Dairy Industry News Roundup: Week of June 20 - 26, 2026
U.S. dairy markets closed the week of June 20 to 26, 2026, with a striking split: CME spot butter surged $0.0950 on Friday to end at $1.6500 per pound, a weekly standout, while 40-pound cheddar blocks slipped to $1.4200 and NDM futures were pressuring cash prices toward the mid-$1.50s. The USDA NASS May Milk Production
# Dairy Industry News Roundup: Week of June 20 - 26, 2026
U.S. dairy markets closed the week of June 20 to 26, 2026, with a striking split: CME spot butter surged $0.0950 on Friday to end at $1.6500 per pound, a weekly standout, while 40-pound cheddar blocks slipped to $1.4200 and NDM futures were pressuring cash prices toward the mid-$1.50s. The USDA NASS May Milk Production report, released June 22, confirmed nationwide output was up 2.3 percent year over year, though that pace marked the softest annual gain since April 2025. Officially announced June FMMO class prices widened the gap between Class III ($15.98 per cwt) and Class IV ($20.96 per cwt) to roughly $5.00, continuing a depooling risk environment not seen at this level since 2020. On the animal disease front, HPAI H5N1 NMTS surveillance remained active across affected states with California still classified as an NMTS Stage 3 state. The GDT Pulse mid-week auction showed further pressure on powder prices, consistent with a broader multi-week softening trend in WMP and SMP.
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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 NASS May Milk Production: U.S. Output Up 2.3%, Slowest Gain in Over a Year
Milk output across the U.S. continued to rise in May 2026, though the pace of growth has slowed somewhat. USDA NASS released its May Milk Production report during the week of June 22, showing volumes up 2.3 percent year over year. Once adjusted for component growth, the effective increase is likely even larger, though in raw terms this was actually the lowest year-over-year gain since April 2025.
The country's largest dairy states continued to record gains relative to prior year levels, with volumes in California, Wisconsin, and Texas up 1.2 percent, 2.3 percent, and 4.0 percent, respectively. The largest declines were seen in Pennsylvania and Washington, where shrinking cow numbers weighed on production even as yields rose.
USDA ERS has the 2026 full-year milk production forecast at 236.6 billion pounds. Higher milk supply is expected to lower milk prices, with the all-milk price for 2026 now projected at $20.00 per cwt, 70 cents below the previous forecast. The USDA June Livestock, Dairy, and Poultry Outlook offered a slightly different cut: milk production is forecast at 236.4 billion pounds in 2026 and 237.0 billion pounds in 2027, with the all-milk price for 2026 revised downward to $20.70 per cwt, $0.55 lower than the previous estimate.
| State | May 2026 YoY Change |
|---|---|
| California | +1.2% |
| Wisconsin | +2.3% |
| Texas | +4.0% |
| Pennsylvania | Negative |
| Washington | Negative |
| U.S. Total | +2.3% |
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## 3. USDA NASS May Dairy Products Report: Butter and Whey Output Climb, American Cheese Dips
The USDA NASS May Dairy Products report, circulated in the week's industry reporting, provided a comprehensive view of domestic manufacturing activity through May 2026.
Butter production was 224 million pounds, 3.5 percent above May 2025 but slightly below April 2026. American-type cheese production totaled 499 million pounds, 2.6 percent below May 2025 but 1.5 percent above April 2026. Total cheese output excluding cottage cheese was 1.28 billion pounds, 2.0 percent above May 2025 and 1.1 percent above April 2026.
Nonfat dry milk production for human food totaled 173 million pounds, 10.3 percent above May 2025, though 3.8 percent below April 2026. Dry whey production for human food was 82.6 million pounds, 12.2 percent above May 2025 and 7.4 percent above April 2026. Ice cream regular hard production totaled 69.2 million gallons, 7.1 percent above May 2025 and 4.0 percent above April 2026, reflecting strong seasonal demand.
