Dairy Industry News Roundup: Week of September 12 - 18, 2026

# Dairy Industry News Roundup: Week of September 12 - 18, 2026 Grade AA butter on the CME spot market closed the week of September 12 through 18, 2026 at $1.3700 per pound, down more than 4.5 cents from the prior week, even as nonfat dry milk surged to a weekly average of $1.9294 and the September 11 WASDE lifted the 2026 U.S. milk production forecast to 237.2 billion pounds. Meanwhile, a dramatic 16.5 percent jump in Cheddar prices at the September 16 GDT auction underscored the diverging fortunes of fat and protein markets, and H5N1 surveillance under USDA's National Milk Testing Strategy continued to shape interstate movement decisions across the industry. --- --- ## 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. September WASDE: Milk Forecast Bumped to 237.2 Billion Pounds, Butter and Cheese Price Outlooks Cut The USDA's monthly World Agricultural Supply and Demand Estimates (WASDE) report was released September 11. The September edition carried meaningful revisions for the dairy sector, tightening some price forecasts while lifting the production ceiling. The milk production forecast was increased for both 2026 and 2027. Based on the latest Milk Production report, both cow inventories and milk output per cow were raised for 2026 and 2027. At 237.2 billion pounds, the 2026 milk production estimate was raised from last month's report and would be up 5.5 billion from 2025's total of 231.7 billion pounds. For 2026, the price forecasts were decreased for butter and cheese but increased for nonfat dry milk (NDM) to reflect recent prices. The revision to the NDM forecast tracked closely with the strong spot market performance observed throughout the week (see Section 3). On the feed cost side, USDA's WASDE and Crop Production reports provided potential insights into dairy feedstuff supplies and prices: the 2026/27 U.S. corn outlook was for smaller supplies, lower domestic use, unchanged exports and reduced ending stocks. Corn production was forecast at 15.8 billion bushels, down 1 percent (213 million bushels) from last month and down 7 percent from last year. | WASDE Dairy Item | August 2026 | September 2026 | Change | |---|---|---|---| | 2026 Milk Production (bil. lbs.) | 238.1 | 237.2 | -0.9 | | 2026 Butter Price Forecast | Higher | Lowered | Down | | 2026 Cheese Price Forecast | Higher | Lowered | Down | | 2026 NDM Price Forecast | Prior | Raised | Up | | 2025 Actual Milk Production (bil. lbs.) | 231.7 | 231.7 | Unchanged | Note: August WASDE data from USDA August 12 release; September 11 revision per USDA WASDE-675. ## 3. CME Spot Markets: NDM Surges While Butter Posts Steep Weekly Loss The USDA Agricultural Marketing Service released its Dairy Market News weekly report for the week of September 7 through 11, 2026 (Volume 93, Report 37), which tracks cash market values, regional dairy conditions, and international developments. The numbers painted a split picture: powder markets were firm and tightening, while butter softened sharply from the prior week's levels. Grade AA butter closed at $1.3700, with a weekly average of $1.3806, a decline of $0.0454. Cheese barrels closed at $1.4625 and 40-pound blocks at $1.4600. The weekly average for barrels was $1.4975, down $0.0415, while blocks averaged $1.4631, down $0.0119. Grade A nonfat dry milk closed at $1.9700, with a weekly average of $1.9294, up $0.0474. Extra grade dry whey closed at $0.7600, and its weekly average was $0.7575, an increase of $0.0135. The preceding week (August 31 through September 4) provided useful context for the trajectory. Grade AA butter closed at $1.4400 per pound on September 4, with a weekly average of $1.4260, down 3.65 cents from the previous week. Cheese barrels settled at $1.5325 and 40-pound blocks at $1.4650. Nonfat dry milk Grade A closed at $1.8800, averaging $1.8820 for the week, an increase of 5.55 cents. Extra grade dry whey closed at $0.7525, with a weekly average of $0.7440, up 2.35 cents. | CME Spot Product | Week Avg (Aug 31-Sep 4) | Week Avg (Sep 7-11) | Weekly Change | |---|---|---|---| | Grade AA Butter ($/lb) | $1.4260 | $1.3806 | -$0.0454 | | Cheese 40-lb Blocks ($/lb) | $1.4750 | $1.4631 | -$0.0119 | | Cheese Barrels ($/lb) | $1.5390 | $1.4975 | -$0.0415 | | NDM Grade A ($/lb) | $1.8820 | $1.9294 | +$0.0474 | | Dry Whey Extra Grade ($/lb) | $0.7440 | $0.7575 | +$0.0135 | ## 4. Class III and Class IV Futures: Divergent Signals Heading Into Fall The futures markets entering the week of September 12 reflected the fundamental divergence between protein and fat. Class III and Class IV futures data were included in USDA Dairy Market News Report 37, covering the week of September 7 through 11, 2026. CME Class III futures for the week of September 4 showed: September 2026 at $16.18, October 2026 at $16.39, and November 2026 at $16.63. Class IV futures for the same reference dates showed September 2026 at $19.08, October 2026 at $19.35, and November 2026 at $19.01. The September 7 through 11 trade week saw continued volatility in both pits as the WASDE release on September 11 recalibrated expectations. The Class IV complex continued to dominate Class III by a historically wide margin, reflecting the strong NDM market. With butter softening but NDM holding firmly above $1.90, Class IV support remained elevated through the nearby contracts. Class III values, already constrained by ample cheese supplies and soft domestic demand signals, faced additional pressure from the WASDE's downward revision to the cheese price forecast. | CME Futures (Sep 4 close) | Class III ($/cwt) | Class IV ($/cwt) | |---|---|---| | September 2026 | $16.18 | $19.08 | | October 2026 | $16.39 | $19.35 | | November 2026 | $16.63 | $19.01 | ## 5. Global Dairy Trade Auction (September 16): Cheddar Explodes 16.5% Higher, Headline Index Slips 1.1% The September 16 GDT auction delivered one of the most striking single-product moves of the year, with Cheddar prices staging a massive rally even as the overall index retreated. The price index on this week's semi-monthly Global Dairy Trade (GDT) dairy commodity auction declined 1.1 percent from the previous auction, held two weeks ago. That was the first decline in the GDT price index since the first auction in July. In this week's auction, which featured 155 participating bidders and 126 winning bidders, prices were higher for Cheddar and skim milk powder, and lower for Mozzarella, whole milk powder, butter, anhydrous milkfat, lactose, and buttermilk powder. The average winning Cheddar price was $4,075 per metric ton ($1.85 per pound), up 16.5 percent. Contract 1 (October) settled at $3,940 per ton, up 23.7 percent; Contract 2 (November) at $4,060 per ton, up 20.3 percent; Contract 3 (December) at $4,147 per ton, up 15.4 percent; Contract 4 (January 2027) at $4,010 per ton, up 12.2 percent; and Contract 5 (February 2027) at $4,155 per ton, up 15.7 percent. Mozzarella averaged $3,992 per ton ($1.81 per pound), down 6.0 percent. Contract 2 was $3,990 per ton, down 6.2 percent; Contract 3 was $3,990 per ton, down 5.7 percent; and Contract 4 was $4,000 per ton, down 5.9 percent. Skim milk powder averaged $3,689 per ton ($1.67 per pound), up 0.1 percent. Contract 1 was $3,719 per ton, up 0.6 percent; Contract 2 was $3,689 per ton, up 0.1 percent; Contract 3 was $3,675 per ton, down 0.5 percent; and Contract 4 was $3,698 per ton, up 0.8 percent. | GDT Product (Sep 16 Auction) | Avg Price ($/MT) | Avg Price ($/lb) | Change vs Prior | |---|---|---|---| | Cheddar | $4,075 | $1.85 | +16.5% | | Mozzarella | $3,992 | $1.81 | -6.0% | | Skim Milk Powder | $3,689 | $1.67 | +0.1% | | Whole Milk Powder | Lower | N/A | Negative | | Butter | Lower | N/A | Negative | | Anhydrous Milkfat | Lower | N/A | Negative | The Cheddar surge at GDT ran directly counter to the CME spot block and barrel softness observed domestically during the same week, highlighting the divergence between international specification Cheddar (mostly 20-kg block) and domestic 40-pound block trading patterns. The two weeks prior had shown the GDT index on a four-consecutive-auction winning streak, making this week's overall decline the first interruption of that run since early July. ## 6. Regional Dairy Conditions: NDM Tight in the West, Cheese Running Seven Days in the East Regional market fundamentals differed substantially across production zones during the September 7 through 11 reporting week. Spot milk prices ranged from $2.00 under to flat Class. Cream multiples for all Classes were reported at 1.20 to 1.50 in the East, 1.18 to 1.35 in the Central region, and 1.15 to 1.24 in the West. Cheese production in the East continued seven days a week, with healthy milk volumes and readily available milk. Domestic demand in the Central region was light, though a 23-percent increase in conventional cheese ads last week aimed at capturing additional retail interest. Western region milk production was steady for week 37. Buttermilk powder supplies remained tight in the Central and Eastern regions, while contacts reported improved availability in the West. Manufacturers in the West were catching up on buttermilk powder production, with increased dryer availability reported in the Southwest. Demand for nonfat dry milk remained robust while availability was limited. High-heat NDM prices held steady in the Central and East but rose at both ends of the range in the West. Dry buttermilk prices increased at both ends of the range in the Central and East, whereas prices declined at both ends in the West. The preceding week captured in the August 31 through September 4 report offered additional color. Milk production in the Central region became more available due to mild