Butter Market News

Dairy Demand Keeps Pace With Rising Milk Production

Thu, 28 May 2026 20:06:20 GMT

April milk production numbers are in and have increased 2.8 percent from April 2025. Milk production totaled 19.2 billion pounds for April and after March revisions, March was up 71 million pounds or 0.4 percent from last month’s estimates. Production did decrease slightly from last month, however still well above last year.

(USDA)

The number of cows has also increased above even the highest quarter of 2025 coming in at 9,618,000 head. That is trending 120,000 above last year’s average. Milk production per cow is 6,093 pounds for first quarter, close to last year’s average. The combination of the two data points leads to milk production totaling 58,598 million pounds for the first quarter of 2026. That is 3 percent higher than first quarter of 2025.

With all of the extra milk production we have seen in recent years, the question is, where does all the milk go? Demand has steadily increased with the higher availability of milk supply. On a milk-fat basis, exports in the first 3 months of 2026 totaled 5,001 million pounds, about 40.6 percent higher than last year. On a skim-solids basis, exports totaled 12,190 million pounds, about 5.7 percent higher than the same period for 2025.

International demand is strong, especially for cheese and butterfat productions. Due to the quantity of supply the U.S. has available, our pricing is competitive, our production is rampant so exports are expected to continue to increase as we move further into 2026.

(USDA)

Domestic use for all dairy products was also higher in the first quarter of 2026. On a milkfat basis, domestic use was 52,719 million pounds, up 0.9 percent higher than the same period a year ago. On a skim-solids basis, domestic use was 47,108 million pounts, up 3.3 percent from 2025. Dry skim milk products and whey protein concentrates have had the largest year over year increases, up 22 percent for dry skim production and 74 percent higher for whey protein concentrates, on par for the increasing demand for protein products. Domestic usage for butter and cheese have also increased from 2025 however domestic uses for dry why and lactose have declined this year.

Overall, with the export program thriving, and domestic usage increasing for most products, the 2026 March ending stocks declined 5.9 percent on a milkfat basis and 5.7 percent on a skim-solid basis. Butter, American cheese, dry skim milk and whey protein concentrate stocks all declined year over year despite the rising increases in production.

Forecasts for 2026 all seem to be positive for U.S. Dairy products. The USDA believes exports will continue to increase due to high global demand. We could also see more demand from China as trade talks have been positive and China has committed to buying more U.S. Agricultural products over the next few years. Details on how much dairy that will include are still unknown.

Overall, the U.S. dairy market has a lot to look forward to. While naysayers are focused on the overwhelming supply, the story has turned favorable for demand and it is not slowing down anytime soon.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions

Cheese Exports Hit All-Time High in March as Global Appetite Grows

Tue, 12 May 2026 13:00:00 GMT

Records were broken with over 63,435 MT exported in the month of March of cheese alone, an all-time high for single month exports, jumping over 29% from March of 2025. Butterfat and AMF exports also set a single month record at 17,074 MT shipped, 109.9% higher than March of 2025.

The world wants U.S. cheese with a shift in desire for western-style foods, more restaurant and food service demand at a competitive price not found in other countries due to our abundance of supply available her in the United States. Cheese exports are trending higher, with the first quarter of 2026 totaling an increase of 23.2% higher year over year.

Meanwhile, butter production was up 1.2% in March while butter exports year-to-date are up nearly 93.2% from the same quarter last year. Which raises the question if the U.S. can keep up with the export demand despite the increasing production. Churns are running seven days a week with growing milk and cream supply and spring flush is here with outstanding weather for cow comfort.

(USDA)

While cheese and butterfat are the stars of the show, milk powders are the most vulnerable in the export category. Nonfat dry milk (NFDM) and skim milk powder (SMP) broke their four-month year over year growth streak with a decline of 8% lower volume in the month of March 2026 when compared to the extremely high volume traded in March of 2026. All is not lost though, March 2026 was still the highest export volume we’ve seen in five months, it’s comparison to March 2025, being the highest export volume of the whole year, makes the year over year data look poorer than it is.

(USDA)

When looking at the dairy export data, the volume is certainly impressive, however the economic impact is outstanding. The value of dairy products exported reached the high dollar amount of $892.4 million in March, the highest monthly value seen in nearly four years. This is an increase of 6% more value year over year as reported from the USDA’s Foreign Agricultural Service.

The biggest markets for U.S. exports of dairy products in total value during the first quarter of the year were Mexico at $675.4 million, up 10% YoY, Canada who declined 19% YoY still came in second with total dollars purchased coming in at $295.4 million, Japan at $156.4 million, up 8%; South Korea at $145.5 million, up 19%; and China dropping 24% in 2026 with ongoing trade negotiations coming in at $123.9 million. All other major customers were under $100 million with anywhere from Colombia up 77% YoY to Philippines down 10% with most showing big increases YoY.

