Dairy Industry News Roundup: Week of September 5 - 11, 2026

# Dairy Industry News Roundup: Week of September 5 - 11, 2026 Cheese blocks settled at $1.46 per pound Thursday on the CME and NDM surged $0.0250 to $1.94 per pound as the September 11 WASDE landed squarely on the radar, projecting 2026 U.S. milk output at 238.1 billion pounds while FMMO class prices revealed a turbulent August with Class II down $3.18 to $18.71 per cwt. A week bookended by soft butter ($1.37 Thursday), a robust NDM bid, expanding dairy product manufacturing volumes, continued H5N1 vaccine field trials, and a September DMC margin likely to trigger Tier I indemnities at the $8.50 per cwt coverage level made for one of the most data-rich news cycles of the third quarter. --- --- ## 1. This Week From Therio The team is heads-down building this week. If you missed our recent long-form pieces from co-founder Greg Cochara, both are worth catching up on: - [Herdscripting 101: The Hidden Infrastructure Behind Every Dairy Treatment](/news/herdscripting-101) - [Interstate Movement of Dairy Cattle: The Compliance Maze Nobody Talks About](/news/interstate-movement-101) --- ## Industry News ## 2. September 11 WASDE: USDA Holds 2026 Milk Output at 238.1 Billion Pounds The September WASDE, scheduled for release September 11 at 12:00 PM ET, is the month's single biggest market-moving report. At 238.1 billion pounds, the 2026 milk production estimate was raised in the August edition from the prior month's report, representing a gain of 6.4 billion pounds over 2025's total of 231.7 billion pounds, driven by a larger cow herd and a slight decrease in milk output per cow. U.S. milk output has continued to climb with each passing month as domestic and international demand warrants it, particularly with protein's hold on the consumer. However, the rate at which milk is produced is outpacing dairy consumption, and coupled with competition from the European Union and New Zealand, market analysts are warning of downward pressure on milk prices. USDA forecasts U.S. milk production at 106.2 million metric tons for 2026, up 1.2 percent from 2025, accounting for most of the net increase among major exporting countries. The growth reflects continued herd expansion and rising processing capacity. The September WASDE was expected to lock in those figures or make only modest trim adjustments given the mid-year data already in hand. | Indicator | 2025 Final | Aug 2026 WASDE | Sep 2026 WASDE (Expected) | |---|---|---|---| | U.S. Milk Production (bil. lbs.) | 231.7 | 238.1 | ~238.1 | | YOY Change (bil. lbs.) | -- | +6.4 | +6.4 | | 2026 All-Milk Price ($/cwt) | ~$21.17 | ~$18.50 | ~$18.50 | ## 3. CME Spot Dairy: NDM Surges to $1.94 While Butter Slides to $1.37 The week of September 5 to 11 delivered bifurcated signals across CME spot dairy commodities. Nonfat dry milk was the clear outperformer. Thursday, September 10, cash dairy prices were mixed: dry whey was up $0.0025 to $0.76 per pound (one sale), 40-pound cheese blocks fell $0.01 to $1.46 (four sales ranging from $1.4475 to $1.46), cheese barrels slid $0.07 to $1.4625 (ten sales from $1.46 to $1.49), butter fell $0.01 to $1.37 (34 sales ranging from $1.3575 to $1.39), and nonfat dry milk jumped $0.0250 to $1.94 (two sales from $1.9325 to $1.94). The contrast from the prior Friday is sharp. On September 4, dry whey was up $0.0025 to $0.7525, 40-pound blocks were down $0.0125 to $1.4650, barrels sat at $1.5325, butter was unchanged at $1.44, and NDM was unchanged at $1.88. That means NDM gained a full 6 cents across the week, butter lost 7 cents, and blocks shed about 0.5 cents while barrels dropped nearly 7 cents in a single session Thursday. Production of NDM remains limited as Class I milk demand has strengthened with the start of the school year, pulling more milk away from drying operations. High heat NDM prices increased at both ends of the range, and market participants note extremely tight high heat NDM availability. Plant managers say drying operations continue to prioritize low/medium NDM, limiting high heat output, with the Northwest expecting some availability in October. Most high heat production is contracted, making spot loads largely inaccessible. | Commodity | Sep 