Dairy Industry News Roundup: Week of June 27 - July 3, 2026

# Dairy Industry News Roundup: Week of June 27 - July 3, 2026 Dairy markets entered the July 4th holiday week on an uneven footing: CME spot butter rallied sharply to a weekly average of $1.6788 per pound while block cheddar and barrel cheese slumped to multi-week lows near $1.43, USDA's NASS released its May Dairy Products figures showing total cheese output at 1.28 billion pounds (up 2.0 percent year-over-year) and NDM production surging 10.3 percent above May 2025 levels, June FMMO class prices locked in a wide Class II/III spread of nearly $7 per hundredweight, and the July advanced Class I base price pulled back to $21.33 per cwt. Feed costs remained a watchpoint with corn pegged at $4.40 per bushel and the May DMC margin settling at $10.62 per cwt, while the global supply backdrop kept NDM prices under pressure from domestic and Mexican demand softness. --- --- ## 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. CME Spot Dairy: Butter Bounces, Cheese Sags Into the Holiday The week of June 29 through July 3 produced one of the sharpest intra-week divergences in spot markets in recent months. Grade AA butter closed at $1.6375 per pound on July 2, with a weekly average of $1.6788, representing an increase of $0.1318 from the prior week. That is a substantial one-week move for butter, driven in part by pre-holiday demand from food service and retail assemblers locking in supplies ahead of Independence Day weekend. Cheese told a very different story. Cheese barrels settled at $1.4750 while 40-pound blocks closed at $1.4325, with the weekly average for barrels at $1.4763 (up $0.0053) and for blocks at $1.4288 (up $0.0078). While the weekly averages technically eked out small gains, the closing prices are well below the June monthly product price average of $1.5642, signaling end-of-month accounting masked real spot weakness. NDM retreated through the week. Prices on the CME daily spot call increased at the start of the week but declined every other day, settling at $1.5050, down $0.0925 from the prior Friday. Contacts say light demand is the primary driver of declining prices. Extra grade dry whey closed at $0.6850, with a weekly average unchanged at $0.6850, up $0.0040 from the prior week. | CME Spot Product | Weekly Avg (June 29-July 2) | Prior Week Change | July 2 Close | |---|---|---|---| | Grade AA Butter | $1.6788/lb | +$0.1318 | $1.6375 | | Cheddar Blocks (40#) | $1.4288/lb | +$0.0078 | $1.4325 | | Cheddar Barrels | $1.4763/lb | +$0.0053 | $1.4750 | | Grade A NDM | $1.5919/lb | -$0.0016 | $1.5050 | | Extra Grade Dry Whey | $0.6850/lb | +$0.0040 | $0.6850 | *Sources: USDA AMS Dairy Market News Weekly Report, July 3, 2026* ## 3. NDPSR: Broad Price Declines Marked the Week Ending June 27 The National Dairy Products Sales Report released July 1, 2026, covering the week ending June 27, told the story of across-the-board weakness in commercial transaction prices heading into the holiday week. The USDA AMS data shows a broad decline in dairy commodity prices for the week ending June 27, 2026, with prices falling across all four major product categories. Butter prices for 25-kilogram and 68-pound boxes meeting USDA Grade AA standards averaged $1.57 per pound, a decrease of 7.0 cents per pound compared to the prior week. Cheddar cheese in 40-pound blocks averaged $1.53 per pound, down 0.7 cents from the previous week. Dry whey averaged 63.9 cents per pound, a decline of 0.9 cents week over week, while nonfat dry milk averaged $1.84 per pound, falling 7.7 cents from the prior week. | NDPSR Product | Week Ending June 27, 2026 | Week-over-Week Change | |---|---|---| | Butter (Grade AA) | $1.57/lb | -$0.0700 | | Cheddar Blocks (40#) | $1.53/lb | -$0.0070 | | Dry Whey (Extra Grade) | $0.639/lb | -$0.0090 | | NDM (Extra Grade/Grade A) | $1.84/lb | -$0.0770 | *Source: USDA AMS National Dairy Products Sales Report, released July 1, 2026* The NDM drop of 7.7 cents in a single week is particularly notable. Demand was light in both domestic and international markets, with some stakeholders reporting that purchasers in Mexico are only interested in loads priced near or below the bottom of the range. Mexican import demand is a critical marginal buyer for U.S. NDM, and softening at that key destination accelerates spot price deterioration. ## 4. June FMMO Class Prices: Class II/III Spread Reaches Nearly $7 per CWT 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 Class II/Class III spread of $6.80 per cwt is historically wide, reflecting the divergence between strong butterfat values (which support Class II) and depressed cheese prices (which drive Class III lower). 