News and Articles

• USDA raised its Class III milk price forecast to $17.00/cwt, supported by cheese and whey strength.
• Class IV milk was lifted to $19.95/cwt on strong nonfat dry milk prices.
• The all-milk price forecast increased to $21.25/cwt.
• Cheese and butter prices are expected to rise modestly next year.
• Whey and nonfat dry milk prices are expected to soften next year.
• The US dairy herd is about 200,000 head larger year over year, supporting milk supply growth.

The United States Department of Agriculture raised its 2026 milk and cheese price forecasts in its May World Agricultural Outlook Board report, supported by strong whey markets and steady domestic cheese demand.

The Class III milk price forecast was lifted to $17.00 per hundredweight, up from the April estimate. The Class IV forecast also moved higher, reaching $19.95 per hundredweight, helped by firm nonfat dry milk prices.

World Agricultural Outlook Board Chair Mark Jekanowski said very strong nonfat dry milk prices were the main driver behind the higher Class IV forecast. Cheese and whey performance supported the increase in Class III milk. The all-milk price is now forecast at $21.25 per hundredweight, also above the prior estimate.

The outlook for next year is more mixed. Cheese prices are expected to rise modestly, by about $0.07 per pound year over year. Butter prices are also projected to increase. Whey and nonfat dry milk prices, however, are expected to soften. The all-milk price for next year is forecast at $20.95 per hundredweight, slightly below this year’s level.

On the supply side, the US dairy herd remains stable and is running about 200,000 head above year-earlier levels. Production per cow is also expected to increase. More cows, combined with higher output per animal, should keep total milk supply growing and may limit further upside for cheese and dairy ingredient prices.

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For cheese buyers with index-linked contracts, the May forecast raises the cost-planning baseline for second-half procurement. Spot price dips may still occur during the spring milk flush, when raw milk availability can pressure CME cash markets. The USDA forecast, however, suggests that below-trend pricing is unlikely to last once seasonal milk volumes ease.

Buyers of cheddar, mozzarella, processed cheese blends, and dairy ingredients used in food manufacturing and foodservice should treat current spring softness as a short-term buying opportunity. Cheese is likely to remain an elevated cost line compared with pre-2024 levels, making contract timing and volume commitments important for procurement teams.