Dairy Industry News Roundup: Week of September 19 - 25, 2026
U.S. dairy markets closed the week of September 19-25, 2026, under broad pressure: CME spot Grade AA butter settled at $1.3575/lb on Wednesday September 24, its lowest close in more than two months, while cheese blocks navigated choppy trade in the mid-$1.40s range. The USDA NASS September Milk Production report, relea
# Dairy Industry News Roundup: Week of September 19 - 25, 2026
U.S. dairy markets closed the week of September 19-25, 2026, under broad pressure: CME spot Grade AA butter settled at $1.3575/lb on Wednesday September 24, its lowest close in more than two months, while cheese blocks navigated choppy trade in the mid-$1.40s range. The USDA NASS September Milk Production report, released Monday September 22 at 3:00 p.m. ET, showed the national herd continuing to expand, reinforcing the WASDE's full-year 2026 production forecast of 237.2 billion pounds. On the disease front, the National Milk Testing Strategy (NMTS) continues as the primary surveillance backbone for HPAI H5N1 in dairy cattle, with interstate movement requirements now eased for unaffected states following the May 2026 APHIS guidance update. Meanwhile, the GDT Pulse auction on September 22 attracted analyst attention as global buyers reassessed U.S. export competitiveness. Here is everything that moved the industry this week.
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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 September 22 Milk Production Report: Herd Expands, Output Stays on Record Pace
USDA NASS released its monthly Milk Production report on September 22, 2026, at 3:00 p.m. ET. The report covered August 2026 production data for the 24 major milk-producing states and served as the primary supply benchmark heading into the fourth quarter.
The USDA September WASDE report raised the 2026 milk production forecast slightly to 237.2 billion pounds, based on expectations of a larger cow herd and an increase in milk output per cow. That revision continued a trend of upward revisions driven by genetics and management gains. USDA Livestock Analyst Anthony Fischer has noted that growth in milk production has been consistent, with genetic advancements and improved herd management practices expected to continue driving milk output per cow into 2026.
The milk production forecast was increased for both 2026 and 2027, as both cow inventories and output per cow were raised for both years. The expansion in the national dairy herd is particularly notable given the inflationary pressure on replacement animals seen in late 2025. Prices for U.S. replacement dairy cows kept rising into the fourth quarter of 2025, reaching their highest level on record in October.
| Metric | 2025 Estimate | 2026 WASDE Forecast | Change |
|---|---|---|---|
| U.S. Milk Production (bil lbs) | 230.0 | 237.2 | +7.2 bil lbs |
| All-Milk Price (per cwt) | $21.35 | $20.40 | -$0.95 |
| Class III Price Forecast | $18.20 | Lower YOY | Revised down |
| Class IV Price Forecast | $18.15 | Lower YOY | Revised down |
With higher expected milk production, the forecasts for Class III and Class IV milk prices are revised downward for both years, reflecting lower price expectations for Cheddar cheese, butter, and nonfat dry milk.
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## 3. CME Spot Dairy: Butter Slides to Multi-Month Low, Cheese Barrels Firm
Butter prices at the CME Group cash market settled lower on September 24, 2026, with Grade AA closing at $1.3575 per pound, a decline of $0.0075 from the prior close, according to USDA Dairy Market News report 1599. That print extends a multi-week downtrend that has taken butter from levels near $1.44/lb in early September to its current nadir.
The CME Group cash markets closed the prior week ending September 18 with Grade AA butter at $1.3700 per pound and a weekly average of $1.3590, a decline of $0.0216. CME cash values were mixed for the week of September 14-18, with butter and cheese declining while nonfat dry milk and dry whey gained.