So, while the market wants to focus on the massive amount of production the United States is producing, the export program continues to be a bright light. World demand is continuing to increase, and we have the supply to feed it.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

What’s Driving a Better Dairy Outlook in the Second Half of 2026

Tue, 21 Apr 2026 19:59:57 GMT

Milk prices started 2026 on a soft note, but the outlook has improved somewhat as the year has progressed. Futures markets now suggest slightly stronger prices later in the year, offering some optimism for dairy margins.

Still, the improvement is measured. Strong protein demand, shifting consumer habits, global trade dynamics and record beef values are all shaping today’s dairy outlook. Those same forces could also introduce volatility over the next year.

“We have a lot better story to tell today than we did a few weeks ago,” says Kathleen Wolfley, market intelligence director with Ever.Ag. “We’re looking at a market today that is significantly higher than where we were trading at the beginning of the year. Class IV prices are around $19 a hundredweight. Class III prices are around $18 a hundredweight average.”

Even with prices looking a bit better, tight budgets and higher costs are still weighing on dairy demand. During a recent Standard Dairy Consultants webinar, Wolfley and Mike North, president of the producer division at Ever.Ag, gave their take on the current economic outlook for dairy.

A Split Consumer Economy

Energy costs are emerging as one of the biggest economic pressures affecting food demand, particularly for middle- and lower-income households.

“Fuel prices are the top item I’ve been watching here in the last few weeks,” Wolfley says. “I’m in New York, so if I pay over $4 a gallon, it pinches a little bit more than it did back in February when gas prices were in the mid-$2 range.”

But when fuel gets more expensive, family budgets feel it in a hurry.

“In our estimation, it’s costing a family $30 to $40 more per week to fill the tank. That’s basically takeout for a family of four,” Wolfley says. “It’s an easy way to cut back, especially in an environment where folks are feeling pinched.”

The result is a split consumer economy.

“You have some consumers, middle-to-lower income, that consistently say, ‘Hey, I am struggling with affordability,’ versus higher-income consumers that are going to feel the pinch of these energy prices a lot less,” Wolfley adds. “They’ve been absorbing the inflation over the last few years and just kind of taking it in stride.”

That uneven spending environment creates uncertainty for dairy demand.

“I’m a bit concerned about domestic demand here in the U.S. and the ability of domestic demand to recover on the backside of all this uncertainty,” Wolfley notes.

Protein Demand Off the Charts

(Stock Photo)

If one theme defines today’s dairy markets, it is protein. Nonfat dry milk, skim milk powder and whey are increasingly tied to demand for high-protein foods and beverages.

“We’re sitting at $2.06 per pound on the CME nonfat dry milk market, Wolfley says. “That’s a really exciting move, especially for those of you that have a lot of Class IV exposure.”

But the story goes beyond price. Milk solids are increasingly moving into higher-value uses.

“There’s solids now going into cheese production or yogurt production, or into ice cream, or even into the fluid bottle that is no longer making its way into the dryers,” she adds.

Ultrafiltered milk and protein beverages are capturing a growing share of milk solids, pulling more wet solids away from traditional drying channels and into high-protein beverage production. At the same time, U.S. powder markets remain tighter than global supplies, creating added competition pressure for exporters.

“It’s really important to consider that the tightness in this nonfat dry milk market is just a U.S. issue,” she says. “In the rest of the world, they’ve got a lot of supply, and they’re making a lot of powder.”

European milk production rose about 5% year-over-year early in 2026, increasing global powder availability. With U.S. powder priced 50¢ to 60¢ above global competitors, export buyers may start looking elsewhere.

“If you’re a buyer in Southeast Asia, why would you go to the U.S. for your nonfat dry milk or your skim milk powder needs when you can buy it cheaper out of New Zealand or the EU?” Wolfley asks.

Mexico, one of the largest buyers of U.S. dairy products, may already be exploring alternatives.

“I think those Mexican buyers are now looking at alternate sources to say, ‘Can I get it cheaper out of the EU even with the freight costs? Can I go to the GDT auction and get supply that helps alleviate some of that price pressure?’” she says.

For U.S. producers, that means the current rally in nonfat prices could face pressure if exports slow.

Butter Markets Swing with Global Trade

(iStock)

Butter markets have already experienced volatility this year.

“Butter prices rallied all the way above $2 a pound to begin the month of March,” Wolfley says. “Fast forward six weeks, and we’re basically back to where we were in early February.”

The early butter rally was largely fueled by strong export demand, with significant volumes moving through the CME spot market and a steady flow of fat heading into international channels.

February butter exports totaled about 22 million lb., with a large share headed to the Middle East. But geopolitical tensions quickly disrupted that trade. As exports slowed, more butter stayed in the domestic market.

“I think that does open up more potential that we’re keeping fat in the domestic market that may have otherwise been earmarked for the international space,” Wolfley says.

Even so, retail demand has been strong.

“Butter has been crushing it. Cheap butter has allowed retailers to promote aggressively. To see the four-week average on butter and butter-blend sales up 10% is pretty astounding,” she notes.