weather and the approaching holiday weekend, with spot milk prices reported from flat-Class to $4.00 over. California producers reported milk output down 6 to 8 percent from peak levels but expected recovery, aligning with a 0.8 percent year-over-year decrease in the state's production as per the National Milk Production report released August 21, 2026. ## 7. H5N1 / HPAI Update: NMTS Surveillance Ongoing, New Vaccine Trials in Progress, Unaffected-State Movement Rules Hold The H5N1 situation in U.S. dairy cattle continued to draw regulatory and biosecurity attention during the week, with surveillance infrastructure maturing and vaccine development advancing. In May 2026, USDA updated its guidance allowing the interstate movement of lactating dairy cattle without individual influenza A tests from states with "Unaffected" state status under the National Milk Testing Strategy (NMTS). USDA's Animal and Plant Health Inspection Service (APHIS) 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 at that time of issuance, lactating dairy cattle moving interstate from states with Unaffected State Status under NMTS were no longer required to be tested for HPAI H5N1 prior to movement. No testing is required for lactating dairy cattle originating from states with Unaffected State Status under NMTS. Unaffected State Status requires ongoing testing and surveillance activities to confirm the absence of HPAI in the state's dairy herds. Wisconsin's DATCP, for example, began testing milk samples from milk quality laboratories for HPAI in May 2025 in accordance with the federal USDA National Milk Testing Strategy. To monitor HPAI in Wisconsin, bulk tank milk samples submitted to quality laboratories from Grade A dairies are tested monthly. On the vaccine front, 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. The NVSL has also previously confirmed a notable strain development: USDA APHIS reported that the National Veterinary Services Laboratories (NVSL) confirmed H5N1 clade 2.3.4.4b, genotype D1.1 in dairy cattle in Nevada. This was 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). Genotype D1.1 represents the predominant genotype in the North American flyways during the past fall and winter and has been identified in wild birds, mammals, and spillovers into domestic poultry. 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 the HPAI virus. Milk from affected animals is diverted or destroyed to prevent entry into the food supply. The U.S. Centers for Disease Control and Prevention (CDC) continues to consider the public health risk low. | HPAI / NMTS Status Item | Detail | |---|---| | NMTS movement exemption (unaffected states) | In effect since May 2026 | | Vaccine candidates (dairy cattle) | Several in field trials (USDA) | | New genotype confirmed (D1.1) | First detection in dairy cattle (Nevada) | | CDC human risk assessment | Low | | Interstate testing required | Only from affected/unknown-status states | ## 8. USDA All-Milk Price and Farm-Level Economics: $20.30/cwt in July, Feed Cost Pressures Building Farm-level economics going into the September 12 through 18 week were shaped by the July NASS All-Milk price and escalating alfalfa hay costs. The USDA NASS July agricultural prices showed the All-Milk price received by farmers was $20.30 per cwt, down $0.50 from July 2025. Alfalfa hay was $203.00 per ton, up $28.00 year over year. Corn was $4.26 per bushel, down $0.30, and soybeans were $11.60 per bushel, up $1.40. The combination of a lower All-Milk price and sharply higher alfalfa hay costs pressured margins, particularly in the West where alfalfa is a primary forage. The $28-per-ton year-over-year jump in alfalfa hay, pushing the average to $203.00 per ton, is the steepest seasonal move in several years and reflects both drought-reduced yields and competing export demand. Corn at $4.26 per bushel provided some partial offset for ration-balancing strategies, but soybean meal costs remained elevated given the $1.40 gain in whole soybeans. | NASS Farm-Level Indicator (July 2026) | July 2026 | July 2025 | YoY Change | |---|---|---|---| | All-Milk Price ($/cwt) | $20.30 | $20.80 | -$0.50 | | Alfalfa Hay ($/ton) | $203.00 | $175.00 | +$28.00 | | Corn ($/bu) | $4.26 | $4.56 | -$0.30 | | Soybeans ($/bu) | $11.60 | $10.20 | +$1.40 | Note: July 2025 values are estimated baseline references per NASS trend data. ## 9. Cow Herd Dynamics and Milk Production Trends: Bigger Herd, More Milk, But California Dips The September WASDE's dual upward revision to both cow numbers and per-cow output for 2026 tells the story of a supply side that is broadly expanding, even as regional variation remains significant. The milk production forecast was increased for both 2026 and 2027. Based on the latest Milk Production report, both cow inventories and milk output per cow were raised for 2026 and 2027. At 237.2 billion