Cheese blocks in 40-pound format continued to trade with light volumes. For the trading week ending September 12, CME average spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $1.6605 and $1.6535 per pound, respectively. By the September 19-25 week, both products had softened materially from those September 12 averages, consistent with the broader mid-$1.40s environment seen in early September trading. CME spot prices for NDM, butter, and dry whey had averaged $1.1890, $1.9565, and $0.5875 per pound, respectively, for the biweekly period ending September 12.
| CME Spot Product | Week of Sep 14-18 Close | Week of Sep 19-25 (Sep 24) | Weekly Direction |
|---|---|---|---|
| Grade AA Butter | $1.3700/lb | $1.3575/lb | Down |
| 40-lb Cheese Blocks | Soft, mid-$1.40s | Mid-$1.40s range | Sideways/soft |
| Nonfat Dry Milk | $1.88 area | Slight gain | Up |
| Dry Whey | $0.74-$0.75 area | Steady/slight gain | Steady |
| Cheese Barrels | $1.5325 | Holding | Unchanged |
Contacts noted that the market for bulk butter has been somewhat quiet in recent weeks, with buyers showing limited urgency to build inventory positions ahead of the holiday season at these price levels.
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## 4. September WASDE: Full-Year 2026 Forecasts Revised, Feed Costs in Focus
The USDA WASDE and Crop Production reports provided potential insights into dairy feedstuff supplies and prices for the 2026-27 season. Feed costs remain a key variable for producer margins at a time when milk prices are being compressed by supply growth.
The latest USDA Agricultural Prices report indicated dairy-quality alfalfa hay prices averaged $242 per ton in July, while alfalfa hay prices averaged $203 per ton, and prices for other hay averaged $143 per ton. Those figures represent meaningful input cost burdens for producers whose all-milk price forecast for 2026 now stands at $20.40/cwt. The all-milk price forecast for 2027 is unchanged at $19.80 per cwt.
The 2025-26 season-average farm price forecast for soybeans is at 62 cents per pound reflecting year-end trade data, while the projected season-average price for 2026-27 is raised 2 cents to 78 cents per pound, a development that will modestly increase protein supplement costs for dairy herds in the months ahead.
| Feed Input | July 2026 Price | YOY Context |
|---|---|---|
| Dairy-Quality Alfalfa Hay | $242/ton | Elevated |
| All Alfalfa Hay | $203/ton | Elevated |
| Other Hay | $143/ton | Moderate |
| Soybean Meal (proxy, 2026-27) | Reflecting $0.78/lb bean | Rising |
The cost-price squeeze remains the dominant farm-level theme entering Q4 2026. Producers with forward-contracted milk at Q3 Class III levels are watching the September settle with concern as futures continue to reflect the weight of abundant supply.
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## 5. USDA WASDE Dairy Product Price Forecasts: Pressure Across the Board
The September WASDE reinforced what cash markets have already been signaling: product prices face structural headwinds from the growing milk supply. Price forecasts for cheese, butter, nonfat dry milk, and dry whey are all reduced on downward pressure from increased milk production. USDA's new 2026 dairy product price forecasts show cheese at $1.7750 per pound, down 3.5 cents; butter at $2.2450 per pound, down 30.5 cents; and nonfat dry milk at $1.2200 per pound, down 2.5 cents.
For both 2026 and 2027, commercial export forecasts were lowered on a skim-solids basis due to reduced shipments of whey and nonfat dry milk, and on a fat basis primarily due to reduced shipments of cheese and butter. That export downgrade is a meaningful shift, as the U.S. dairy trade community had been counting on robust foreign demand to absorb incremental domestic production.
The August Consumer Price Index for all food was 350.4, up 2.7 percent from 2025, while the dairy products index was 272.1, down 0.3 percent from a year ago. Retail dairy deflation, even modest, further reduces the incentive for processors to bid aggressively for milk solids.
| WASDE 2026 Product Forecast | Prior Month | September Revision | Change |
|---|---|---|---|
| Cheese | $1.8100/lb | $1.7750/lb | -$0.035 |
| Butter | $2.2750/lb | $2.2450/lb | -$0.0305 |
| Nonfat Dry Milk | $1.2450/lb | $1.2200/lb | -$0.0250 |
| All-Milk Price | $20.70/cwt | $20.40/cwt | -$0.30 |
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## 6. H5N1 / HPAI in Dairy Cattle: NMTS Continues, Unaffected-State Rules Now Operational
The HPAI H5N1 situation in U.S. dairy cattle is now operating under a materially different regulatory framework compared to the emergency-response posture of 2024 and early 2025. In May 2026, USDA updated their 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. That guidance continues to govern interstate commerce this week.