4 Close ($/lb) | Sep 10 Close ($/lb) | Week Change | |---|---|---|---| | Cheese Blocks (40 lb) | $1.4650 | $1.4600 | -$0.0050 | | Cheese Barrels | $1.5325 | $1.4625 | -$0.0700 | | Butter (Grade AA) | $1.4400 | $1.3700 | -$0.0700 | | NDM (Grade A) | $1.8800 | $1.9400 | +$0.0600 | | Dry Whey (Extra Grade) | $0.7525 | $0.7600 | +$0.0075 | ## 4. FMMO August 2026 Class Prices: Class II Drops $3.18, Class III Ticks Higher The August 2026 class prices under the Federal Milk Marketing Order pricing system, along with changes from the prior month, are: Class II at $18.71 (down $3.18), Class III at $16.64 (up $1.12), and Class IV at $17.36 (down $0.98). The butterfat price for August 2026 under the FMMO system is $1.5107 per pound, setting the Class II butterfat price at $1.5177 per pound. The protein and other solids prices for August 2026 are $2.8281 and $0.4052 per pound, respectively, which set the Class III skim milk price at $11.76 per cwt. The August 2026 Class IV skim milk price is $12.51, derived from the nonfat solids price of $1.3456 per pound. The $3.18 month-over-month plunge in Class II is the headline figure for fluid milk processors and soft dairy manufacturers. It reflects the earlier summer retreat in NDM and cream values that have since reversed. The Class III recovery of $1.12 tracks the mid-August cheese market bounce. Producers' milk checks will be smaller in July as markets weigh on uniform milk prices across all Federal Milk Marketing Orders, and uniform prices fell in July after a six-month run. | Class | August 2026 | Month-over-Month Change | |---|---|---| | Class I | (Announced separately by FMMO) | -- | | Class II | $18.71/cwt | -$3.18 | | Class III | $16.64/cwt | +$1.12 | | Class IV | $17.36/cwt | -$0.98 | | Butterfat (component) | $1.5107/lb | -- | | Protein (component) | $2.8281/lb | -- | | Other Solids (component) | $0.4052/lb | -- | ## 5. Dairy Margin Coverage: September DMC Margin to Trigger Tier I Indemnities If markets remain as currently projected, the smallest DMC margin will be realized in September at $8.23 per cwt, triggering indemnity payments in the Tier I category at the $8.50 per cwt coverage level. That means producers who enrolled in the program's highest protective tier will receive payments for September production history, a meaningful backstop as both Class III and Class IV prices remain well below the mid-year highs. The One Big Beautiful Bill Act reauthorized the Dairy Margin Coverage program for calendar years 2026 through 2031 and provided substantial program improvements, including establishing new production history and increasing Tier 1 coverage. Dairies also have the option to lock in coverage levels for six years (2026 to 2031) with premium fees discounted by 25 percent. The September trigger adds urgency to enrollment calculations for producers who may have initially chosen lower coverage levels. USDA Farm Service Agency offices are expected to see increased producer traffic this week as the September margin estimate circulates through the industry. ## 6. USDA Dairy Products Report: Butter Down, NDM and Whey Volumes Up Butter production was 189 million pounds in the most recent reporting period, 5.5 percent above July 2025 but 9.0 percent below June 2026. American-type cheese production totaled 480 million pounds, down 1.1 percent from July 2025 and 0.6 percent below June 2026. Total cheese output (excluding cottage cheese) was 1.26 billion pounds, 2.1 percent above July 2025 and 2.3 percent above June 2026. Nonfat dry milk production for human food totaled 165 million pounds, 26.6 percent above July 2025 and 0.8 percent above June 2026. Dry whey production for human food was 80.2 million pounds, 17.3 percent above July 2025 but 1.2 percent below June 2026. The 26.6 percent year-over-year jump in NDM output is the standout figure, and when combined with this week's spot NDM surge to $1.94, it tells a nuanced story: volume is up significantly versus 2025 but the school-year Class I pull is presently restricting further NDM production, supporting the spot price. Butter's 9 percent month-over-month dip in output aligns with the summer seasonal rotation but has not been enough to hold spot butter prices, which fell hard