decrease of $0.85 per cwt when 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. The pullback reflects softening in the product price averages that feed the FMMO pricing formula, and it arrives just as summer heat begins to work against milk output in several key producing states.
For July 2026, the advanced Class IV skim milk pricing factor is $15.91 per cwt, the Class II skim milk price is $16.61 per cwt, and the Class II nonfat solids price is $1.7860 per pound. The two-week product price averages for July 2026 are: butter $1.6372, nonfat dry milk $1.9669, and cheese $1.5975.
The finalized June FMMO component prices provide the clearest window into Class III and IV dynamics. For June 2026, Federal Milk Marketing Order class prices were set as follows: Class II at $22.78, up $2.50; Class III at $15.98, down $0.94; and Class IV at $20.96, down $1.36. The butterfat price for June was $1.6900 per pound, with the Class II butterfat price at $1.6970. Protein and other solids prices were $2.4553 and $0.3873 per pound, respectively. The Class III skim milk price was $10.43 per cwt, and the Class IV skim milk price was $15.59. Product price averages for June were: butter $1.6227, nonfat dry milk $1.9327, cheese $1.5642, and dry whey $0.6428.
| FMMO Price | June 2026 | July 2026 (Advance) |
|---|---|---|
| Class I Base ($/cwt) | $22.18 | $21.33 |
| Class II ($/cwt) | $22.78 | N/A (advance) |
| Class III ($/cwt) | $15.98 | N/A (advance) |
| Class IV ($/cwt) | $20.96 | N/A (advance) |
| Butterfat ($/lb) | $1.6900 | $1.6372 (2-wk avg) |
| Protein ($/lb) | $2.4553 | TBD |
The Class I Extended Shelf Life (ESL) adjustment was -$1.46 per hundredweight for the month of July 2026. Handlers and processors will watch Class III closely given the WASDE-driven downward revision in cheese price forecasts heading into Q3.
## 5. Cold Storage: Butter Stocks Up 8% on July 1; Cheese Inventories Edge Lower
As of July 1, 2026, butter stocks totaled 68,992 pounds, an increase of 5,317 pounds or 8 percent from the mid-June reading. Cheese inventories stood at 84,726 pounds, a decrease of 199 pounds from the earlier date. The divergence between building butter stocks and shrinking cheese stocks tells an important structural story for the second half of 2026.
For comparison, the Cold Storage snapshot from late June showed: cold storage data as of June 29, 2026, showed butter inventories at 67,021 pounds, up 3,400 pounds from June 1. Cheese stocks stood at 84,702 pounds, a decline of 1,223 pounds from the start of the month.
| Cold Storage Category | June 1, 2026 | June 29, 2026 | July 1, 2026 | Direction |
|---|---|---|---|---|
| Butter (lbs.) | ~63,621 | 67,021 | 68,992 | Rising |
| Cheese (lbs.) | ~85,925 | 84,702 | 84,726 | Declining |
In the West, butter manufacturers continued to receive contracted volumes despite lighter milk and cream production in some areas. California milk output in June 2026 was reported down from May but remained above year-ago levels. In the Central region, cream production was steady, though high temperatures were expected to negatively impact milk components in the coming weeks. Milk production in the Central region was declining due to heat affecting cow comfort.
## 6. H5N1 / HPAI in Dairy Herds: NMTS Framework Active, Vaccine Field Trials Continue, California Remains Stage 3
H5N1 activity in dairy cattle remained a persistent cost and management burden entering the July 4 week. The H5N1 strain of highly pathogenic avian influenza (HPAI) is present in wild birds worldwide and is causing outbreaks in U.S. domestic birds and dairy cattle. In partnership with state veterinarians, USDA 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 in the United States and support the rapid implementation of enhanced biosecurity measures to decrease the risk of transmission to other livestock.
A significant regulatory shift that took hold earlier in the spring continues to shape herd movement logistics. USDA APHIS has issued updated guidance related to the April 2024 Federal Order that required testing of lactating dairy cattle before they move across state lines. Effective immediately, lactating dairy cattle moving interstate from states with Unaffected State Status under the NMTS are no longer required to be tested for HPAI H5N1 prior to movement. Unaffected State Status requires ongoing testing and surveillance activities to confirm the absence of HPAI in the state's dairy herds. This update follows a United States Animal Health Association (USAHA) resolution received in October 2025 and is expected to be widely supported by dairy and state animal health regulatory officials.
