USDA’s August Supply and Demand report is projecting more dairy cows, more milk production, and more cheese and butter exports.

USDA increased its expected milk production forecasts for this year and next year based on cow inventories in the most recent Milk Production report.  Output per cow is also expected to go up for this year and next year.

Fat basis imports for 2025 are reduced from last month, mainly on butterfat products. Skim-solids basis imports for 2025 are raised on higher milk protein concentrates. For 2026, imports are raised on skim-solids basis reflecting higher imports of milk protein concentrates but are unchanged on a fat basis.

The 2025 fat basis exports are expected to go up based on higher expected shipments of butter and cheese. The skim-solids basis export forecast for 2025 is also higher, expecting more exports of dried skim milk products and whey products. For 2026, the fat basis export forecast is raised anticipating higher exports of cheese. More skim-solids basis exports are expected for 2026 due to more shipments of whey products, lactose, and dried skim milk products.

The price forecast for 2025 butter is lowered from the previous month based on recent price weakness. The Class III price is unchanged based on cheese and whey prices. The Class IV price is lowered on lower butter more than offsetting higher nonfat dry milk.  The 2025 all milk price is unchanged at $22.00 per cwt.

For 2026, the price forecasts for butter and NDM are raised based on firm demand from domestic and international markets. Cheese and whey prices are unchanged from last month. The 2026 all milk price is also raised to $21.90 per cwt.