Last week, the USDA released the monthly Dairy Products Report. Most products reported higher production from last year with the most notable decline in production in whey protein concentrate, coming in at 38.8 million pounds produced, a reduction of 11 percent from 2025.
Total cheese output excluding cottage cheese was 1.27 billion pounds, which was 4.2 percent above last April and 0.3 percent above last month. Italian type cheese production totaled 556 million pounds which was 4.2 percent above April 2025 and 2.5 percent above March 2026. American type cheese production climbed 1.2 percent above last year at 490 million pounds, 0.4 percent less than March 2026.
Cheese production is sufficient to keep up with demand as of now. Usually, we see a small reduction in inventory by late summer, however milk supply is plentiful especially now that schools have let out for the summer. Manufacturers should have plenty of milk to keep production steady.
Butter production totaled 224 million pounds which was 4.5 percent above April 2025 however, 1.8 percent below March 2026. Seasonally, this is the time of year for butter demand to begin to increase as buyers look get aggressive ahead of summer demand. Therefore, one could read into these numbers from April and give reason why the market has begun to bounce back from the May lows. These low prices have given buyers the opportunity to purchase more than their needs and are expected to fill inventory at these levels.
Not only is the price of butter low for U.S. buyers, but the United States remains well below the world average, keeping export expectations high for the remainer of the year. There is also opportunity to increase overall dairy exports as speculation regarding the 17-billion-dollar trade deal announced with China last month begs the question if dairy will be included in their purchases from the United States.
China has been missing from our export program over the past couple of years and we have been able to grow exports despite this. On a 10-year average, dairy products accounted for $558.98 Million worth of exports to China. That is a total volume of 367,416 metric tons of product. While small in the big picture of a $17 billion deal, it could be huge for an already thriving export program in dairy.
With butter prices finding a 5 year low in January with a small comeback this quarter, the last half of the year could bring some hope as the United States is the most competitive on the world front. If China comes back to boost an already strong export market, the growing milk production forecast may not be as bleak for the balance sheet as it seems.
Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net.
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