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 under the May update, lactating dairy cattle moving interstate from states with Unaffected State Status under the National Milk Testing Strategy 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. Wisconsin, for example, continues its bulk-tank surveillance program. Bulk tank milk samples submitted to quality laboratories from Grade A dairies are tested monthly as part of Wisconsin's NMTS participation.
USDA APHIS previously confirmed H5N1 clade 2.3.4.4b, genotype D1.1 in dairy cattle in Nevada, marking the first detection of this virus genotype in dairy cattle. All previous detections in dairy cattle had been genotype B3.13. That genotype shift remains relevant to ongoing surveillance design. 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.
| HPAI Program Element | Status as of Sep 25, 2026 |
|---|---|
| NMTS Bulk Tank Surveillance | Active nationwide |
| Interstate Movement (Unaffected States) | No individual test required |
| Interstate Movement (Affected States) | Pre-movement test still required |
| Genotypes Confirmed in Cattle | B3.13 (predominant) and D1.1 (Nevada) |
| Public Health Risk (CDC Assessment) | Low |
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## 7. GDT Pulse Auction, September 22: Global Buyers Signal Caution
HighGround Dairy published a snapshot of the GDT Pulse auction results from September 22, 2026, with the full detail gated behind a Platinum subscription. The broader context from USDA Dairy Market News for the surrounding period shows that global market dynamics are mixed, with South American production seasonality providing some price support on the international stage while Northern Hemisphere supply growth weighs on prices.
In South America, milk output remains seasonally lighter, and demand is strong, continuing to give support to milk prices. That Southern Hemisphere tightness has historically provided a floor for GDT pricing in whole milk powder and skim milk powder, the two most-watched GDT commodities for U.S. export competitiveness.
January through June 2026, compared to the first half of 2025, saw large increases in international dairy trade volumes. The largest increases were for butter, up 9.4 percent, and skim milk powder, up 10.0 percent. The pace of those first-half export gains now appears to be decelerating as the full weight of the larger U.S. and European milk crops comes to market in Q3 and Q4.
| GDT Product | H1 2026 Volume vs H1 2025 | Price Trend Entering Sep 22 Pulse |
|---|---|---|
| Butter | +9.4% | Softening |
| Skim Milk Powder | +10.0% | Softening |
| Whole Milk Powder | Moderate growth | Mixed |
| Cheese | Growth | Pressured |
The September 22 GDT Pulse is the first of two auctions in the month. The main full-format GDT event is scheduled for early October.
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## 8. Cold Storage Snapshot: Butter and Cheese Stocks Edge Lower
Cold storage data as of September 14, 2026, showed butter at 611,684 pounds and cheese at 84,553 (in reporting units), compared with September 1, 2026 figures of 63,138 for butter and 85,729 for cheese. The butter stocks reading reflects continued large milkfat inventories that are consistent with the multi-month downward pressure on CME butter prices. Cheese stocks, while edging lower, remain at levels that limit processor urgency to bid up spot prices.
The cold storage picture entering Q4 2026 provides little seasonal tailwind for bulls. Holiday demand buildup from food manufacturers and retailers typically begins to draw down stocks in October, but with butter already trading near $1.36/lb, the question is whether consumer demand elasticity can drive enough incremental usage to materially tighten supplies.
Conventional dairy ads were down 7 percent, and organic ads fell 25 percent in week 37. The only conventional commodities that appeared in more ads were cream cheese, flavored milk, and milk. Reduced promotional activity at retail typically correlates with softer near-term demand signals for bulk commodity products.
| Cold Storage Product | Sep 1, 2026 | Sep 14, 2026 | Direction |
|---|---|---|---|
| Butter | 63,138 (reporting units) | 611,684 lbs reported | Heavy |
| Cheese | 85,729 (reporting units) | 84,553 (reporting units) | Slightly lower |
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## 9. Regional Milk Supply: Central Tightens, Northeast Stable, West Eyes 2027
In the Central region, milk supplies tightened during the week. Spot Class III milk prices held mostly steady, from flat-Class to $2.00 over, with premiums trending higher in response to market tightness. That regional tightness is a notable divergence from the macro supply-growth story, and could reflect seasonal weather patterns and a concentration of September culling decisions.