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. | FMMO Class Price | June 2026 | Month-over-Month Change | |---|---|---| | Class II | $22.78/cwt | +$2.50 | | Class III | $15.98/cwt | -$0.94 | | Class IV | $20.96/cwt | -$1.36 | | Butterfat | $1.6900/lb | -- | | Protein | $2.4553/lb | -- | | Class III Skim | $10.43/cwt | -- | | Class IV Skim | $15.59/cwt | -- | *Source: USDA AMS FMMO Class Price Announcement, June 2026* 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. Producers pooling under the Upper Midwest, Central, and Southwest Orders will watch July utilization data closely as the Class III drag on blend prices continues. Total receipts of milk pooled under Federal Milk Marketing Orders in 2025 were 148.8 billion pounds, marketed by 18,930 dairy producers. ## 5. NASS May Dairy Products Report: NDM and Whey Output Surge 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 strong year-over-year butter output reflects both the expanded cow herd and aggressive manufacturer scheduling ahead of summer baking and foodservice demand cycles. American type cheese production totaled 499 million pounds, 2.6 percent below the prior year but 1.5 percent above the previous month. Total cheese output, excluding cottage cheese, was 1.28 billion pounds, up 2.0 percent year-over-year and 1.1 percent from April. The American type cheese decline year-over-year is worth monitoring: with spot block prices already near $1.43 at the close of this reporting week, the risk is that manufacturers trim American output in favor of Italian varieties or NDM in coming months. Nonfat dry milk production for human food was 173 million pounds, 10.3 percent above May 2025 but 3.8 percent below April. Dry whey production for human food totaled 82.6 million pounds, 12.2 percent above the prior year and 7.4 percent above the prior month. | NASS May Dairy Products | May 2026 Volume | YoY Change | MoM Change | |---|---|---|---| | Butter | 224 mil lbs | +3.5% | slightly below April | | American Cheese | 499 mil lbs | -2.6% | +1.5% | | Total Cheese (ex-cottage) | 1.28 bil lbs | +2.0% | +1.1% | | NDM (human food) | 173 mil lbs | +10.3% | -3.8% | | Dry Whey (human food) | 82.6 mil lbs | +12.2% | +7.4% | | Hard Ice Cream | 69.2 mil gal | +7.1% | +4.0% | *Source: USDA NASS May Dairy Products Report* Regular hard ice cream production was 69.2 million gallons, 7.1 percent above May 2025 and 4.0 percent above April, suggesting strong consumer demand for frozen dairy into the summer season, which bodes well for Class II milk utilization. ## 6. Cold Storage: Butter Stocks Build, Cheese Draws Down Cold storage data as of June 29, 2026, showed butter inventories at 67,021 pounds (thousands), up 3,400 pounds from June 1. The building butter inventory may be tempering some of the enthusiasm from the CME price rally seen during the holiday week. Manufacturers in the West continued to produce aggressively. In the West, butter manufacturers continued to receive contracted volumes despite lighter milk and cream production in some areas. Cheese stocks stood at 84,702 pounds (thousands), a decline of 1,223 pounds from the start of the month. The drawdown in cheese cold storage is a constructive signal for the cheese market, but the pace of decline needs to accelerate materially to support block and barrel prices back toward $1.55 or higher. Seasonal demand from food processors and school foodservice programs typically steps up in July and August, which could assist in that effort. Higher temperatures are causing milk component levels to decline and reducing cream production. Demand for cream is lighter ahead of the holiday, and some manufacturers are moving volumes at lower multiples. The dual pressure of heat-driven component loss and pre-holiday logistics slowdowns compressed cream multiples across the Midwest, with several butter plants scheduling extended downtime around July 4th. ## 7. Farm-Level Economics: May All-Milk Price, DMC Margin, and Feed Costs The All-Milk price received by farmers was $21.30 in May 2026, down $0.10 from May 2025. The alfalfa hay price was $195.00 in May, up $4.00 from May 2025. Corn was $4.48, down $0.16; and soybeans were $11.60, up $1.20. The NASS Agricultural Prices report, released June 29, established May's Dairy Margin Coverage 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 cwt for the month. A $10.62 margin is healthy relative to program indemnity triggers and suggests most enrolled producers with DMC Tier 1 coverage are not receiving indemnity payments for May. The margin is anticipated to be strong for another month with the feed cost forecast falling below $10 per cwt. Then, it appears as if the all-milk price will also drop to the mid-$19s per cwt for a DMC margin forecast just shy of the $9.50 per cwt indemnity trigger in July and August. Producers should review their Dairy-RP endorsement windows closely heading into Q3, as the margin squeeze narrative is gaining traction. | Farm Economics Indicator | May 2026 | Year-Ago Change | |---|---|---| | All-Milk Price | $21.30/cwt | -$0.10 | | Alfalfa Hay | $195.00/ton | +$4.00 | | Corn | $4.48/bu | -$0.16 | | Soybeans | $11.60/bu | +$1.20 | | DMC Margin (May) | $10.62/cwt | +$0.08 | | Milk-Feed Price Ratio | 2.21 | -0.04 | *Sources: USDA NASS Agricultural Prices, released June 29, 2026; USDA AMS Dairy Market News* The milk-feed price ratio was 2.21, down 0.04 from May 2025, meaning returns per unit of feed input are eroding slightly year-over-year, even though absolute margins remain above most indemnity thresholds. ## 8. USDA WASDE Context: July 10 Report Sets the Stage Post-Holiday While the July WASDE fell just outside this reporting week (released July 10), the preliminary data flow during the June 27 to July 3 window shaped expectations. 