California, the nation's largest dairy state, remains excluded from that testing relief. California remains an affected state and is still at the NMTS Stage 3. As such, USDA guidance on pre-movement testing exemptions does not currently apply to California dairy animals, and pre-movement testing requirements remain in effect for cattle leaving California in accordance with the April 2024 Federal Order.
On the vaccine front, progress is advancing. USDA continues to support the rapid development and timely approval of an H5N1 vaccine for dairy cows, in addition to other species. Several vaccine candidates for use in dairy cows are currently undergoing field trials. USDA currently has 100 herds across 18 states enrolled in the Dairy Herd Status Program.
| HPAI / NMTS Status Category | Detail |
|---|---|
| States confirmed with HPAI in dairy herds | 19 states (as of AVMA Dec. 2025 count) |
| Herds in Dairy Herd Status Program | 100 herds / 18 states |
| States with "Unaffected" testing exemption | Multiple (NMTS-verified) |
| California NMTS Stage | Stage 3 (Affected) |
| H5N1 vaccine candidates in field trials | Multiple candidates |
| Federal Order (pre-movement testing) | Still active for affected states |
## 7. Dairy Products Report: May Butter Production Up 3.5% Year-Over-Year
According to the May Dairy Products report from NASS, butter production reached 224 million pounds, 3.5 percent above May 2025 but slightly below April 2026. The data, released the prior week and digested during the July 4 window, reinforced the building cold storage narrative and kept butter futures under moderate overhead pressure despite spot strength.
Dry whey prices in the East moved higher, supported by reported trading activity and aligning with CME trades. 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.
In the West, low/medium heat nonfat dry milk prices moved lower at both ends of the range and mostly price series. Dry buttermilk prices in the West moved higher at both ends of the range and mostly price series.
| May 2026 Production Highlight | Value | Y/Y Change |
|---|---|---|
| Butter (million lbs.) | 224 | +3.5% vs. May 2025 |
| Packaged Fluid Milk (May, bil. lbs.) | 3.5 | -2.2% (conventional) |
| Organic Fluid Milk Sales | N/A | -1.0% vs. year ago |
In May 2026, milk handlers shipped an estimated 3.5 billion pounds of packaged fluid milk products. Estimated sales of total conventional fluid milk products decreased 2.2 percent from May 2025, while organic fluid milk sales fell 1.0 percent from a year earlier. Softening fluid volumes underscore the structural dependence of milk price support on manufactured dairy exports and domestic cheese and butter demand.
## 8. Regional Milk Supply: Summer Heat Hits Idaho, Pennsylvania; Oregon Output Surges 7.1%
Weather and geography created a bifurcated milk supply picture entering the holiday week. Parts of the eastern dairy region, particularly in Pennsylvania, are experiencing an abnormally high heat wave that creates uncertainty in short-term output. Idaho recorded its hottest weekend of 2026, which processors say is affecting cow comfort, milk production, and milk components.
California milk production changes were mixed for week 29. According to the latest NASS milk production report, 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 percent milk production increase.
The East reports steady cheese production supported by adequate milk supplies, even as heat stress introduces risk. In the East, milk was plentiful due to shortened holiday schedules and plant downtime, temporarily increasing supply chain volumes. Spot demand for excess condensed skim was limited, with prices reported at flat Class to $0.15 over Class.
| Region | Condition (Week of July 4) | Key Driver |
|---|---|---|
| Pennsylvania / East | Heat wave; near-term output uncertainty | Record heat; holiday plant downtime |
| Idaho | Hottest weekend of 2026 | Heat stress affecting components |
| Central | Declining milk; heat affecting cow comfort | High temps |
| California | Mixed week-29 results | Seasonal variation |
| Oregon | +7.1% milk production (May) | Herd expansion |
| Washington | Milk cow numbers decreased (May) | Herd contraction |
Class III spot milk prices this week range from $2.00 under to $5.00 over Class. Cream multiples for all classes span 1.22 to 1.56 in the East, 1.10 to 1.40 in the Midwest, and 1.00 to 1.24 in the West. Bulk butter overages range from 3 cents below to 5 cents above market across all regions.
## 9. Global Dairy and Oceania: New Zealand and Australian Volumes Underpin Export Competition
Global supply dynamics continue to shape the competitive landscape for U.S. exporters. New Zealand's May 2026 milk output was 1.02 million metric tons, up 3.6 percent year-over-year, with milk solids rising 5.0 percent 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 percent compared to May 2025.
