Relentless Growth in Milk Output
The T.C. Jacoby Weekly Market Report Week Ending September 4, 2026
Relentless growth in milk output and sky-high components kept dairy manufacturers busy in July. Dairy processors made 2.1% more cheese and 5.5% more butter than in July 2025. Domestic demand is not keeping pace with this growth, and neither are exports. Despite another month of record-smashing cheese shipments, year-over-year growth in January through July cheese exports was 19.5 million pounds smaller than the increase in cheese output. Meanwhile butter exports fell short of year-ago volumes in July. In the first seven months of the year, butter output outpaced 2025 volumes by 86 million pounds, while exports grew just 36 million pounds. It’s no surprise, then, to see these markets remain under pressure. CME spot butter fell 2.25ȼ this week to $1.44 per pound. CME spot Cheddar blocks retreated 1.75ȼ to a two-month low of $1.465.
The trade has assumed that greater whey protein concentrate (WPC) and whey protein isolate (WPI) production has restrained dry whey output. Manufacturers are indeed making as much WPC and WPI as possible, but there’s still whey leftover for dryers. Production of dry whey for human consumption topped prior-year volumes by 18.7%, and it’s up 12% for the year to date. Exports are the real story. The rest of the world is hungry for protein too, and the U.S. is the supplier of first choice. Dry whey exports jumped 75% year over year in July. For the year to date, whey powder exports are record high, up 57% from the first seven months of 2025. Exports are lapping up all the growth in output and then some. In fact, whey exports grew nearly three times faster than output in January through July. Robust international demand – particularly from China – has pushed CME spot whey powder to calendar-year highs. This week it rallied a penny and a half to 75.25ȼ.
September 7, 2026
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