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. Milk production is forecast to be higher for 2026 and 2027, mainly due to projected herd expansion resulting from low slaughter rates, adequate milk margins above feed costs, and expected longer cow retention. In 2026, milk production is forecast at 236.6 billion pounds, while for 2027 it is projected at 238.1 billion pounds. For 2026, the price forecasts are lowered for NDM, cheese, and butter due to continuing strong growth in the milk supply. The whey price is unchanged from last month. As a result, the Class III milk price forecast is lowered to $16.15 per cwt, and the Class IV price is also lowered to $18.40 per cwt. The 2026 all-milk price is lowered 70 cents to $20 per cwt. That downward revision is material and reflects USDA's acknowledgment that the supply surge is real and durable. 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 of U.S. dairy farmers, milk margins remain tight. | USDA WASDE July 2026 Dairy Forecast | 2026 | 2027 | |---|---|---| | Milk Production | 236.6 bil lbs | 238.1 bil lbs | | Class III Price | $16.15/cwt | $17.05/cwt | | Class IV Price | $18.40/cwt | $17.40/cwt | | All-Milk Price | $20.00/cwt | $19.85/cwt | *Source: USDA WASDE, July 10, 2026 (released post-period; projections shaped week's forward market)* ## 9. Global Supply: New Zealand Surges, South America Slows, Australia Expands The international backdrop during the June 27 to July 3 week was broadly bearish for U.S. export competitiveness in powder markets. New Zealand's May 2026 milk output came in at 1.02 million metric tons, up 3.6 percent year-over-year with milk solids rising 5.0 percent to 108.7 million kg. Export data for New Zealand showed the value of milk powder, butter, and cheese exports in May 2026 totaled $2.3 billion, an increase of 6.9 percent compared to May 2025. Dairy Australia also released updated export data showing that milk export volumes from July 2025 through April 2026 totaled 139,822 metric tons, a 15.2 percent increase compared to the same period a year earlier. Australia's competitive export posture, particularly in butter and SMP, adds pressure to U.S. prices in Asian and Middle Eastern markets. Milk production is lighter in South America as seasonal patterns shift into the winter phase. Wet weather in some pastures is also taking a toll on cow comfort. Some stakeholders indicate margins for milk producers are stable, while others note they continue to slowly decline. South America's seasonal pullback offers some offsetting relief, but New Zealand and Australia's export strength is likely to dominate global sentiment through Q3. An El Nino system is anticipated in 2026, which would increase precipitation in key dairy areas in South America to above average figures, potentially boosting South American production later in the year and adding a further layer of bearish global supply risk by early 2027. ## 10. Domestic Supply and Production Conditions: Heat, Spot Milk, and Component Loss California milk production is lighter. Handlers report June 2026 milk output is down from May 2026 but remained up year-over-year. Spot milk loads are available, and among manufacturers in the state, some scattered downtime is planned during Q3. Cheesemakers say they are unable to take in additional spot milk, but a few are purchasing spot loads to help nearby processors with downtime later in the week. Class III spot prices range from $3.00-under to $0.50-over Class. The wide spot milk trading range underscores the logistical complexity of the holiday week, with processors balancing planned downtime against the legal obligation to take milk from contract producers. Spot loads are available in the West, but inventories are generally tight in the Central and East regions. Some market participants say more spot loads were available from the Southwest this week. The regional divergence in spot milk availability is a recurring seasonal pattern but was amplified this week by holiday downtime announcements, with several major cheese plants in Wisconsin, Minnesota, and Idaho confirming extended breaks on July 3 and July 4. ## 11. H5N1/HPAI in Dairy Cattle: Ongoing Surveillance, Vaccine Development Continues The H5N1 strain of highly pathogenic avian influenza is present in wild birds worldwide and is causing outbreaks in U.S. domestic birds and dairy cattle. APHIS is working with Federal, State, and industry partners to combat outbreaks, support producers, and strengthen prevention. The overall herd-level impact on national milk supply has been managed, but biosecurity compliance remains a front-burner operational issue on farms across the affected footprint. APHIS 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. Progress on vaccine authorization would represent a significant risk-management tool for the industry, though APHIS has not announced a commercial approval timeline. APHIS reports that NVSL has confirmed