pounds, the 2026 milk production estimate would be up 5.5 billion from 2025's total of 231.7 billion pounds. This trajectory, if realized, would represent annual growth of roughly 2.4 percent, a notable acceleration compared to the sub-1-percent growth rates that characterized much of 2024 and early 2025. California, the nation's largest dairy state, is running counter to the national trend. California producers reported milk output down 6 to 8 percent from peak levels but expected recovery, aligning with a 0.8 percent year-over-year decrease in the state's production as per the National Milk Production report released August 21, 2026. Summer heat stress and the ongoing effects of HPAI biosecurity expenditures were cited in regional contacts as contributing factors to the California shortfall. Cheese production continued to top year-ago volumes, and the product mix hinted at poor domestic demand. Cheese output reached 1.23 billion pounds, up 1.1 percent from June 2025. Manufacturers made more Cheddar and less Mozzarella, confirming reports of tepid pizza sales. Cheddar's outperformance in the GDT auction this week (Section 5) provides some export-side relief for those production overages. ## 10. Dairy Margin Coverage (DMC) Program: One Big Beautiful Bill Reauthorization Active for 2026 Through 2031 The federal safety net for dairy farmers underwent its most significant structural overhaul in years following reauthorization through the "One Big Beautiful Bill Act." A USDA press release stated: "The One Big Beautiful Bill Act reauthorized DMC for calendar years 2026 through 2031 and provided substantial program improvements, including establishing new production history and increasing Tier 1 coverage." All dairy operations that elect to enroll in DMC for 2026 will establish a new production history. Existing dairy operations that started marketing milk on or before January 1, 2023 will use the higher of milk marketings for the years 2021, 2022, or 2023. New dairy operations starting after January 1, 2023 will use their first year of monthly milk marketings, even for a partial year. Marketing statements or production evidence are required to establish a production history. Dairies also have the option to lock in coverage levels for six years (2026 through 2031) with premium fees discounted by 25 percent. DMC offers different levels of coverage, including an option that is free to producers, minus a $100 administrative fee. With the July All-Milk price at $20.30 per cwt and feed costs (particularly alfalfa hay) rising sharply, the DMC margin math is worth recalculating for producers who have not yet revisited their coverage elections under the new production history rules. ## 11. NDM Export Market: U.S. Powder Tightening Domestically as Global SMP Bids Firm The NDM complex dominated the commodity price narrative this week, with domestic availability shrinking even as international demand strengthened. Values north of $1.50 for NDM are relatively lofty, but much easier to sustain than the spectacular spring spike above $2.00. The weekly average of $1.9294 recorded in the September 7 through 11 USDA Dairy Market News report placed NDM at its highest sustained weekly average in months, and the closing price of $1.9700 on September 11 opened the door to a potential test of $2.00 again as the week of September 12 through 18 began. In June, combined production of NDM and skim milk powder (SMP) slumped to 193.6 million pounds, down 2.4 percent year over year to the lowest tally for the month since 2013. Shipments abroad fell just shy of 106 million pounds in June, on par with daily average exports in May and the slowest export pace in nearly seven years. Low production volumes and product recalls pushed U.S. manufacturers to focus on the domestic market this spring, but now they are paying closer attention to international values. The NDM market got a lift from a 1.2 percent increase in SMP prices at the GDT auction held earlier in the reporting period. The September 16 GDT confirmed that trend continued, with SMP averaging $3,689 per metric ton, up 0.1 percent. U.S. producers and handlers watching the arbitrage window between domestic NDM and globally traded SMP will be tracking whether the CME spot price can hold above $1.90 into October. ## 12. Cheese Export Record and Trade Context: June Exports Hit All-Time High of 142.4 Million Pounds U.S. cheese export performance provided one of the industry's brightest data points heading into the fall marketing season. Cheese shipments jumped to an all-time high of 142.4 million pounds, up 24 percent from last year's record-setting volumes. U.S. cheese exports to Mexico notched a fresh high in June. Mexico's role as the primary destination for American cheese exports continued to anchor the trade corridor even as tariff and trade policy uncertainty lingered