Insight Focus
US milk production is up in 2026. This is driven by more dairy cows and higher output per cow despite hot weather affecting volume and solids content. Dairy product prices were mixed with nonfat dry milk declining, whey protein products rising and butter prices falling to their lowest since mid-January. New 50% US tariffs on certain Canadian imports introduced market uncertainty amid steady domestic and export demand.
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Milk Production Rises
Dairy product prices were mixed last week, with nonfat dry milk (NDM) continuing its recent downturn. Cheese prices were mixed, while butter softened.
Hot weather remained a negative factor on milk production volume and solids content, although US milk production continues to run above year-ago levels because of more dairy cows and higher milk output per cow.
The USDA said milk production in June was 19.7 million lbs, up 2.3% from June 2025, with January-June output at 118.8 million lbs, up 2.7% from the first half of 2025. Milk production has been up at least 2.1% from a year ago in every month.
Source: USDA
Dairy Product Prices Diverge
NDM prices have been under pressure on steady domestic demand and light export interest, the latter beginning to show some signs of life. The market was a bit unsettled, with some manufacturers reporting snug inventories and others offering additional spot loads. Production is focused on low/medium-heat NDM, so high-heat supplies are tight. But prices are following other grades lower.
Whey powder and 34% whey protein concentrate markets bucked the downtrend and moved higher. Dryers continued to focus on higher-protein products (whey isolates and 80% whey protein concentrate) to meet strong consumer demand for protein, leaving lower-protein products in tight supply. US prices were competitive, so export interest remained active.
CME Butter Prices Tumble
CME Group butter prices fell to the lowest level since mid-January. Production was steady, as was domestic demand, while export demand held strong amid competitive US prices.
CME Group cheddar cheese prices were mixed. Production was limited by light volume of class III milk in the Midwest, while West Coast milk supplies were adequate. Some improvement was noted in domestic demand, while export demand was steady.
Injecting uncertainty into the market was the Trump administration’s July 20 announcement of new 50% tariffs on certain imports from Canada, a major dairy trading partner with the US. The US dairy industry supported the move, with one group calling on Canada to fully implement its dairy commitments under the US-Mexico-Canada Agreement and eliminate policies that deny US dairy access to Canadian markets.