Still, Wolfley cautions the Class IV complex faces potential downside risk if powder markets weaken or exports slow.

Cheese Markets Lean on Exports

Cheese markets tell a similar story of volatility and global competition. Wolfley points to how prices dropped sharply earlier in the year.

“We hit sub-$1.30 cheese in mid-January. Sub-$1.30 cheese is pretty dang cheap, especially when you compare it to the $1.70 to $1.80 price points at the end of October,” she says.

Those low prices encouraged stronger demand.

“Low prices tend to cure low prices,” Wolfley adds. “We’ve seen more advertising in food service, more promotional activity in retail and opportunities in the export market.”

Cheese production continues to climb, with February output up 4% compared to a year earlier. At the same time, exports have helped absorb some of that additional supply and keep the market more balanced.

“We shipped 129 million lbs. of cheese in February, 30% more than last year, a record-high volume,” Wolfley says. “At the same time, we’re importing less.”

Exports have become essential to keeping the market balanced.

“It tells me we have to stay competitive,” Wolfley says. “If we want to move that cheese, and the domestic consumer isn’t saying ‘Hey, I want a bunch more,’ it ultimately comes down to staying competitive versus the European mozzarella market.”

Price gaps between U.S. and European cheese have narrowed recently, reducing the cushion U.S. exporters have relied on to stay competitive in global markets. With that spread tightening, the risk of oversupply in the domestic cheese market increases if export demand softens.

“Without a big splash into the international marketplace, we could find ourselves with a lot of product looking for a home,” Wolfley notes.

GLP-1 Drugs Shift Dairy Demand

(Lori Hays)

Another emerging factor shaping dairy consumption is the rapid rise of GLP-1 medications used for weight loss and diabetes management.

“I joke that you can’t talk about dairy now without talking about GLP-1, because I think it is a really important piece of the puzzle,” Wolfley says. “About 12% of U.S. adults are using it today, compared to 6% in 2024.”

These drugs reduce overall food intake, with users typically consuming about 20% to 30% fewer calories, and that shift is starting to show up in dairy demand, particularly across categories tied to indulgence and higher-calorie foods.

“We’re seeing less pizza consumption because it doesn’t sit well with people’s stomachs on GLP-1. We’re seeing less ice cream consumption,” Wolfley says.

But the change is not entirely negative for dairy. Protein-rich foods are gaining traction.

“We’re seeing more cottage cheese consumption,” Wolfley adds. “There’s a big boom in cottage cheese production and investment because of opportunities to hit high protein needs. There’s also growth in yogurt and whey protein.”

The shift may ultimately move dairy demand away from indulgent products and toward nutrient dense, protein-focused foods.

Milk Production Expands

At the same time demand patterns are shifting, milk production continues to grow.

“We’ve asked for more milk in terms of processing,” Wolfley says. “We’ve added a lot of capacity in a short amount of time here in the U.S. — about $11 billion worth of investment expected between 2025 and 2030 — and producers have responded.”

U.S. milk production rose nearly 3% in February, showing continued strength in output as the year gets underway. Cow numbers are also increasing, up about 211,000 head year over year, signaling ongoing herd expansion across the industry. At the same time, productivity continues to improve.

“Every cow that’s out there is making more milk today than she was last year and the year before that, and she’s making more components,” Wolfley says.

Advances in genetics and feeding strategies are pushing component levels higher across the U.S. dairy herd. As a result, Wolfley has adjusted her production outlook, reflecting stronger-than-expected gains in milk output potential.

“If you’d asked me this question at the beginning of January, I would have said we might see contraction by the end of 2026,” Wolfley says. “I’m singing a little bit of a different tune today. I expect around 1.5% growth in milk production in 2026 compared to 2025.”

Beef-on-Dairy Income Remains Strong

(Wyatt Bechtel)

Strong beef markets have added another layer to the dairy profitability picture. What once served as a modest income source has grown significantly.

“The more crowds of producers I get in front of, the more I hear how important beef revenue is to the operation,” North says. “This went from casual spending money to something that’s much more substantive and really a big part of the overall profitability picture on a dairy.”

Revenue from beef-on-dairy has increased sharply.

“From late 2022, we estimated revenue on a per hundredweight basis of beef to the bottom line of about $1 to $1.50. Today, that number has grown to anywhere between $4.50 to $5,” North says.

Day-old beef-on-dairy calf prices reflect the strength of the market.

“Recently reported numbers coming in from out of the East Coast show $1,700 for a wet calf,” North says. “It seems insane, but the market has been going up for the better part of three and a half years.”

These high prices are sending a strong message to producers, pushing them to take a closer look at how beef-on-dairy plays a role on their operation.

“If you aren’t addressing beef prices in your operation right now, what are you waiting for? These prices are called record prices because we don’t get to touch them very often,” North says.

Managing Risk in a Volatile Environment

Feed markets add another layer of uncertainty. Large U.S. crops could keep pressure on corn prices, but geopolitical events and energy markets continue to create volatility.