across other market channels. Cheese production continued to top year-ago volumes. Manufacturers made more Cheddar and less Mozzarella, confirming reports of tepid pizza sales. The shift toward Cheddar production aligned well with the GDT auction this week, where Cheddar's 16.5 percent price surge suggested export-specification product is in high demand internationally, particularly for October through February delivery windows. The backdrop for U.S. dairy trade includes continued scrutiny of tariff policy. On July 24, 2026, USDA announced the resumption of live cattle imports from Mexico starting on August 24, exclusively through the Douglas, Arizona Port of Entry. Forecasts in the WASDE reflected the resumption of live cattle imports through Douglas but assumed that all other ports of entry would remain closed until an official timeline for their reopening is provided. While primarily a beef and livestock story, the partial reopening of Mexican cattle trade has downstream implications for dairy heifer supply chains and U.S.-Mexico agricultural trade relations more broadly. --- ## Quick Hits - Dry whole milk prices moved higher at both ends of the range, and spot prices under $2.00 per pound were noted in week 37. - The September 2 GDT auction showed the price index rising 0.9 percent, which at that time represented the fourth straight increase in the GDT price index. - That September 2 auction featured 157 participating bidders and 115 winning bidders, with prices higher for Mozzarella, skim milk powder, lactose, and buttermilk powder. - USDA APHIS reports that 100 herds across 18 states are currently enrolled in its Dairy Herd Status Program (voluntary weekly HPAI bulk tank milk testing). - The USDA voluntary Dairy Herd Status Program offers dairy producers the option to monitor their herds via weekly HPAI testing of bulk tank milk samples. - Nonfat dry milk remained tight in the West, with dryer time prioritized for NDM over milk protein concentrate. The dry buttermilk market also stayed tight, with demand outpacing supply. - The Senate Ag Committee failed to advance the farm bill earlier this summer, adding legislative uncertainty to the backdrop for the DMC reauthorization rollout. --- ## What to Watch Next Week 1. **CME Spot Butter Recovery or Further Slide** -- After losing more than 4.5 cents per pound in the week of September 7 through 11, butter's next directional move will determine whether the Class IV complex can maintain its wide premium over Class III. Watch for cream availability reports from the East and Central regions. 2. **NDM at the $2.00 Threshold** -- The CME spot NDM close of $1.9700 on September 11 puts the market within 3 cents of the psychologically important $2.00 level. A sustained break above $2.00 would reinforce the WASDE's upward NDM price forecast revision and pressure Class IV futures higher. 3. **October WASDE Preparation** -- With the next WASDE scheduled for October 9, the September crop production data and grain stocks numbers released the week of September 11 will set the feed cost baseline for the next dairy outlook revisions. 4. **GDT Follow-Through on Cheddar** -- The 16.5 percent Cheddar surge at the September 16 GDT auction was historic in scale. The next GDT event (expected late September or early October) will confirm whether international buyers were absorbing a positioning squeeze or whether genuine demand is pulling product forward. 5. **California Milk Production Recovery** -- With output reportedly down 6 to 8 percent from peak levels, the Western region's ability to recover as temperatures moderate will influence national supply totals heading into Q4. Watch for the August NASS Milk Production report. 6. **HPAI Vaccine Field Trial Updates** -- USDA APHIS noted that several H5N1 vaccine candidates for dairy cows are currently undergoing field trials. Any interim efficacy data or regulatory pathway announcements would be a major development for herd health economics. 7. **Dairy Margin Coverage Enrollment** -- Producers reviewing DMC elections under the new production history rules established by the One Big Beautiful Bill Act should note that lock-in options for the 2026 through 2031 period carry a 25 percent premium discount, making this a time-sensitive financial decision. --- *The Therio Dairy Newsdesk is published weekly by the Therio team, delivering data-forward analysis of U.S. and global dairy markets to producers, processors, cooperatives, lenders, and traders. All price data referenced in this report is sourced from USDA Agricultural Marketing Service Dairy Market News, CME Group, USDA WASDE, and the Global Dairy Trade auction platform. For questions, submissions, or subscription inquiries, contact the Therio editorial team directly. This report is for informational purposes only and does not constitute trading or investment advice.*