One day shy of the USDA’s July Milk Production report, the market anticipates a drop in milk production due to heat stress, however the overall production numbers for the year exceed expectations month after month. Forecasts for the year anticipate 236.6 billion pounds of milk produced in the United States for 2026. That is 5.9 billion higher than milk produced last year. That growth is expected to continue into 2027 leaving a massive amount of supply for the market to find buyers for.
Over the last year, the market has done an outstanding job of creating demand with competitive pricing and innovation by creating new products and marketing to consumers looking for clean protein sources. Exports are high, trending over 25% higher than the first half of 2025 when comparing January through June and nearly surpassing the total export volume of 2024.
Low prices typically do see more demand but the innovation in products along with the changing of the consumer focus appears like this new demand for healthy whole foods is here to stay. It doesn’t take long to look at local coffee shops advertising protein cold foam, protein lattes or even convenient stores offering protein chocolate milk which I see my own children grabbing off the shelves.
With a shift in demand like we have seen, there becomes questions about the infrastructure and storage available to produce and house products in the future. Yesterday, August 17th, the USDA made an announcement regarding new funding available for Cold Chain Grants. The program offers up to $7.5 million in grants, with the focus on emergency food assistance.
The dairy industry relies heavily on reliable cold chain infrastructure. More refrigerated capacity overall helps stabilize the market by making reliable supply chains for consumers to always have the products they reach for rather than going without or looking for alternative products to take their place. In return, this helps stabilize prices as well. Less large price swings as production shifts taking out barriers between available food and consumers that demand it. It also provides another layer of safety as the market upgrades equipment since perishable products rely so heavily on temperature-controlled handling.
While this new funding won’t make a measurable impact on dairy balance sheet alone but will help to give food banks the infrastructure to provide more meat, dairy, eggs and produce to the families that need it. This administration’s focus on providing “Real Foods for Americans” in the “Make America Healthy Again” campaign highlights the shift in demand for less processed foods and more whole foods in domestic demand. The new food pyramid guidelines, bringing back whole milk as an option in schools, both serve as examples of a government-led change in the way the market views food sources.
While current dairy market prices weigh heavily on a surplus of supply, there is a shift in demand that will be here to stay long after milk production volumes hit their peak.
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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