| Product | May 2026 Volume | YoY Change | MoM vs. April 2026 |
|---|---|---|---|
| Butter | 224 million lbs | +3.5% | Slightly below |
| American Cheese | 499 million lbs | -2.6% | +1.5% |
| Total Cheese (ex. cottage) | 1.28 billion lbs | +2.0% | +1.1% |
| NDM (human food) | 173 million lbs | +10.3% | -3.8% |
| Dry Whey (human food) | 82.6 million lbs | +12.2% | +7.4% |
| Ice Cream (hard) | 69.2 million gallons | +7.1% | +4.0% |
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## 4. CME Spot Markets: Butter Surges $0.0950 Friday, Blocks Slip, NDM Faces Headwinds
The CME spot trading session on Friday, June 26, 2026, delivered the week's most eye-catching single-day move. Grade AA butter closed at $1.6500 per pound on June 26, a gain of $0.0950 on the day. Cheese barrels ended at $1.4800, up $0.0025, while 40-pound blocks slipped to $1.4200, down $0.0200. Grade A NDM closed at $1.5975, up $0.0175, and extra-grade dry whey finished at $0.6850, up $0.0150.
The barrel-block spread narrowed notably by Friday, with barrels finishing $0.0600 above blocks, reflecting divergent demand dynamics between the Western and Central manufacturing regions. Dry whey found a bit of traction this week, rising half a cent to 68.5 cents per pound. The market remains range bound as dry whey continues to compete with higher-value uses for raw whey. Domestic dry whey consumption has taken a noticeable dip at the start of 2026, though robust export activity has helped bridge the gap with production.
NDM CME futures continued to fall, with lows in the mid-$1.50s for August delivery. Some buyers with no immediate needs are delaying purchases in an attempt to determine if the price will continue to drop or level out. Domestic demand for NDM is steady to light and export demand is softening, particularly from Mexico.
| CME Commodity | Mon 6/22 | Tue 6/23 | Wed 6/24 | Thu 6/25 | Fri 6/26 | Weekly Move |
|---|---|---|---|---|---|---|
| Cheese Barrels | $1.4600 | $1.4600 | $1.4775 | $1.4775 | $1.4800 | +$0.0200 |
| Cheese 40-lb Blocks | -- | -- | -- | -- | $1.4200 | -$0.0200 |
| Butter Grade AA | -- | -- | -- | -- | $1.6500 | +$0.0950 |
| NDM Grade A | -- | -- | -- | -- | $1.5975 | +$0.0175 |
| Dry Whey Xtra Grade | -- | -- | -- | -- | $0.6850 | +$0.0150 |
*Source: USDA AMS CME Daily Cash Trading, June 26, 2026*
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## 5. FMMO June Class Prices: Class IV Holds a $5.00 Premium Over Class III, Depooling Risk Elevated
Federal Milk Marketing Order June 2026 class prices were officially in focus throughout the week as the industry absorbed the implications of a historically wide Class III to Class IV gap.
For June 2026, FMMO 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 per cwt.
The May USDA Announcement of Class and Component Prices was indicative of a milk market the U.S. dairy industry has not seen since 2020, as the gap between Class III and Class IV reached $5.40 per hundredweight, incentivizing depooling in Federal Milk Marketing Orders. The June gap at approximately $5.00 represents only a modest improvement, keeping the structural depooling incentive firmly in place. Producers in Class III regions face pressure on mailbox milk prices as handlers seek to minimize pooling obligations.
Product price averages for June 2026 were: butter $1.6227, NDM $1.9327, cheese $1.5642, and dry whey $0.6428.
| Class | June 2026 Price ($/cwt) | Change |
|---|---|---|
| Class II | $22.78 | +$2.50 |
| Class III | $15.98 | -$0.94 |
| Class IV | $20.96 | -$1.36 |
| Class III / IV Spread | approx. $5.00 | --- |
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## 6. June WASDE Dairy Outlook: NDM, Cheese, and Butter Forecasts Revised Lower, All-Milk Cut to $20.70
The June World Agricultural Supply and Demand Estimates (WASDE) report, released June 11 and digested during the trading week, carried bearish revisions for most U.S. dairy commodity price forecasts.
For 2026, the NDM, cheese, and whey price forecasts were lowered from the previous month on recent price declines. The butter price was raised on stronger demand expected in the second half of the year. The Class III and Class IV price forecasts were both lowered, and the all-milk price forecast for 2026 was lowered to $20.70 per cwt.
For 2026, price forecasts were lowered for NDM, cheese, and butter due to continuing strong growth in milk supply. The whey price was unchanged from last month. The Class III milk price forecast was lowered to $16.15 per cwt, and the Class IV price was also lowered to $18.40 per cwt.