For dairy producers, it’s another reminder to keep an eye on risk.

“There are plenty of headwinds that crude oil prices bring into our economy,” North says. “GLP-1s are real. We see big growth as we come through 2026. It’s going to create domestic headwinds for demand that we may not fully understand yet.”

Even with those challenges, the outlook for margins is cautiously optimistic.

“We are cautiously optimistic about margins as we look at the 2026 year,” North notes. “But we cannot overlook managing the risk around strong beef and dairy prices. The bottom line is: manage risk. It’s too volatile to just leave it to chance.”

An Industry in Transition

Taken together, today’s dairy markets reflect an industry in transition. Prices are improving but remain tied closely to global trade. Protein demand continues to reshape product markets. New consumer trends and medications are shifting how dairy is consumed.

At the same time, milk production continues to expand, beef-on-dairy revenue is strengthening farm balance sheets and risk management tools are playing a larger role in protecting margins.

The opportunity for growth remains strong. But in a market like this, North and Wolfley say it comes down to making the most of the good opportunities while keeping a handle on the risks.

Record Breaking Prices in Grade A Non-Fat Dry Milk

Wed, 15 Apr 2026 13:49:51 GMT

The slow sneak higher Grade A Non-Fat Dry Milk has caught traders by surprise as the rest of the dairy sector is knee deep in doom and gloom from high milk production woes. The last week has left everyone in awe at the strength of the cash market to continue to find demand for Non-Fat Dry Milk and Skim Milk Powders.

(Sarah Jungman)

Exports have been strong; however traders are beginning to speculate as to when we will hit the threshold of value to the world market, especially in the last week as prices skyrocketed higher. At some point, high prices weigh on demand, and the fear is that we are there now. But buyers keep buying, even today, after an impressive close last week, buyers secured another 5 loads, increasing the price to new heights by another 1.75 cents.

Class IV milk has reaped the benefits of the strength of Nonfat Dry Milk as butter has fallen back in price despite the strength of the milk powders. For every penny that Grade A Nonfat Dry Milk increases, it heavily influences the Class IV milk price by approximately 9 cents. Dry Whey, on the other hand, only impacts price by 6 cents for every 1 cent move.

While the question of if the demand will continue is on the forethought of traders’ minds, what goes up usually comes back down. In the meantime, we are going to be thankful for the one bit of shining light in the dairy market today and hope to reap the benefits in the Class IV price for a bit longer.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

More Cows, More Milk, More Global Concerns

Tue, 31 Mar 2026 16:05:25 GMT

The USDA released the February Milk Production report shortly after my last article, showing much of the same numbers as expected. Milk production in the United States is higher compared to a year ago, coming in at 18.3 million pounds, that is 2.9% higher than February 2025. However, that is 595 million pounds lower than the January report.

Milk cow numbers also increased from 2025, to 9.615 million cows, that is 204,000 cows more than a year ago. What did change in February is production per cow decreased 168 lbs., the lowest production per cow we’ve seen in a year.

Class IV milk has been steadily increasing in prices for the last 45 days due to strength in the butter and powder markets. Butter continues to see support from the strong export market as well as Easter season demand, but the Cold Storage Report showed an increase in inventory. Butter inventory is 253.8 million lbs., an increase of 27 million lbs. from last month, however still 17% from a year ago.

Cream supplies have gotten tighter than expected but not enough to bring a big influx of buying the cash market. Milk components have declined but still higher than last year and with spring flush around the corner, they have not gotten in a hurry to secure supply, leading to some weakness in the market.

There is a lot of talk about export demand facing its own set of challenges. With fuel and energy prices rallying, the cost of commodities and moving products could be concerning for world demand. Insurance costs of ships, fuel to move products are on the forefront of fears, however it goes deeper than that with concerns over the availability of the petroleum products to make the plastic containers for dairy products.

Some exports fear that even if the Strait of Hormuz gets back to business-as-usual today, should the conflict be resolved, we could still cause issues for months to come with the disruption in the supply chain. Between fuel cost, insurance costs, energy costs, or something as small as a container shortage, there are a lot of unknowns the dairy market has yet to face.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

The Butter Run: A Hands-On Way to Connect With Dairy

Wed, 18 Mar 2026 19:45:14 GMT

A new fitness trend is shaking up social media — literally. Known as the “butter run” or “churning and burning,” runners are making fresh butter while jogging.

The trend began when two Oregon runners, Libby Cope and Jacob Arnold, wondered if the motion of running could churn cream into butter. They placed heavy cream and a pinch of salt in sealed bags, strapped them to their bodies and went for a 5-mile jog.

View this post on Instagram

A post shared by Libby Claire (@lib_claire)

The agitation from the movement caused the fat in the cream to separate from the liquid, resulting in fresh butter. Their video demonstrating the process has now received over 2 million views on TikTok and 11 million views on Instagram.