Thursday to $1.37. | Product | Monthly Output | vs. July 2025 | vs. June 2026 | |---|---|---|---| | Butter | 189 mil. lbs. | +5.5% | -9.0% | | American Cheese | 480 mil. lbs. | -1.1% | -0.6% | | Total Cheese (ex. cottage) | 1.26 bil. lbs. | +2.1% | +2.3% | | NDM (human food) | 165 mil. lbs. | +26.6% | +0.8% | | Dry Whey (human food) | 80.2 mil. lbs. | +17.3% | -1.2% | ## 7. H5N1 Update: Vaccine Field Trials Continue, NMTS Surveillance Active, Cat Seroprevalence Study Published USDA 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. No new emergency use authorizations were announced during the September 5 to 11 window, but the field trial pipeline remains the industry's most-watched regulatory development. In partnership with state veterinarians, USDA is implementing a National Milk Testing Strategy (NMTS) that facilitates comprehensive H5N1 surveillance of the nation's milk supply and dairy herds. The strategy is designed to increase understanding of the virus's spread, support rapid implementation of enhanced biosecurity measures to decrease the risk of transmission to other livestock, and inform efforts to protect farmworkers. A new peer-reviewed paper published in the CDC's Emerging Infectious Diseases journal (Volume 32, Number 9, September 2026) examined the seroprevalence of H5N1 in domestic cats near the epicenter of dairy cattle outbreaks in California's Central Valley. The study tracked highly pathogenic avian influenza A(H5N1) dairy cattle outbreaks and domestic cat serum sample collection in the Central Valley, California between 2024 and 2026. The findings reinforce the known spillover risk to other species on and near dairy premises and add scientific weight to ongoing arguments for accelerating bovine vaccination. 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. Bulk tank milk samples submitted to quality laboratories from Grade A dairies continue to be tested monthly. 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. ## 8. Global Context: U.S. Remains Milk Production Growth Engine; EU and NZ Contract New Zealand output is projected to decline 0.5 percent as declining cow numbers offset strong milk prices and export demand. European Union milk production is also forecast to decline by 0.5 percent for the second consecutive year as environmental regulations, disease pressure, and herd contraction outweigh gains in milk per cow. Collectively, milk production among major exporters is expected to be 0.4 percent higher in 2026, with the United States accounting for most of the increase. U.S. cheese production is forecast 3 percent higher in 2026, driven by higher milk availability and growth in manufacturing capacity. Investments in new cheese plants in key dairy states, including Wisconsin, Kansas, Texas, Minnesota, and Idaho, continue to fuel production growth, and lower prices are expected to drive higher consumption and exports. In 2025, U.S. exports of skim milk powder declined by 10 percent to 669,000 tons, the lowest level in nearly a decade. Shipments to Mexico remained relatively stable through September, but demand fell significantly from many major markets, including Indonesia (down 42 percent), Vietnam (down 21 percent), Malaysia (down 20 percent), and the Philippines (down 18 percent). That export headwind underscores why the NDM spot price rally this week drew attention: any sustained domestic tightness in the face of weak export channels is a sign of genuine near-term physical demand, not just speculative repositioning. | Country/Region | 2026 Milk Production Trend | Key Driver | |---|---|---| | United States | +1.2% YOY | Herd expansion, new plant capacity | | European Union | -0.5% YOY | Environmental regs, herd contraction | | New Zealand | -0.5% YOY | Lower cow numbers | | Australia | +1.8% to 2.4% | Improved rainfall, lower feed costs | ## 9. Organic Dairy Exports and NDM Supply Tightness Recently released FAS data for July 2026 indicated organic milk exports were 131,322 liters, down 19.2 percent from the month prior and down 83.0 percent from July 2025. Exports of organic milk from the start of the year through July totaled 2,202,715 liters, down 30.2 percent compared to the same period last year. NDM supplies in the East are described