A heat dome covered much of the Midwest and northeast sending temperatures soaring, as the nation prepared to celebrate 250 years on July 4. The temperatures do not bow well for milk output or components.
Milk prices were chilling however, as the Agriculture Department announced the June Federal order Class III milk price at $15.98 per hundredweight (cwt.), down 94 cents from May and $2.84 below June 2025.
It is the lowest Class III price since February and put the six month average at $15.90, down from $19.00 a year ago, and compares to $16.92 in 2024.
July 2 Class III futures portended a July price at $15.55; August, $16.12; September, $16.79; October, $17.23; November, 17.56; and December at $17.53.
The Class IV price was $20.96, down $1.36 from May, but is $2.66 above a year ago.
U.S. dairy cow numbers and output per cow continue to climb, keeping milk output above that of a year ago for the 14th consecutive month, but the growth is slowing. The USDA’s latest data shows May output at 20.565 billion pounds, up 2.3% from May 2025, and follows a 2.7% rise in April. April output was revised down 5 million pounds to 19.955 billion, still 2.7% above a year ago.
May cow numbers totaled 9.665 million, up 10,000 from the April count, which was revised up 10,000 head and was up 184,000 head or 1.9% from a year ago.
May milk per cow averaged 2,128 pounds, up 8 pounds or 0.4% from a year ago.
California output hit 3.6 billion pounds, up 43 million or 1.2% from a year ago. Cow numbers were up 4,000 and output per cow was up 20 pounds. Wisconsin produced just under 2.9 billion pounds, up a whopping 65 million pounds or 2.4%. Cow numbers were up 29,000, with output per cow unchanged.
Idaho output was up 45 million pounds or 2.9% on 17,000 more cows. Output per cow was up 10 pounds. Kansas continued to show the biggest percentage gain, up 21.2% from a year ago.
Michigan was up 2.7% and Minnesota was up 2.1%. New Mexico, one of five states showing a decline in milk output, was off 0.4%. New York was up 1.8%. Oregon was up 7.0% on 8,000 more cows. Output per cow was unchanged.
Pennsylvania was down 1.9%. South Dakota was up 4.7%. Texas was up 4.0% from a year ago. Washington State was off 0.8% on 5,000 fewer cows, but output per cow was up 25 pounds.
StoneX stated “Component adjusted production was up 4.0%. The fat content in milk was only up 0.7% year over year (YoY) in Jan-Apr, but it was up 1.7% YoY in May. It might be a blip or it could be a resumption of the long-run trend.
With the herd still building, milk production growth is expected to stay ample through the end of the year unless weather or disease issues knock it back.”
The USDA’s weekly slaughter report showed 47,200 dairy cows sent to slaughter the week ending June 20, up 2,100 head or 4.7% from a year ago. Year to date 1,304,000 had been culled, up 61,200 head or 4.9% from a year ago.
Concern remains regarding the future dairy herd. A new report from CoBank points out that, while it has reached its largest size in 30 years, “Replacement heifers that represent the next generation of milk cows remains historically low.”
“The number of heifers available to enter the milking herd has fallen sharply, dropping to the lowest level since 1978,” said CoBank, and “The decline comes as strong financial incentives are prompting dairy farmers to produce calves destined for the beef supply rather than milk production.”
The report warns “Replacement heifer supplies are projected to shrink even further in 2026 before beginning to rebound in 2027. With replacements in short supply producers are retaining adult dairy cows that would have typically been culled, contributing to the overall increase in the US herd. Producers are making more beef-on-dairy calves, further tightening dairy replacement heifer supplies. This has pushed heifer prices into record territory, well over $3,000 per head.”
“On most dairy farms, net margins are currently being driven by the beef check, not the milk check,” said Corey Geiger, CoBank lead dairy economist. “Five years ago, calf and cull cow sales accounted for 5% of a dairy farm’s bottom line while milk sales represented 95% of their revenue. Today, beef sales account for 12-15% of revenue on many farms, with some operations approaching 20% when measured on a per hundredweight basis. That shift is reshaping the US dairy herd, most notably through the decline in replacement heifers,” Geiger said.