The June WASDE also reflected a favorable balance on the production side: milk production forecasts were raised for both 2026 and 2027. Based on the latest NASS Milk Production report, cow inventories were also raised for both years. Milk output per cow was reduced slightly for 2026 but unchanged for 2027. 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.
| WASDE June 2026 Forecast Item | June 2026 Projection | Change from May |
|---|---|---|
| U.S. Milk Production 2026 | 236.6 billion lbs | Raised |
| All-Milk Price 2026 | $20.70/cwt | -$0.55 |
| Class III Price 2026 | $16.15/cwt | Lowered |
| Class IV Price 2026 | $18.40/cwt | Lowered |
| Butter Price 2026 | Raised | +vs. May |
| NDM Price 2026 | Lowered | -vs. May |
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## 7. Cold Storage and End-June Inventory Snapshot: Butter Builds, Cheese Stocks Tighten
Cold storage data provided a useful end-of-quarter reference point as the industry closed out the first half of 2026.
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. The counter-directional movement in butter and cheese stocks aligns with the split pricing action seen on the CME: butter building inventory while still seeing a sharp Friday rally suggests speculative or positioning activity, while the cheese drawdown is consistent with reports of strong export demand and busy cheesemaking schedules.
Condensed skim was scarce nationally, with export demand exceeding supply and inventories declining through the period. Central-region milk supplies for Class III were balanced. Cheesemakers were operating busy schedules with curds steady and export demand strong. Western cheesemakers reported adequate milk despite seasonally lighter output.
The Dairy Margin Coverage farm margin above feed costs was reported at $10.54 per cwt in April 2026, 32 cents per cwt lower than the same period in 2025. Tightening margins heading into summer are a key watchpoint for herd management decisions in the second half.
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## 8. H5N1 and NMTS: California Remains Stage 3, Surveillance Continues Across Affected States
Animal health surveillance remained a background constant for the U.S. dairy industry during the week of June 20 to 26, with USDA APHIS and state partners continuing National Milk Testing Strategy (NMTS) operations.
Since April 29, 2024, a federal order has been in effect requiring testing of lactating dairy cattle for H5N1 prior to interstate movement, and reporting of positive nucleic acid detection and serology results to USDA APHIS. While the movement restriction initially applies to lactating dairy cows, this may be adjusted based on evolving scientific understanding of the disease and risks.
A second federal order that went into effect December 6, 2024 requires that raw milk samples be collected from milk silos at dairy processing facilities nationwide and shared with USDA for testing as part of NMTS. The order is intended to complement the April federal order by facilitating comprehensive H5N1 surveillance of the nation's milk supply and dairy herds.
California has not met the negative testing requirements necessary to be classified as an unaffected state and thus remains an Affected State at NMTS Stage 3. Pre-movement testing requirements remain in effect for cattle leaving California in accordance with the April 2024 federal order. USDA APHIS has confirmed H5N1 in dairy cattle across 19 states in total. USDA 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.
Since April 2024, there have been 9,461 raw milk samples tested for inter- and intrastate animal movement under the Wisconsin NMTS program, with zero positives. Wisconsin continues monthly bulk tank testing from Grade A dairies.
| NMTS Key Item | Status as of Week of June 20 to 26 |
|---|---|
| Federal Interstate Movement Order | In effect since April 29, 2024 |
| NMTS Mandatory Bulk Tank Sampling Order | In effect since December 6, 2024 |
| California NMTS Stage | Stage 3 (Affected) |
| Vaccine Candidates | Multiple in field trials |
| States with Confirmed HPAI H5N1 in Cattle | 19 states |
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## 9. GDT Pulse and Global Markets: WMP and SMP Slide, Powder Markets Under Sustained Pressure
The Global Dairy Trade (GDT) Pulse auction held during the week extended the recent softening trend in powder markets, adding downward pressure to the U.S. NDM pricing environment.
In the week's GDT Pulse auction, prices for both whole milk powder and skim milk powder moved downward, extrapolating the trend seen in recent weeks. Fat prices also dipped but by a more modest margin, suggesting that prices may be approaching the floor.
The June 2 full GDT event had already set a cautious tone: skim milk powder averaged $3,457 per metric ton ($1.57 per pound), down 3.0%, with near-term contracts most affected. Contract 2 came in at $3,407 per ton, down 3.3%, and Contract 3 at $3,424 per ton, down 3.9%. The GDT price index fell 0.6% at that event, the first decline since the second auction in April. That auction featured 147 participating bidders and 97 winning bidders, with Cheddar, butter, and AMF prices higher while Mozzarella, SMP, and WMP prices were lower.
