The USDA is projecting increased milk supplies and declining cheese prices to overhang the market this year and next.
In its latest supply and demand report, the department says increased milk production per cow and larger cow inventories are expected to raise overall production for 2026 and 2027.
Exports are projected to increase through 2027, supported by increased butter shipments, although economists expect dried skim milk demand to weaken next year. Imports are unchanged.
Nonfat dry milk, cheese, and whey price forecasts are expected to decline during the second half of this year, following a recent dip in prices. Stronger demand is expected to keep butter prices elevated.
USDA lowered Class III and Class IV prices for 2026, with the all-milk price projected at $20.70 per hundredweight, down 55 cents from the May report.
USDA lowered its price forecast for cheese next year, while increasing whey price outlooks. Nonfat dry milk and butter prices are unchanged.
Class III prices for next year are unchanged as weaker cheese prices are expected to offset higher whey prices. Class IV prices are also unchanged because of a flat market outlook.
The all-milk price for 2027 is projected to be $20.90 per hundredweight, down a nickel from USDA’s prior estimate.
EDITOR’S TAKE:
The ability for dairy farmers to manage supply has been a perpetual difficult task. Thus, dairy farmers face these price cycles and eventually make the necessary adjustments. While the USDA price outlook may squeeze margins for larger operations, they should still remain profitable. However, the lower prices for milk could be problematic for smaller size herds. Size and scale do matter, but so does management, even with a smaller size operation.
Don’t remove dairy farmers from your prospect list just yet. Make sure you continue reaching out to them via social media, advertisements or, even better, personal visits. They will still be purchasing trucks, and you need to be top of mind when they are ready. And, of course, keep that inventory current on AgTruckTrader.com®!