Milk production across the Northeast was stable as the region moved into cooler weather, which is historically favorable for cow comfort and component yields. Cooler fall temperatures typically support butterfat test increases, a dynamic that supports Class III and Class IV milk values.
In the East, milk availability for cheese production remained steady, supporting consistent plant schedules. Some contacts anticipated contractual changes in milk demand due to geopolitical shifts in 2027, which may alter long-term milk-draw needs from the West. That forward-looking commentary reflects broader industry uncertainty about export market access and trade policy heading into the new calendar year.
| Region | Milk Supply Tone | Spot Class III Premium | Seasonal Factor |
|---|---|---|---|
| Central | Tighter | Up to +$2.00/cwt | Seasonal shift |
| Northeast | Stable | Steady | Cooling weather |
| East | Steady | Plant schedules normal | Consistent |
| West | Ample, watching 2027 | Flat to slight premium | Policy uncertainty |
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## 10. FMMO and Class Price Outlook: Q4 Shapes Up Soft
Federal Milk Marketing Order Class prices for Q4 2026 are shaping up on the soft side, consistent with the September WASDE revisions and CME spot trends. With higher expected milk production, the forecasts for Class III and Class IV milk prices are revised downward for both years, reflecting lower price expectations for Cheddar cheese, butter, and nonfat dry milk.
The weighted-average advertised price for 6-8-ounce shredded cheese was down 6 percent from a year ago, and the number of ads was up, suggesting that processors and retailers are using promotional activity to move product rather than relying on price strength. That dynamic is consistent with a market where supply is outpacing demand at current price levels.
The Class I mover, which is set on the higher of the advanced Class III or Class IV skim pricing plus the Class I differential, is reflecting the broad commodity price weakness. Producers in federal orders with high Class I utilization (principally southeastern and mid-Atlantic markets) are better insulated than those in cheese-heavy Class III orders. The full September FMMO Class price announcements from USDA AMS are expected in the final days of September.
| FMMO Class | Q4 2026 Direction | Key Driver |
|---|---|---|
| Class I | Mildly soft | Advanced skim pricing |
| Class II | Stable to soft | NDM/cream values |
| Class III | Soft | Cheese prices down |
| Class IV | Soft | Butter and NDM weakness |
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## 11. Feed Cost and Herd Economics: Margins Compressed as Harvest Advances
The 2026 corn and soybean harvest is advancing across the Corn Belt, and early yield reports from USDA NASS point to a large crop that should eventually relieve some feed-cost pressure. However, basis levels for nearby delivery remain elevated in several key dairy states, keeping actual on-farm feed costs above futures-implied levels for many operations.
Steady milk output growth has assisted farmers in managing production during periods of weather disruptions and decreases caused by Highly Pathogenic Avian Influenza (HPAI), particularly in California during the first quarter of the previous year. Herd resilience and management quality have been the defining competitive differentiators in the current cycle.
For 2026, beef production is reduced on a slower pace of fed cattle marketings in the third quarter, lighter dressed weights in the third quarter, and lower cow slaughter in the fourth quarter. Lower cow slaughter in Q4 is a meaningful signal for dairy herd dynamics: fewer cull opportunities mean producers may be choosing to maintain borderline-productive cows rather than exit them, which could add modest pressure to both beef markets and milk supply simultaneously.
Average cull cow prices reached a peak in September 2025 and showed signs of stabilization as the year closed. In 2026, cull cow prices remain a relevant margin lever for producers managing the cost-price squeeze, but the Q4 beef outlook suggests that lever may be less powerful than it was a year ago.