The U.S. is not alone in growing milk production, as most supply regions across the world are also seeing volumes rise, albeit at a slowing rate. In New Zealand, the 2025 to 2026 milk production season drew to a close at the end of May reporting record high production as milk solids output grew 4.5 percent over the year. 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. Heavy Oceania supply is compounding global pressure on powder prices and limiting U.S. NDM export competitiveness.
| GDT Product | Avg. Price (June 2 Event) | Change vs. Prior |
|---|---|---|
| Cheddar | $4,621/mt ($2.10/lb) | +1.8% |
| Mozzarella | $3,942/mt ($1.79/lb) | -4.6% |
| SMP | $3,457/mt ($1.57/lb) | -3.0% |
| Butter | Higher | Positive |
| AMF | Higher | Positive |
*Source: Cheese Reporter / GDT event data, June 2, 2026*
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## 10. Feed Costs and Grain Markets: Corn Steady, Soybean Meal Supported, Milk-Feed Ratio Slides
Feed cost dynamics continued to shape the profitability picture for U.S. dairy producers heading into the back half of 2026, with grain markets showing volatility tied to weather and geopolitical headlines.
Grain markets spent most of the week moving downward as a proposed agreement in the Middle East calmed market sentiment. By Thursday, however, weather fears fueled increases in both corn and soybean markets. DEC26 corn settled at $4.43 per bushel while DEC26 soybean meal landed at $305 per ton on Thursday.
The all-milk price received by farmers in May 2026 was $21.30, down $0.10 from the prior year. Alfalfa hay was $195.00, up $4.00; corn was $4.48, down $0.16; and soybeans were $11.60, up $1.20. The milk-feed price ratio was 2.21, down 0.04 from May 2025.
The index of prices received by farmers in May 2026 was 140.9, up 5.5 from the prior month and up 0.2 percent from the prior year. The index of prices paid by farmers was 163.7, up 0.4 from the prior month and up 9.6 percent from the prior year. That widening cost-versus-income spread remains a structural concern for producers who are not capturing Class IV-linked pricing.
The latest USDA Agricultural Prices report indicated dairy-quality alfalfa hay prices averaged $247 per ton in May, while alfalfa hay prices averaged $195 per ton, and prices for other hay averaged $142 per ton.
| Feed Input | May 2026 Price | YoY Change |
|---|---|---|
| Corn (cash/bu) | $4.48 | -$0.16 |
| Soybeans (/bu) | $11.60 | +$1.20 |
| Alfalfa Hay (dairy quality) | $247/ton | Up |
| Alfalfa Hay (all) | $195/ton | +$4.00 |
| Other Hay | $142/ton | Reported |
| Milk-Feed Ratio | 2.21 | -0.04 vs. May 2025 |
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## 11. Class III Futures Pressure: June Contract Near $16.00, Nearby Curve Signals Continued Weakness
CME Class III and Class IV futures as of the close of June 26 reflected the divergent commodity price environment between cheese and powder, painting an uneven outlook for producers pooling under different FMMO classes.
The June 26 Class III futures close came in at $16.01 per cwt. The July 26 contract settled at $15.72 per cwt, and August 26 came in at $16.47 per cwt. The Class III curve implies producers shipping to cheese plants in July will face the weakest blend prices of the summer before a modest AUG-SEP recovery.
On the Class IV side, the futures reflected far stronger underlying values driven by butter support: the June 26 Class IV contract closed at $20.88 per cwt, July 26 settled at $18.70 per cwt, and August 26 came in at $18.20 per cwt. The July to August step-down in Class IV futures mirrors softening NDM price expectations, even as butter continues to find support. The approximately $3.00 spread between July Class III and July Class IV futures is a direct reflection of the structural commodity split that dominated market conversation throughout the week.
| Contract Month | Class III ($/cwt) | Class IV ($/cwt) | Spread (IV-III) |
|---|---|---|---|
| June 2026 | $16.01 | $20.88 | $4.87 |
| July 2026 | $15.72 | $18.70 | $2.98 |
| August 2026 | $16.47 | $18.20 | $1.73 |
*Source: USDA AMS Dairy Market News, Report 26, June 26, 2026*
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## 12. Global Milk Supply Context: New Zealand Records, European Growth, U.S. Herd Expansion Continue
The international supply picture continued to reinforce the bearish overlay on commodity prices heading into the second half of 2026.
