US butter makers are running flat out, yet the cold store keeps emptying. Stocks ended May at 335.6m lbs, the lowest May reading since 2022 and down 8% on the year. The obvious explanation, that someone stopped churning, is wrong: production hit a record 916m lbs over the first four months of 2026, up 6.1%.

The answer is exports. US butter shipments more than doubled year to date, to 40,501 mt from 19,353 a year earlier. That extra product heading abroad absorbed almost all of the extra production, which is why the US can make more butter than ever and still draw down inventory. CME spot reflected the tension this week, dropping midweek before closing up about 6%.

The wildcard now is the weather. Europe is in record heat and the US is next in line, with Vesper’s heat-stress reading at moderate this week before easing into early July. Heat hits cows first, pressuring fluid milk and softening output. After a spring spent asking when the milk glut would end, the question has flipped to what happens if the heat ends it.

Cheese is the softer corner of the complex. CME blocks eased about 2% on the week, and unlike butter the cold store offers less of a cushion, with US cheese stocks only 1% below last year. The puzzle is that exports have been strong, up 44% year to date, yet spot keeps sliding. The pull is fading just as the season turns: international buyers are less active despite lower prices, European exporters are competing harder (GDT Mozzarella fell 5% at the latest auction), and EU buyers have largely covered their Q3 needs. By category, EU Cheddar has eased on plentiful curd, Mozzarella is the most balanced and stays competitive into export channels, and Emmental is holding sideways.

The near-term read for US sellers is cautious. With the market leaning on export demand that is itself softening, Vesper’s analysts see little room for a meaningful cheese recovery before activity picks up in August. The one thing that could change the math quickly is the heat.

For the full US dairy analysis, visit: https://app.vespertool.com/market-analysis/3147?commodity=dairy