View this post on Instagram

A post shared by Bodz | Endurance Athlete (@ironbodz)

Since then, runners around the world have taken up butter runs, posting videos from trails and parks across North America, Europe and Asia. Many strap bags of cream to their backpacks, and some experiment with flavors like herbs, honey or garlic, combining the hands-on process with a culinary twist. The trend has gone viral on social media, putting butter in the spotlight.

View this post on Instagram

A post shared by Gemma Upson-McPike (@gemmaupsonmcpike)

From a dairy perspective, the trend provides an opportunity to show how simple dairy ingredients can easily be transformed into a healthy product. By mixing fitness with a bit of fun, consumers are finding a new way to connect with dairy.

Global Demand Lifts U.S. Dairy Exports to Near-Record Levels

Tue, 03 Mar 2026 15:05:04 GMT

Every week, dairy news articles circle the impact of the growing milk production in the United States and what factors could possibly help support prices despite the looming supply. The one bright spot helping to elevate the massive supply issue is the extreme growth in exports we’ve seen over the last few years.

In 2025, the United States approached near record export values at a whopping $9.51 billion in dairy products exported. Second to 2022 in dollars of products shipped to other countries. That equates to a 15% increase year over year from 2024 in dollars and 5% more in total volume of dairy products exported.

Currently, the U.S. sells to 143 countries which saw the biggest increase in demand from a wide range of buyers in the Middle East, South Asia, North Africa and South America. We are third largest exporter of dairy products in the world.

In 2025, the U.S. saw a huge increase in butter and milk fat shipments, up over 165% from 2024. Whole milk powder also saw a massive increase, coming in 56% higher than 2024. Cheese and butter product demand is strong both domestically and abroad.

Globally, milk supply is plentiful with the U.S., New Zealand, and the European Union increasing steady. It can be seen when comparing prices as the World Milk Price which has been falling since early last June.

With supply being plentiful and exports strong, the world has all eyes on the conflict in the Middle East. Over the weekend, tensions between Iran and the United States led to strikes on U.S. bases in Bahrain and buildings in Dubai. While not a direct impact to the dairy industry, the tensions can be felt throughout.

For shipments, insurance and freight costs will be a factor, especially near the Strait of Hormuz. Most cargos will see increased cost with the added risk as well as some energy cost spikes, given the impact on crude oil. Insurance companies either drop coverage or increase prices enough to discourage travel through those areas as we saw with the Russian/Ukrainian war. Bottlenecks in logistics may also be a factor going forward.

As far as changes that will directly affect dairy, it is too soon to tell but something the United States, EU and New Zealand are keeping a close eye on. Butter so far has not factored in a risk to demand as Monday trade was higher on the day. Volatility is to be expected whether it comes directly in the futures markets for dairy products or indirectly from the impact seen on the stock market. This can create marketing opportunities, especially in the deferred months which have surpassed the $18 mark in Class III Milk futures for June and beyond.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

Full-Fat Dairy Steps into the Spotlight in New Dietary Guidelines

Fri, 27 Feb 2026 18:16:18 GMT

For years, full-fat dairy had a target on its back, painting it out to be a food product consumers should avoid. Past dietary guidelines encouraged Americans to choose lower-fat or fat-free dairy whenever possible, which shaped how families shopped and how brands positioned their products.

But all of this changed dramatically earlier this year as new federal dietary guidelines formally embraced full-fat dairy as part of a healthy eating pattern.

According to Katie Brown, president of National Dairy Council, this change validates more than a century of farmer-funded research and opens the door to new opportunities across the dairy supply chain. She says this long‑awaited recognition is a chance for new opportunities for the entire dairy community, from the farm level to processors and brands.

Dairy Front and Center

During the release of the new dietary guidelines, several messages were established, with dairy ranking high on the list.

Eat the right amount for you
Prioritize protein foods at every meal
Consume dairy
Eat vegetables and fruits throughout the day
Incorporate healthy fats
Focus on whole grains
Limit highly processed foods, added sugars and refined carbohydrates
Limit alcoholic beverages

“When the guidelines came out, it was a pretty clear message: eat real food,” Brown says. “Dairy foods fit into that message perfectly.”

With dairy showing up in multiple parts of the guidelines — as an excellent source of protein, as a recommended food group and as part of the healthy fats conversation — Brown say it’s clear the guidelines recognize dairy’s versatility across several nutrition areas.

Full-Fat is Back

With changes to the healthy fats guidance, the new dietary guidelines now include dairy at all fat levels — something that hasn’t appeared in previous editions. Foods like whole milk, full‑fat yogurt and cheese are now recognized as options that can fit into a balanced diet.

“It’s a meaningful shift that gives consumers more choice and acknowledges the evolving research on dairy fat,” Brown says. “Dairy foods at all fat levels, including whole milk, full-fat yogurt and cheese are now included in the dairy food group in the dietary guidelines.”

Although the guidelines mark a change on paper, Brown notes consumer buying habits have been moving in this direction for a while.

