USDA releases its mid-June dairy outlook – IndexBox Market Intelligence reports

USA – The USDA Agricultural Marketing Service’s Dairy Market News has released the report for the week of June 8-12, 2026, which presents a detailed overview of the sector, highlighting regional variations in milk output, shifting demand patterns, and notable price movements across key dairy commodities.

Fluid Milk and Cream

In the Eastern region, farm-level milk production is contracting as the spring flush concludes and abnormally high temperatures place stress on both livestock and pastures.

The Central region reports steady output, while Western production varies from stable to reduced, though overall volumes remain sufficient for processing needs.

Demand for Class II cream is intensifying, fueled by seasonal ice cream manufacturing. Plants in the East and Central areas are sourcing spot loads from the Midwest and West, whereas Western cream supplies are adequate for local requirements.

Class III demand is weakening in the East, but Central manufacturers note steady to robust demand supported by contracted milk. Western Class III demand is unchanged.

Class IV butter stocks are ample, with consistent demand in the East and Central regions and mixed interest in the West. Condensed skim supplies are constrained in the Northeast and Central regions but stable in the West.

Dry Products

Nonfat dry milk prices declined sharply for low- and medium-heat varieties nationwide. In the Central and East, high heat prices dropped significantly at the upper end of the range but remained steady at the lower end.

Western high heat prices decreased across the board. Dry buttermilk prices fell in the Central and East regions, while the West saw no change. Dry whey prices held steady in the Central and East but softened in the West.

Lactose prices dipped slightly at the lower end of the range and were unchanged elsewhere. Whey protein concentrate (WPC) 34% prices were largely stable, with some softening at the top of the range.

Dry whole milk prices strengthened at the lower end and remained firm at the upper end. Acid and rennet casein prices were unchanged.

Organic Dairy Market News

The Transition to Organic Partnership Program (TOPP) has been established via cooperative agreements between the USDA and non-profit entities to offer technical assistance and support to both transitioning and established organic farmers.

According to the Foreign Agricultural Service (FAS), organic milk exports in April 2026 totaled 368,000 liters, a decrease of 27.9% from March and 26.7 percent from April 2025.

Cumulative organic milk exports from January through April reached 1,549,658 liters, down 10.4% compared to the same period last year.

Butter Highlights

Above-normal temperatures from New York through the Mid-Atlantic are hastening the end of the spring flush and causing early heat stress.

Salted butter supplies are abundant, cream is increasingly diverted to seasonal ice cream production, and spot butter trading remains active with a steady tone. In the Central region, milk and cream production is robust, though rising temperatures are a growing concern.

Strong demand for Class II and III cream is limiting spot cream availability for Class IV use, prompting some plants to source cream from other regions to maintain churn operations.

Domestic sales of 80% butter are steady, while export interest in 82% butter persists due to competitive pricing. In the West, milk output continues to meet cream needs, and intermittent Class II downtime is freeing up some spot cream.

Butter manufacturers report light demand, though churns remain active on contracted cream supplies through Week 24. Inventories are stable to increasing, domestic demand is steady, international interest is mixed, and spot loads of 80% and 82% butterfat butter are available.

Cheese Highlights

Eastern milk supplies are constrained for cheese production as heat accelerates the end of the spring flush and reduces cheese milk components.

A major plant returning to a five-day schedule has tightened Class III milk availability. Condensed skim is scarce, export demand exceeds supply, and inventories are declining.

Central region milk supplies for Class III are balanced. Spot milk movement has increased due to downtime, with prices ranging from $7 under to flat Class. Forecasted cooler weather could boost milk volumes.

Cheesemakers are operating busy schedules, curds are steady, and export demand is strong. Western cheesemakers report adequate milk despite seasonally lighter output.

Spot milk is more available due to downtime at Class II/IV facilities. Domestic and international demand is steady, with retail outpacing food service. Inventories are somewhat tight, though spot cheese loads are available.

June Supply and Demand Estimates

Milk production forecasts have been raised for both 2026 and 2027, based on the latest Milk Production report, which shows higher cow inventories and milk per cow for both years.

For 2026, commercial export forecasts are increased on both a fat and skim-solids basis, driven by higher shipments of cheese, whey, and butter.

For 2027, exports are raised on a fat basis due to higher butter shipments but lowered on a skim-solids basis due to less competitive dried skim milk products. Imports are unchanged on both bases for 2026.

For 2027, skim-solids basis imports are reduced from last month, primarily due to lower whey product imports, while fat basis imports are unchanged.

For 2026, price forecasts for nonfat dry milk (NDM), cheese, and whey are lowered from the previous month due to recent price declines. The butter price forecast is raised on expectations of stronger demand in the second half of the year.

Class III and Class IV price forecasts are both lowered. The all milk price forecast for 2026 is reduced to $20.70 per cwt. For 2027, the cheese price forecast is lowered, while whey prices are raised slightly. Price forecasts for NDM and butter are unchanged from the previous month.

The Class III price forecast is unchanged as lower cheese prices are offset by higher whey prices. The Class IV price forecast is unchanged due to no changes in the butter or NDM price outlook. The all milk price forecast for 2027 is lowered to $20.90 per cwt.

Consumer and Producer Price Indexes

The May Consumer Price Index (CPI) for all food stood at 349.0, up 3.1% from 2025. The dairy products index was 268.5, down 1.0% from a year ago.

Year-over-year percentage changes for selected products in May were: fresh whole milk +4.1, cheese -6.0, and butter -8.0. The May Producer Price Index (PPI) for all food was 273.2, up 1.7% from 2025.

The dairy products index was 245.3, up 1.0% from a year ago. Year-over-year percentage changes for selected products in May were: fresh whole milk +10.0, cheese -0.1, and butter -30.5.

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