U.S. milk production began to drop in July.

The Agriculture Department said the decline from year-earlier levels was the first since February, 1985, with output in the 21 major dairy states totaling 10.5 million pounds, 1% less than a year ago. USDA analysts have forecast a downturn in the second half of 1986 as more milk cows go to market under the government’s dairy herd buyout program. Under the 18-month program, which began in April, more than 1.55 million cows, heifers and calves are being sold for slaughter or export to reduce surplus milk production.