Australia also posted solid numbers. Australia's May 2026 milk production was 654.0 million liters, up 33.7 million liters or 5.4 percent 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.
Year-over-year percentage changes for selected products in June Consumer Price Index data were: fresh whole milk up 9.0 percent, cheese down 3.6 percent, and butter down 8.7 percent. Year-over-year percentage changes for selected products in the June Producer Price Index were: fresh whole milk up 15.5 percent, cheese down 1.8 percent, and butter down 33.0 percent. The divergence between fresh milk inflation and processed dairy deflation captures the structural tension running through the 2026 complex.
| Global Milk Supply Indicator | May/June 2026 Value | Y/Y Change |
|---|---|---|
| New Zealand milk output (May) | 1.02 mil. MT | +3.6% |
| NZ milk solids (May) | 108.7 mil. kg | +5.0% |
| NZ dairy export value (May) | $2.3 bil. NZD | +6.9% |
| Australia milk production (May) | 654.0 mil. liters | +5.4% |
| Australia export volumes (Jul 25-Apr 26) | 139,822 MT | +15.2% |
U.S. dairy exports are forecast higher in 2026 compared to the previous month. They are projected at 12.8 billion pounds on a milk-fat basis, up 0.2 billion pounds from the prior projection. On a skim-solids basis, dairy exports are forecast at 48.9 billion pounds, up 2.2 billion pounds from last month's estimate due to higher expected shipments of dry whey products, lactose, and dry dairy products.
## 10. Dairy Margin Coverage and Herd Dynamics: DMC Margin Holds Above $10/cwt, Herd Size Climbing
The USDA NASS Agricultural Prices report released June 29 established May's Dairy Margin Coverage (DMC) program calculations. As the all-milk price rose 50 cents, the total feed costs rose 42 cents, boosting the DMC margin 8 cents to $10.62 per hundredweight for the month.
Milk production across the U.S. has been rampant in 2026 with both processing capacity and global demand pressuring dairy farms to produce more, and a larger national dairy herd is helping keep the pace. Despite all the dynamics working in favor for U.S. dairy farmers, milk margins remain tight and risk management strategies remain critical.
The One Big Beautiful Bill Act, which cleared Congress earlier in 2026, carries material implications for DMC. A USDA press release said the One Big Beautiful Bill Act reauthorized DMC for calendar years 2026 through 2031 and provided substantial program improvements. The multi-year reauthorization provides hedging stability for smaller and mid-size operations navigating a rising supply environment and softening Class III prices.
| DMC Margin Snapshot | Value |
|---|---|
| May 2026 DMC Margin | $10.62/cwt |
| Month-over-Month Change | +$0.08/cwt |
| All-Milk Price Move (month) | +$0.50/cwt |
| Feed Cost Move (month) | +$0.42/cwt |
| DMC Reauthorization Period | 2026-2031 (One Big Beautiful Bill) |
## 11. Consumer and Retail: CPI Dairy Index Up 0.4%, Conventional Ads Lift 3% in Week 29
The June Consumer Price Index for all food stood at 349.7, up 3.0 percent from 2025. The dairy products index was 271.7, up 0.4 percent from a year ago. Year-over-year percentage changes for selected products in June were: fresh whole milk up 9.0 percent, cheese down 3.6 percent, and butter down 8.7 percent.
The June Producer Price Index for all food was 274.9, up 1.7 percent from 2025. The dairy products index was 247.3, up 0.7 percent from a year ago. Year-over-year percentage changes for selected products in June were: fresh whole milk up 15.5 percent, cheese down 1.8 percent, and butter down 33.0 percent.