as very tight, while some stakeholders note spot loads are more accessible in the West compared to other regions. Reported spot milk prices range from flat Class to $4.00 over. Demand for block cheese is steady to mixed. Bulk cheese sales have softened. The 83 percent year-over-year collapse in organic milk exports is a dramatic structural shift that deserves separate analysis. Domestic organic premium erosion, combined with the broader softening in export demand for U.S. dairy products in Asian markets, is compressing organic producer margins. Cooperatives and handlers with significant organic milk pools are working through this adjustment as the 2026 crop year tightens organic feed costs in key production regions. ## 10. Dairy Product Price Averages and FMMO Component Context Product price averages for August 2026 are: butter $1.4747 per pound, nonfat dry milk $1.5985 per pound, cheese $1.6203 per pound, and dry whey (as reported by USDA Dairy Market News). These monthly average prices underpin the Class III and Class IV formulas and will feed directly into September class price announcements in coming weeks. Following strong growth in the production of milk and milk components, U.S. milk and dairy product prices are expected to fall in 2026. The all-milk price is projected to be $18.95 per cwt in 2026, down from an estimated $21.17 in 2025. With the September DMC margin already projected below $8.50 per cwt, that annual average projection is increasingly a ceiling rather than a floor for many months this year. Producers continue to improve herd performance with genetic improvements and better nutrition. In 2025, the milkfat percentage grew by 2.1 percent to an annual level of 4.33 percent. Skim solids grew by 0.4 percent to an annual level of 9.1 percent. Those component gains are compounding the milk production surplus, because even a flat cow count translates to more pounds of fat and protein available for manufacturing. | Product | Aug 2026 Average ($/lb) | CME Sep 10 Spot ($/lb) | |---|---|---| | Butter | $1.4747 | $1.3700 | | NDM | $1.5985 | $1.9400 | | Cheese (all types) | $1.6203 | $1.4600 (blocks) | | Dry Whey | (partial data) | $0.7600 | ## 11. Feed Costs and Herd Dynamics: Corn Use Elevated, Cow Culling Trends Total corn use in the most recent annual period rose by 90 million bushels to 16.4 billion bushels. Elevated corn use keeps feed cost pressure on dairy producers, even as corn prices have moderated somewhat heading into the September harvest window. The number of dairy cattle sent to slaughter plants in July was an estimated 227,600. The USDA WASDE raised 2026 milk production to 238.1 billion pounds on expectations of a larger cow herd. The July culling figure, while elevated, has not been sufficient to offset herd additions in key growth states. The total U.S. red meat and poultry production forecast for 2026 is lowered from the previous month, as lower red meat production more than offsets higher poultry production. Beef production is lowered due to a slower rate of steer and heifer slaughter through the end of the year, and cow slaughter is also reduced for the remainder of the year. Lower expected dairy cow slaughter rates through year-end supports a larger milk cow inventory heading into 2027. Strong cheese demand and solid export performance are pulling more milk into plants, encouraging producers to add cows despite higher capital and labor costs. The tension between rising input costs and a structurally lower all-milk price is the defining financial dynamic for the U.S. dairy producer in the back half of 2026. ## 12. U.S. Export Trajectory: Whey Gains, SMP Under Pressure, Cheese Plants Expanding Trade dynamics are expected to play a notable role in shaping 2026 market conditions. U.S. commercial exports are forecast to decline on a milk-fat basis, in part due to increased global competition and shifting demand patterns. However, on a skim-solids basis, exports are expected to rise, largely driven by gains in whey product shipments. U.S. SMP production in 2026 is forecast to expand by over 5 percent due to higher milk availability and robust consumer demand for protein. Despite higher output, exports are forecast marginally lower at 668,000 