Milk production: the constant bear weighing heavily on dairy markets. September milk production was 19.44 billion pounds, up 2.4 percent from September 2025. This continues the year long streak of higher year-over-year milk production every month. Projections released by the USDA today for the November WASDE report have total production estimated at 237.7 billion pounds of milk up 800 million pounds from last month’s report for 2026 and 240.7 million pounds for 2027, an increase of 2.3 billion pounds from the October WASDE.
Milk cow numbers have been growing as well with September reaching 9.74 million head of cows, the largest herd size in over three decades of data. Recent speculations have discussed a pathway to eventually reach 10 million head of milk cows but in order to do that, milk demand needs to see a large boost.
In today’s November WASDE report, the USDA forecasted a small reduction in both exports and domestic use on a Fat Basis from last month, however still significantly above last year’s use. On a Skim-solid Basis, exports increased from last month’s projections by 0.4 billion pounds, however still 2.6 billion above 2025. Domestically, the November projections were also pulled back slightly from last month yet still 3.4 billion pounds above last year.
The market is seeing what the USDA is reporting for product demand. Lower fat and higher protein items are all the rage. With that product demand shift, there has been a need for innovation of which the U.S. dairy industry has been hard at work to develop.
Higher protein demand can be directly correlated to the increased use of GLP-1s, but not exclusively. The market has been searching for healthier options to what they eat. Whole, real foods with no added chemicals, dyes or preservatives are what the market wants and what the market wants is what it gets.
Domestically, the dairy industry has created or revamped existing products with purpose. High protein products lead the charge not only with protein powders and beverages but with the already nutritious products manufactured. High protein cottage cheese has been a new product using a proprietary whey and casein formula increasing the protein content of an already high protein food. Cottage cheese has also gotten a facelift of new flavors mixed with fruit additive to create a sweet snack, or blended smooth to use for recipes.
Each new product has been developed with a specific health benefit in mind. Lactose- free milk which opens dairy products to more consumers, Protein milk with as much as 87 percent more protein than regular milk, drinkable yogurts marketed for the gut health and probiotic benefits.
These are just a few examples that have brought more market share for the dairy industry with more demand for Milk Protein Concentrate (MPC), Milk Protein Isolate, Whey Protein Concentrate, Whey Protein Isolate, Casein and Caseinates. All using different parts of the milk process to use more of the milk the industry has been producing.
The focus of domestic demand is that nutritional value holds greater power than price or flavor for current consumer demand. A lot of this is driven by recent social media pushes for better food sources, high protein recipes and weekly meal preparation. The market has listened and now begun hiring social media influencers to push dairy products. Overall instilling dairy consumption into modern diet culture.
Internationally, much of the same demand shift is being seen as well as solid cheese demand globally. Exports are up 13.8 percent this year.
The market has done an excellent job of taking a massive amount of supply and found new demand in new markets and new products. So, while the bearish tone of a growing supply should be pulling markets lower, the U.S. dairy industry has adapted to the consumer and made demand in new places that should still be there for years to come.