US butter stocks continued to grow in May but were still below those a year ago, again thanks to good domestic demand and continuing strong exports. USDA’s latest Cold Storage report has May stocks at 335.6 million pounds, up 27.7 million pounds or 9.0% from April but 29.2 million or 8.0% below May 2025.
American type cheese stocks grew to 816.9 million pounds, up 3.3 million or 0.4% from the April level, which was revised down 3.9 million pounds. Stocks were down 18.2 million pounds or 2.2% from a year ago.
The other cheese holdings totaled 581.2 million pounds, up 7.8 million pounds or 1.4% from April, and were up 2.1 million pounds or 0.4% from a year ago. The April total was revised down 1.8 million pounds.
The total cheese inventory hit 1.423 billion pounds, up 12.3 million or 0.9% from April, but still 13.9 million pounds or 1.0% below those a year ago.
Increased feed prices in May offset another increase in the All Milk Price and lowered the feed price ratio, following three consecutive gains.
The latest Ag Prices report had May at 2.21, down from 2.26 in April, and compares to 2.25 in May 2025.
The All Milk Price climbed to $21.30 per cwt., with a 4.31% butterfat test, up 50 cents from April’s $20.80 on a 4.34% test, and was up for the fourth month in a row. The May price compares to $21.40 a year ago, which had a 4.24% test.
The national corn price averaged $4.48 per bushel, up 17 cents from April, but still 16 cents below May 2025. Soybeans averaged $11.60 per bushel, up 40 cents from April, and $1.20 per bushel above a year ago. Alfalfa hay averaged $195 per ton, up $10 from April, and $4 above a year ago.
The May cull price for beef and dairy combined averaged $172 per cwt., up $4 from April, $25 above May 2025, and $100.40 above the 2011 base.
The dairy markets were closed Friday in honor of the 4th of July. Cash block Cheddar closed Thursday at $1.4325 per pound, up 1.25 cents on the week, but 25.25 cents below a year ago. The barrels finished at $1.4750, a half-cent lower, and 24.50 cents below a year ago. Sales totaled 36 loads of block on the week, and 181 for the month of June, up from 133 in May. There were no barrel sales this week and nine for the month of June, up from four in May.
Dairy Market News reports that Central region milk output is steady to lighter, as a few days of high temperatures negatively impacted production. Domestic cheese demand from retail and food service was lackluster, DMN said. Export interest was unchanged, but down from earlier in the year.
Milk and cream production continue to show seasonal decreases in the West but needs are being met, according to DMN. Domestic cheese demand is steady to lighter. Export demand is steady. Cheese manufacturers report production is pacing well with demand.
Butter hit $1.70 Monday but closed Thursday at $1.6375, 1.25 cents lower on the week, 3.25 cents below its June 1 post, and 96.75 cents below a year ago. Sales totaled 71 for the week and a whopping 390 for June, up from 380 in May.
Cream production is steady in the Midwest, but high temperatures were expected to have a negative impact in the coming weeks. Plants continue to build inventory ahead of the baking season. Domestic butter demand is steady, international interest is strong, though some contacts said export demand was down from earlier in the year.
Grade A nonfat dry milk jumped 10 cents Monday, hitting $1.6975 per pound, a likely reaction to a fire over the weekend at a powder plant in Tempe, Arizona. It closed the shortened week however at $1.5050, down 9.25 cents on the week, 6.25 cents below its June 1 price, but 24.50 cents above a year ago. Sales for the week totaled 73 loads and 178 for the month of June, up from 116 in May.
CME dry whey held all week at 68.50 cents per pound, a penny below where it was on June 1, but 7.75 cents above a year ago. There were no sales on the week and 15 for the month of June, down 1 from May.
The USDA’s latest Dairy Products report shows Cheese output hit 1.282 billion pounds in May, up 1.1% from April, and 2.0% above May 2025. Output for the five-month period totaled 6.3 billion pounds, up 2.7% from 2025.
Butter production, at 224.3 million pounds, was down 32,000 pounds from April, but was up 7.6 million pounds or 3.5% from a year ago. YTD, 1.1 billion pounds had come out of the churns, up 5.6% from a year ago.
— Lee Mielke is a syndicated broadcast columnist who writes his monthly column Mielke Market that appears in the Lynden Tribune in Country Life.