tons due to strong global competition. Prices of U.S. nonfat dry milk are expected to be above prices for EU and New Zealand SMP, while global demand for SMP has cooled, constraining opportunities for growth. "In this new era where cheese and butter exports are not just nice but necessary, a close eye on global markets will be increasingly important in understanding our domestic component values, and risk management strategies may need to be adjusted accordingly," according to Ben Laine of Terrain. That assessment resonates particularly this week, as NDM's domestic spot spike to $1.94 occurs against a backdrop of weak SMP export demand globally. --- ## Quick Hits - The Senate Agriculture Committee failed to advance the farm bill in the first week of August 2026, while Coca-Cola broke ground on a fairlife facility expansion in Michigan. - The butterfat content in fluid milk stands at 1.52 percent, up from 1.51 percent last year, reflecting continued genetic improvement across the U.S. herd. - USDA APHIS currently has 100 herds across 18 states enrolled in the voluntary Dairy Herd Status Program for H5N1 monitoring, enabling simplified interstate movement. - EU cheese production is forecast to reach 11.1 million tons in 2026, an increase of nearly 2 percent from the previous year, adding to the global competitive cheese supply picture. - Australia is expected to rebound 1.8 percent in milk production, supported by improved rainfall in southern dairy regions and relatively low feed costs, which could pressure U.S. export competitiveness in Asia-Pacific markets in Q4. - USDA is investing $1 billion in a comprehensive strategy to curb HPAI across the U.S. livestock sector, with dairy cattle vaccine development a central pillar of that investment. - The CME mid-week butter reading on September 3 showed butter up $0.0325 to $1.44 with 18 sales ranging from $1.43 to $1.44, before the Thursday September 10 drop to $1.37 wiped out more than a week of gains in a single session. --- ## What to Watch Next Week - **September 11 WASDE full release (12:00 PM ET):** The dairy section will set the tone for Q4 price expectations. Watch for any revision to the 238.1-billion-pound milk output figure and any movement in the 2026 all-milk price forecast from the current ~$18.50 per cwt trajectory. - **CME spot dairy continuity:** With NDM at $1.94, traders will watch whether the school-year Class I pull sustains the rally or whether any loosening of the supply constraint brings NDM back below $1.90. Butter at $1.37 is approaching multi-month lows and deserves close monitoring. - **H5N1 vaccine field trial updates:** Any announcement from USDA APHIS on the status of vaccine candidates under field evaluation would be the most market-moving H5N1 development possible. Industry is watching closely. - **Cold Storage report:** USDA NASS will release the August Cold Storage report in the coming days. Butter and cheese stocks data will be critical context for interpreting the Thursday CME price moves. - **September FMMO uniform prices:** With August Class III at $16.64, the lowest in several months, watch for preliminary September component price data to estimate whether the Class III formula will recover or remain under pressure. - **Farm bill momentum:** Following the Senate Agriculture Committee's August stall, any scheduling news on farm bill floor debate will affect DMC and other dairy program structures through 2031. - **GDT auction results:** The next Global Dairy Trade auction results will reflect how global buyers are pricing in the northern hemisphere harvest-season supply flush and whether U.S. NDM can find renewed export interest at the elevated spot levels. --- *The Therio Dairy Newsdesk is published weekly by Therio, covering U.S. and global dairy markets with a focus on actionable data for producers, cooperatives, processors, and risk managers. All prices and report data referenced herein are sourced from USDA AMS Dairy Market News, CME Group, USDA WASDE, and USDA APHIS as of the week of September 5 to 11, 2026. This publication is for informational purposes only and does not constitute financial or trading advice. Contact the Therio Newsdesk for corrections, tips, or subscription inquiries.*