New Zealand's 2025 to 2026 milk production season closed at the end of May reporting record high production as milk solids output grew 4.5 percent over the year. May 2026 output in New Zealand 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.
European production was up an estimated 2.9 percent in April 2026. South American suppliers also continued to see volumes expand, with Argentina and Uruguay posting year-over-year gains of 2 percent and 10.2 percent, respectively, in May. Hefty global production is likely to continue to pressure dairy commodity prices throughout the remainder of 2026.
Domestically, a larger dairy herd continues to push milk production upward. In the week ending May 16, dairy cow slaughter slumped to 44,526 head, the lowest tally for that week since 2008. Slaughter volumes for the year to date are 5.3 percent higher than 2025's very slow pace, but remain well below the historic average. Low cull rates confirm that the industry is in expansion mode, which will sustain production gains well into 2027.
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## Quick Hits
- Weekly grocery store activity data showed conventional dairy ads increased 14 percent during week 27, while organic ads declined 27 percent. Most conventional commodity categories appeared in more ads, though flavored milk, milk, and yogurt decreased.
- Total receipts of milk pooled under Federal Milk Marketing Orders in 2025 were 148.8 billion pounds, marketed by 18,930 dairy producers.
- In the Eastern region, farm-level milk production was contracting as the spring flush concluded and abnormally high temperatures stressed both livestock and pastures. The Central region reported steady output while Western production varied from stable to reduced.
- Demand for Class II cream was intensifying, fueled by seasonal ice cream manufacturing. Plants in the East and Central areas were sourcing spot loads from the Midwest and West, while Western cream supplies were adequate for local requirements.
- GDT confirmed plans to progressively relocate its executive leadership, commercial, marketing, finance, and product growth functions to Singapore, citing the city-state's position as a leading international trade hub. New Zealand will retain a significant team and technology presence, and auction operational functions will remain in Berlin.
- Class III spot milk prices ranged from $3.00 under to $0.50 over Class in the Midwest late in the week. Higher temperatures are causing milk component levels to decline and reducing cream production.
- In April 2026, milk-equivalent fat-basis imports increased 31.6 percent year over year to 847.5 million pounds, due primarily to higher imports of butter.
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## What to Watch Next Week
1. **USDA July WASDE (July 10):** Watch for further revisions to the 2026 all-milk price forecast and whether the USDA trims Class III projections further given the June CME settlement near $16.00.
2. **CME Spot Markets:** The butter rally on June 26 was sharp. Monitor whether that move extends into early July or represents end-of-quarter position squaring. NDM's path toward the mid-$1.50s will be the determining factor in Class IV futures direction.
3. **GDT Full Auction (Early July):** The prior GDT showed SMP falling 3.0 percent and Mozzarella falling 4.6 percent. A third consecutive decline in the GDT price index would further validate global powder bearishness and pressure U.S. NDM below $1.60 cash.
4. **FMMO Depooling Activity:** With the Class III to Class IV spread still near $5.00 and July Class III futures at $15.72, handlers in powder-oriented orders may increase depooling in July, distorting blend prices for producers in affected orders.
5. **H5N1 NMTS Updates:** California's persistent Stage 3 classification continues to create movement and trade friction for the largest dairy state. Any APHIS reclassification announcement, positive or negative, will be a significant market mover.
6. **Feed Cost Weather Risk:** DEC26 corn moved on weather concerns late in the week. Pollination weather in the Corn Belt through mid-July will be the next major catalyst for feed cost direction.
7. **USDA Cold Storage Report (Late July):** End-of-June butter stocks ticked up modestly. A larger-than-expected build in cold storage would confirm the bearish butter narrative and pressure the late-June rally.
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*The Therio Dairy Newsdesk produces weekly U.S. dairy industry intelligence for producers, cooperatives, processors, and analysts. Our reporting synthesizes USDA NASS, USDA AMS, USDA ERS, USDA APHIS, CME Group, and GDT data with on-the-ground market intelligence to give industry participants the context they need to make informed decisions. Therio Dairy is committed to independent, data-forward journalism serving the full breadth of the U.S. dairy supply chain.*