In week 29, conventional dairy advertisements increased 3 percent, while organic dairy ads rose 14 percent. The uptick in organic promotional activity is notable given the underlying volume softness: estimated sales of conventional fluid milk products were 0.6 percent higher than a year earlier in April 2026, while estimated sales of total organic fluid milk products decreased 4.0 percent from a year earlier.
| CPI/PPI Dairy Metric | June 2026 Value | Y/Y Change |
|---|---|---|
| CPI All Food Index | 349.7 | +3.0% |
| CPI Dairy Products Index | 271.7 | +0.4% |
| CPI Fresh Whole Milk | N/A | +9.0% |
| CPI Cheese | N/A | -3.6% |
| CPI Butter | N/A | -8.7% |
| PPI Dairy Products Index | 247.3 | +0.7% |
| PPI Fresh Whole Milk | N/A | +15.5% |
| PPI Butter | N/A | -33.0% |
## 12. USDA Dairy Export Forecast: Skim-Solids Projection Raised 2.2 Billion Pounds on Whey Shipments
Export prospects got a quiet but meaningful upgrade in the July WASDE. Milk production forecasts are raised for both 2026 and 2027, and cow inventories are also raised for both years based on the latest Milk Production report. For 2027, exports are raised on both a fat and skim-solids basis due to increased shipments of cheese, butter, and whey-containing products. Imports are increased on both a fat and skim-solids basis for 2026 due to higher shipments of butter, fluid milk and cream, and milk proteins, and for 2027 on increased shipments of butter and miscellaneous dairy products.
Domestic use forecasts for 2026 have also been revised. On a milk-fat basis, domestic use is projected at 225.6 billion pounds, up 1.0 billion pounds from last month's forecast. The combination of higher exports and higher domestic use absorption will be critical to preventing cheese and butter surpluses from deepening further in the second half of the year.
The USDA's export forecast revision is particularly meaningful for whey markets. 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. This demand signal from the specialty nutrition sector helped offset otherwise soft spot market dynamics for commodity dry whey.
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## Quick Hits
- Total receipts of milk pooled under Federal Milk Marketing Orders in 2025 were 148.8 billion pounds, marketed by 18,930 dairy producers, a key baseline as FMMO modernization discussions continue in 2026.
- The Class I ESL adjustment for July 2026 was -$1.46 per hundredweight, as extended-shelf-life bottlers watch fluid demand trends closely.
- The detection of HPAI H5N1 in lactating dairy cattle does not pose a risk to consumer health or compromise the safety of the commercial milk supply. Pasteurization effectively inactivates HPAI virus.
- 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 percent as global oil values eased, offering Australian processors a margin tailwind.
- Butter inventories showed 80 percent butterfat loads readily available, while 82 percent stocks remained snug. Bulk butter overages ranged from 3 cents below to 5 cents above market across all regions.
- Market analysts note that shifts in Chinese purchasing activity continue to shape outcomes in the international dairy market, with Asian buying sentiment remaining the primary wildcard for GDT auction outcomes through Q3.
- Prairie Farms Family of Companies honored America's 250th anniversary with a donation of 250,000 servings of milk, a headline from industry corporate social responsibility activity during the holiday week.
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## What to Watch Next Week
1. **USDA Milk Production Report (July release):** NASS will publish the June Milk Production report. Analysts will be watching whether the cow herd continues its growth trajectory above 9.5 million head nationally and whether the per-cow output dip flagged in the July WASDE materializes in state-level data.
2. **CME Spot Price Follow-Through:** Can cheese blocks sustain the $1.50 handle established during the holiday week? Block and barrel convergence after the barrel premium seen entering July will be closely watched.
3. **Cold Storage (Monthly):** The full June Cold Storage report is due. Building butter stocks versus declining cheese inventories will be central to forward Class III vs. Class IV basis positioning.
4. **H5N1 Vaccine Field Trial Updates:** USDA APHIS and partner institutions are expected to provide a quarterly science update on field trial progress. Any advancement toward conditional licensure would be market-moving.
5. **California NMTS Status Review:** State and federal officials are under pressure to clarify a pathway for California dairy to achieve Unaffected State Status, which would relieve the interstate movement testing burden on the nation's top-producing state.
6. **GDT Auction (mid-July):** The next Global Dairy Trade auction will test whether the broad 2026 gains in whole milk powder and butter hold with Southern Hemisphere milk supply building seasonally.
7. **Feed Market:** Corn ending stocks remain under pressure with the July WASDE pointing to increased export demand. Any deterioration in crop condition ratings or early harvest estimates will directly feed into DMC margin calculations for the balance of the summer.
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*The Therio Dairy Newsdesk publishes weekly U.S. and global dairy industry coverage, integrating USDA reports, CME market data, FMMO price analysis, HPAI surveillance updates, and trade intelligence into a single, data-forward briefing for producers, cooperatives, processors, and financial stakeholders across the dairy value chain. For corrections, tips, or subscription inquiries, contact the Therio editorial team.*