“Nearly 50% of all milk sold in grocery stores is full-fat dairy,” Brown says. “Consumers are already there. It’s almost like the guidelines are catching up with what consumers know, like, trust and are doing.”

She adds taste has been a major driver.

“Now, the science is aligning with that preference in a way that reinforces dairy’s value, not just its taste. It’s about nutrition, flexibility and choice,” Brown says.

Opportunities for Farmers and Processors

With consumers seeking real, minimally processed foods with simple ingredient lists, full-fat dairy checks off several criteria in the dietary guidelines. Brown describes it as the “perfect trifecta,” offering high-quality protein, healthy fats and a wholesome, real-food option.

This shift also opens doors for marketing, as brands look for ways to highlight the benefits of full-fat dairy. Major consumer packaged goods companies are exploring how to leverage the updated guidelines to promote dairy products and connect with changing consumer preferences.

“Brands have been reaching out to understand how they can communicate the updated guidance,” Brown says. “They see it as an opportunity to highlight the positive news for dairy.”

On the processor side, Brown says the Innovation Center for U.S. Dairy includes more than 70% of dairy brands and companies. A new chapter focused on milk and full-fat dairy is being added to the industry playbook to help companies develop marketing and product innovation strategies that reflect the latest research and updated dietary guidelines.

The center’s health and well-being committee focuses on opportunities in areas such as maternal and child health, gut health, heart health and metabolic health. By translating new nutrition research into products and messaging, the group helps processors meet consumer demand for healthy, real-food options.

“We’ve put together messages that are backed by science and have also been tested by consumers,” Brown adds. “And we know they resonate.”

A Century of Science Pays Off

Brown is quick to point out including full-fat dairy in the new dietary guidelines didn’t happen overnight. It reflects a long-term commitment by dairy farmers to nutrition science.

“For more than 100 years, dairy farmers have invested in research,” she adds. “Few food categories have the same depth of science supporting the health and wellness benefits of dairy foods.”

She credits both dairy farmers and scientific leaders, including former chief science officer Greg Miller, PhD for recognizing the potential of full-fat dairy early and supporting the research behind it.

“Checkoff has funded 80 studies on full-fat dairy, milk and other dairy foods, which in turn have inspired more than 600 additional studies by independent researchers,” Brown says. “Together, this creates a large body of evidence that helped inform the updated guidelines, and it’s a reflection of the strength of the science.”

That research provided a broader view of dairy, emphasizing its overall nutritional value rather than focusing solely on fat content.

“Guidelines of the past probably over indexed on restriction, often emphasizing what to limit rather than what to include,” Brown notes. “What the science has shifted and shown us along the way is that there’s so many health and wellness benefits to embracing a diet that includes nutrient-rich foods like dairy foods at all fat levels.”

With the science and guidelines now aligned, consumers have more dairy choices across a range of fat levels, setting the stage for dairy to play a central role in the real food movement — delivering taste, tradition and real health benefits in every glass, cup and slice.

U.S. Dairy Exports Surge to $9.51 Billion in 2025

Fri, 20 Feb 2026 17:50:01 GMT

The U.S. dairy industry closed 2025 just shy of an all-time export record, signaling strong global demand and growing diversification across international markets.

According to calendar year 2025 data released by USDA, U.S. dairy exports reached $9.51 billion, narrowly missing the record $9.54 billion set in 2022. That total is up 15% from 2024, showing how U.S. dairy continues to gain ground in global markets.

In addition to higher value, export volumes also increased. According to the International Dairy Foods Association (IDFA), U.S. dairy exports totaled 2.8 million metric tons in 2025, up 5% from the previous year. Growth was driven largely by expanding demand in the Middle East, North Africa, South Asia and South America, regions that are playing an increasing role in strengthening and diversifying U.S. dairy exports.

“This near-record year demonstrates that U.S. dairy exporters are succeeding in diversifying both markets and product portfolios,” says Michael Dykes, IDFA president and CEO. “Growth across North Africa, South Asia, the Middle East, South America and the European Union reflects a deliberate strategy to reduce concentration risk, deepen customer relationships and compete in emerging and established markets alike. Today, U.S. dairy exports reach 143 countries, and our product mix spans consumer-ready foods, high-value ingredients and specialized nutrition products — a level of diversification that strengthens long-term export resilience.”

Regional Growth Highlights

Export growth in 2025 was broad-based, with several regions posting double- and even triple-digit gains. The following breakdown from IDFA highlights how U.S. dairy exports performed by region:

North Africa — Exports surged 107% by value and 69% by volume, reflecting accelerating demand across the region.
Middle East — Exports grew 48% by value and 19% by volume, driven largely by processed cheese, sweetened milk powder, whey protein powder and concentrate, lactose and natural milk products.
South Asia — Exports grew 63% by value and 25% by volume, led by strong growth in India, Pakistan and Sri Lanka. U.S. dairy exports to India alone increased 71% by value and 31% by volume.
South America — Exports grew 14% by value and 7% by volume.
Central America — Exports grew 19% by value and 13% by volume.
North America — Exports grew 6% by value and 2% by volume.
East Asia — Exports grew 14% by value and 2% by volume.
European Union — Exports increased 61% by value and 69% by volume.
Sub-Saharan Africa — Exports grew 9% by value.

