The USDA has raised its forecast for US milk production but lowered its export expectations

 In September, the US Department of Agriculture (USDA) raised its forecasts for the country’s milk production in 2026 and 2027. The increase in supply is expected to be driven by both a larger herd of milking cows and higher milk yields per cow; however, the USDA has also lowered its forecasts for exports of certain dairy products and for the prices of cheese and butter.

Production forecast raised by 0.6 billion pounds

In the World Agricultural Supply and Demand Estimates (WASDE) published on 11 September, the USDA forecasts US milk production in 2026 at 237.2 billion pounds (around 107.6 million tonnes). The August forecast was 236.6 billion pounds. The forecast for 2027 has also been increased by 0.6 billion pounds – from 238.0 to 238.6 billion pounds (approximately 108.2 million tonnes).

Compared with 2025, when the US produced 231.7 billion pounds of milk, the current USDA forecast implies a production increase of approximately 2.4 per cent in 2026 and a further increase of around 0.6 per cent in 2027.

Growth is supported by both herd size and productivity

The USDA notes that the September forecast has been revised upwards to reflect the latest milk production data. For 2026 and 2027, the assumptions regarding both the average number of milking cows and the milk yield per cow have been revised upwards.

This is a significant change to the forecast: the higher projected US milk supply is no longer linked solely to herd expansion. Higher total milk production is also expected to be supported by productivity growth.

Higher supply does not mean higher exports

Alongside the higher production forecast, the USDA has lowered its expectations for commercial dairy product exports in 2026 and 2027. When calculated on a milk-fat basis, the forecast has been reduced mainly due to lower projected exports of cheese and butter. In terms of skimmed-milk solids equivalent, the export forecast is being reduced due to weaker shipments of whey and skimmed-milk powder.

The revision to the 2027 export forecast in terms of milk fat is more pronounced: in August, the USDA forecast 21.3 billion pounds, whilst in September it forecast 20.3 billion pounds in milk equivalent. At the same time, the forecast for domestic consumption has been revised upwards.

Cheese and butter price forecasts are falling

The USDA has also lowered its price forecasts for cheese and butter. In the September forecast, the average price of cheese for 2026 was reduced from 1.575 to 1.570 US dollars per pound, and that of butter – from US$1.645 to US$1.595 per pound. The adjustments for 2027 are more significant: the forecast for cheese has been lowered from US$1.665 to US$1.645, and for butter – from US$1.705 to US$1.625 per pound.

The trend for skimmed milk powder prices is the opposite – the forecast for these has been raised for both 2026 and 2027. Due to the differing price movements across products, the overall milk purchase price forecast (All Milk Price) for 2026 has even been raised slightly – from 19.85 to 19.90 US dollars per 100 pounds. For 2027, it has been left unchanged at 19.80 US dollars per 100 pounds.

A signal for the global dairy market

The US is one of the world’s largest milk producers and a major exporter of dairy products, so the country’s growing supply is important for the balance of the global market. However, the USDA’s September forecast also indicates that the additional milk supply will not necessarily translate automatically into higher exports.

At present, this is a forecast rather than the actual production outcome for 2026 or 2027. The future direction of the market will depend on whether the projected growth in herd size and productivity is sustained, and how the domestic market and exports will absorb the increased US milk supply.