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## 12. Genetics, Technology, and Sustainability: GenoSource Youth Program, Record Milk Fat
Milk fat percentage has reached a record high recently, a trend driven by genetics and ration management that is reshaping the economics of component pricing across all FMMO classes. Processors with exposure to butterfat yields are benefiting from this shift even as spot butter prices weaken.
The Future Breeder Program by GenoSource is designed to give youth the opportunity to engage with genomic selection and breeding technologies at an early stage, part of a broader industry effort to build the next generation of technically literate dairy farmers and geneticists. Industry observers note that programs linking genomics education to farm profitability are critical as herds grow larger and management decisions per animal become more consequential.
Milk output continues to grow. It has appeared to slow down a bit in recent years, but the trend is pretty steady. Milk output per cow growth is expected to continue into 2026 as farmers take advantage of genetic advancements and improved herd management. The genetic pipeline, combined with improving reproductive efficiency, means that supply growth is likely to remain the structural story of the U.S. dairy industry for the foreseeable future.
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## Quick Hits
- Conventional cheese ads are down 3 percent and ads for organic cheese fell 13 percent in the most recent weekly retail tracking period (week 37), reducing short-term demand signals for processors.
- The USDA voluntary Dairy Herd Status Program, updated August 26, 2026, offers dairy producers the option to monitor their herds via weekly HPAI testing of bulk tank milk samples, enabling easier interstate movement of cattle without individual tests.
- APHIS updated its guidance on the interstate movement of lactating dairy cattle on April 27, 2026, the most recent formal APHIS action on HPAI livestock movement policy.
- The May 2026 APHIS interstate movement update followed 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.
- Global milk consumption grew 4.8 percent in H1 2026 versus H1 2025. Ukraine's raw milk price moved to a weighted average of 15.10 UAH per kilogram in September 2026, up 5.2 percent from August but down 9.1 percent from a year earlier.
- Some industry sources in Ukraine are predicting prices to increase in the fall by 20 to 25 percent, with supply disruptions and increased production costs expected to push prices higher in the country.
- The Secure Milk Supply Plan is a collaborative initiative among the dairy industry, USDA, state officials, and three universities. The Secure Milk Supply website offers comprehensive materials on dairy biosecurity practices, including posters and information sheets in English and Spanish.
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## What to Watch Next Week
1. **USDA NASS Full August Milk Production Data**: The September 22 release will be fully digested by analysts, with state-level detail illuminating which regions are driving the national herd expansion most aggressively.
2. **September FMMO Class Price Announcements**: USDA AMS is expected to publish official September Class I, II, III, and IV prices in the final days of the month, setting the tone for October producer milk checks.
3. **CME Butter Recovery or Further Slide**: With Grade AA at $1.3575/lb, the market will be watching for either a technical rebound driven by holiday-season buying or a continued slide that would push WASDE butter forecasts lower again in October.
4. **GDT Full Event Results**: The next full-format Global Dairy Trade auction will provide the most comprehensive read on international demand for whole milk powder, skim milk powder, and butter ahead of Q4.
5. **HPAI NMTS State Status Updates**: Several states are expected to report updated bulk-tank surveillance results. Any new positive detections in currently Unaffected states would immediately trigger the return of individual pre-movement testing requirements and could disrupt cattle trade flows.
6. **Feed Harvest Progress and Basis Narrowing**: USDA NASS Crop Progress reports will update corn and soybean harvest completion rates. A rapid harvest advance could begin narrowing basis and providing cost relief to dairy producers.
7. **October WASDE Preview**: Analysts will begin modeling October WASDE scenarios. A third consecutive upward revision to the 2026 milk production forecast would add further downward pressure to Class III and IV price projections.
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*The Therio Dairy Newsdesk publishes weekly U.S. dairy industry roundups drawing on USDA reports, CME market data, APHIS surveillance updates, and proprietary industry analysis. Our goal is to give producers, processors, cooperatives, and allied industry professionals the most data-forward, no-fluff briefing available. For corrections, tips, or subscription inquiries, contact the Therio editorial team.*