Higher-Fat Products Help Drive Momentum

Demand for higher-fat dairy products saw a sharp increase in 2025, contributing to overall growth in U.S. dairy exports. Global export volumes rose by approximately 165% for butter and milk fat and by 56% for whole milk powders, reflecting shifts in global purchasing patterns and increased use of these products in both consumer foods and food manufacturing.

Several other categories also posted solid gains. Dairy spreads, whey protein concentrates and cheese were among the stronger-performing products, indicating continued demand for both value-added ingredients and consumer-ready dairy products across a range of markets.

Combined with broader regional growth, higher export volumes and near-record export value, U.S. dairy continues to expand its role in international markets.

“Looking ahead, our industry is poised for even greater growth,” Dykes says. “A renewed trade agenda that expands market access, strengthens enforcement and opens new opportunities in Southeast Asia, Latin America, North Africa and the Middle East will allow U.S. dairy exporters to compete and win in markets around the globe.”

With momentum already built in 2025, the outlook for 2026 points toward continued export gains fueled by expanding opportunities.

USDA to Buy $148 Million in Dairy Products, But Will it be a Major Market Mover?

Thu, 19 Feb 2026 19:14:47 GMT

USDA is helping create an additional outlet for milk, cheese and butter by purchasing millions of dollars’ worth of dairy products for food banks and federal nutrition programs.

In a recent announcement, U.S. Secretary of Agriculture Brooke Rollins shared USDA’s plans to purchase up to $263 million in agricultural products through the department’s Section 32 authority under the Agriculture Act of 1935. Of that total, nearly $148 million is earmarked specifically for dairy products, including butter, cheese and milk.

“These staples are essential for feeding families and sustaining America’s agricultural economy,” Rollins says, emphasizing the purchases are designed to deliver real food to Americans while injecting dollars back into rural communities.

The move by USDA closely aligns with a formal request made by the National Milk Producers Federation (NMPF) late last year.

“These are almost exactly the numbers that we sent [in] a request to the Secretary on Nov. 25,” says Gregg Doud, president and CEO of NMPF, during an interview with “AgriTalk” host, Chip Flory. “We ran our analysis, suggested what we thought aligned with USDA’s historical dairy Section 32 purchases, and USDA agreed and announced it this morning.”

What’s Included for Dairy

According to USDA, the planned dairy purchases will include:

Butter: $75 million
Cheddar cheese and cheese products: $32.5 million
Swiss cheese: $10 million
Fresh fluid milk: $20.5 million
Ultra-high temperature (UHT) milk: $10 million

For dairy farmers, the purchases could help absorb product during periods of tight margins and volatile milk prices.

“Dairy farmers have shared in the struggles faced throughout the agricultural economy, and these purchases will provide important relief to producers who will benefit from the additional demand, helping them provide nutritious dairy products to Americans and the world,” Doud says.

He notes NMPF has been particularly focused on the butter market, where supply and demand have been misaligned.

“We were especially looking at the butter market,” he says. “Right now, we’re looking for any demand under any rock we can find in the dairy business.”

Rollins emphasized the purchases are designed to support not only dairy farmers, but also the broader network of jobs tied to dairy production.

“These Section 32 purchases help stabilize farm income while supporting rural jobs tied to dairy processing, transportation and manufacturing,” Rollins says. “By turning farm production into meals, we’re supporting the farmers who feed America.”

Market Impact: Helpful, But Not A Game-Changer

While these new purchases made by USDA will help provide support, Phil Plourd, head of market intelligence for Ever.Ag, notes the impact on prices could be modest in scale.

“This is one of the ways that low prices can work to cure low prices,” Plourd says. “Without the details — especially on timing — it’s difficult to offer much specific commentary on potential price impact. At first blush, the commitment to buy butter seems substantial. Based on recent solicitations and purchases, we’d guess that the $32.5 million for cheddar cheese and cheese products might buy about 18 million pounds. That’s not nothing, but if our math is accurate, it’s only about 5% of one month’s worth of U.S. output and less than 1% of annual production. But, the bottom line is straightforward: $148 million in additional dairy purchases counts as supportive.”

Doud echoes that view, noting while the purchases won’t transform markets overnight, they do provide meaningful support — especially for butter and cheese.

“148 million isn’t anything that’s going to be a huge market mover, but it certainly helps, especially on the butter side of the equation,” he says.

Ben Laine, senior dairy analyst at Terrain, adds that even though the purchase won’t dramatically shift markets, it should be positive news for prices.