H5N1 clade 2.3.4.4b, genotype D1.1 in dairy cattle in Nevada, representing the first detection of this virus genotype in dairy cattle. All previous detections in dairy cattle had been HPAI H5N1 clade 2.3.4.4b, genotype B3.13. The emergence of genotype D1.1, which represents the predominant genotype in North American flyways during the past fall and winter and has been identified in wild birds, mammals, and spillovers into domestic poultry, is being watched carefully by veterinary and public health officials. ## 12. Retail Activity and Fluid Milk: Conventional Ads Up, Organic Retreats Weekly grocery store activity data showed conventional dairy ads increased 14 percent, while organic ads declined 27 percent. Most conventional commodities appeared in more ads during week 27, though ads for flavored milk, milk, and yogurt decreased. The uptick in conventional dairy promotional activity heading into the July 4th weekend is consistent with seasonal norms as retailers feature cheese, butter, and ice cream. 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. The continued soft trajectory in fluid milk volumes is a structural headwind for Class I utilization, reinforcing the importance of cheese, powder, and butter markets in driving farm-level blend prices. 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, providing a notable bright spot in the whey complex even as commodity dry whey prices remain stubbornly rangebound near $0.685 per pound. --- ## Quick Hits - The average FMMO uniform milk price climbed 85 cents in May for an average price of $20.87 per cwt across all 11 orders, a positive signal for producer returns but likely to reverse in June given Class III's $15.98 level. - 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, signaling improving farmgate conditions Down Under. - Many plant managers are taking an extended weekend to celebrate the 4th of July. Prices for high heat NDM declined across the range this week, following low/medium heat. - USDA recommends that dairy producers segregate clinically ill cows from the rest of the milking herd if a herd becomes infected with H5N1. The FDA recommends dairy processors not use milk from infected cows in the production of raw milk products. - The July WASDE corn outlook calls 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, with yield unchanged at 183 bushels per acre. - Dry whey prices in the East moved higher, supported by reported trading activity. - New Zealand's Ministry for Primary Industries released its latest Situation and Outlook for Primary Industries report, projecting that the country's food and fiber sector will generate $64.3 billion in revenue for the year ending June 30, 2026, representing 82 percent of the country's total exports. --- ## What to Watch Next Week **July WASDE Full Digest (July 10 release):** The WASDE released Thursday, July 10, will be the most consequential near-term market event. The 2026 all-milk price cut to $20.00 per cwt and lower Class III and Class IV forecasts will be scrutinized by producers, cooperatives, and risk managers. **CME Spot Recovery (or Breakdown) Post-Holiday:** With shortened trading on July 3 and markets closed July 4, the post-holiday reopening on July 7 will be the first real read on whether butter's holiday-week rally holds and whether cheese can stabilize above $1.43. **NASS Milk Production Report:** Watch for the June Milk Production report, which will provide the first official read on cow numbers and per-cow output during the summer heat onset. Any acceleration in cow numbers above the already-elevated trajectory will amplify the bearish WASDE narrative. **NDM Export Demand:** Mexican buyer behavior on NDM is a critical near-term indicator. A sustained refusal to bid above the bottom of the range threatens to push U.S. NDM prices toward $1.45 to $1.50 per pound on the CME. **H5N1 Genotype D1.1 Spread Monitoring:** APHIS genotyping of the newly confirmed D1.1 genotype in Nevada dairy herds will be closely watched. Any additional D1.1 confirmations in commercial dairy herds would elevate the urgency of vaccine authorization discussions. **DMC Forward Margin Watch:** With the July DMC margin forecast approaching the $9.50 indemnity trigger zone, producers and lenders are watching AMS input prices in real time. An August margin breach could generate the first DMC indemnity payments of 2026. **Retail Promotional Follow-Through:** Whether the 14 percent jump in conventional dairy ad placements in week 27 translates into measurable volume lift will show up in AMS fluid milk shipment data by late July, providing an important demand signal heading into back-to-school season. --- *The Therio Dairy Newsdesk publishes weekly U.S. dairy industry coverage synthesizing USDA reports, CME market data, FMMO price announcements, global trade signals, and farm-level economic indicators. Our mission is to give dairy producers, cooperatives, processors, and allied industry professionals the data-forward analysis they need to make confident decisions in a fast-moving market. For questions, corrections, or story tips, contact the Therio editorial team.*