“The purchase announcement should be favorable for milk prices,” Laine says. “We’re starting the year in an oversupplied situation, and most of the positivity in dairy markets so far has been around nonfat dry milk and whey. Support for butter and cheese in particular through these purchases should help round things out and provide more strength to milk prices.”

In the global dairy sector, Doud says signals from the international dairy market are starting to improve, offering more support for prices.

“The good news is we’re seeing these markets — dairy markets, butter markets and cheese markets in Europe — begin to turn around here a little bit,” Doud says. “The world market’s starting to turn, and every little bit helps in this kind of environment.”

That comes against the backdrop of robust U.S. dairy exports.

“The year-end trade numbers came out today, and U.S. dairy exports were tied for an all-time record at $9.5 billion, ” Doud notes. “U.S. dairy is the third-biggest ag exporter, behind corn and soybeans. We had a really good year in exports. We did really, really well in 2025 on cheese exports, an all-time record by a country mile.”

That strong export base, combined with USDA’s planned purchases, contributes to a steadier overall demand picture, with international buyers drawing product abroad and federal programs taking in additional volumes domestically.

How Section 32 Works

USDA’s Agricultural Marketing Service (AMS) purchases domestic agricultural products when market conditions call for extra support. The products are then distributed through nutrition programs run by USDA’s Food and Nutrition Service (FNS), including food banks participating in The Emergency Food Assistance Program (TEFAP).

For dairy processors, these purchases often mean larger orders for products like butter and cheese, which can indirectly help support farm-level milk demand. Historically, Section 32 has acted as a pressure valve for farmers during periods of oversupply or weak commercial demand, moving dairy out of commercial markets and into programs that feed families while keeping milk flowing off farms.

Broader Ag impact

In addition to dairy, USDA plans to purchase fruits, legumes and tree nuts, including:

Chickpeas: $12 million
Dried Beans (Black and Pinto): $25 million
Fresh Pears: $15 million
Lentils: $14 million
Pecans: $10 million
Split Peas: $24 million
Walnuts: $15 million

USDA says the combination of products helps strengthen the nation’s food safety net while reinforcing agriculture’s role in economic resilience.

With this action, the Trump administration says it is aiming to bolster American agriculture, support rural communities and ensure families in need have access to nutritious, domestically produced food.

Butter Volatility Brings Hope

Thu, 05 Feb 2026 16:16:54 GMT

Limit market moves and action-packed cash markets gave dairy prices some excitement to close out January. Nonfat Dry Milk exploded higher with butter taking us on a rollercoaster ride. Milk futures had a strong close last week and have given some indications of strength to be continued this week.

The news cycle for the dairy industry has been packed with government support from the new food pyramid guidelines, continued tension with tariffs, Dairy Margin Coverage triggering the only payment for 2025 in the month of December, formula recalls, screwworm cases approaching the U.S., dramatic outside markets, and weather concerns across the country. Each day was a new story bringing big swings in prices.

The weather from the last two weeks played a major role in the volatility. Consumers and retailers alike had panic buying ahead of reports of incoming snow and ice across the south. Concerns over the ability to not only travel to the store but to get products shipped caused some short-term buying activity that turned into a buyer quarrel in the cash market. This may have triggered not only the assumption that the lows have been set, but also some excitement around buying opportunities.

The growing milk production reports, the abundance of cream, and the lackluster demand in the food service industry made butter buyers think they had plenty of time to purchase their needs. When the storm news started looking worrisome, a little buying action happened which triggered those that thought they had more time to sit on their hands to grab at what they could to fill inventory. Everyone wanted to fill freezers with cheap products but thought they missed out on the bottom. It created a buying frenzy, then a sell-off with the speed at which prices increased and another rush of buying from those that thought they missed the first opportunity.

What is uncertain is how the butter inventory has pulled back with the availability of cream over the last few months. Exports have been strong and retail has been moving product, however production should have had an advantage with the endless supply of cream in the market. Should inventory continue to decline, we could be setting up for a positive impact on prices in the coming months.

Milk prices have been supported by increasing butter, dry whey and nonfat dry milk despite the increasing milk production numbers. While there is no big red flag saying prices should jump higher, you can see the willingness of buyers to step in and be aggressive with the fear of missing out. Fundamentals do not support a major rally today but the recent price volatility in dairy markets suggests a change is on the horizon.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

Butter Sculpture Celebrates 250 Years of American History

Fri, 09 Jan 2026 15:27:44 GMT

This year, the Pennsylvania Farm Show is spreading the celebration of 250 years of American history with its signature butter sculpture.

(American Dairy Association North East)

The 35^th annual butter sculpture, created by artists Jim Victor and Marie Pelton, takes visitors back to 1776 Philadelphia. The piece shows Benjamin Franklin and the Founding Fathers signing the Declaration of Independence and toasting the moment with milk. The scene also includes familiar symbols such as the Liberty Bell and Betsy Ross’ first American flag, with the base highlighting Pennsylvania’s long history of farming.

(American Dairy Association North East)

“While the Founding Fathers were shaping a new country, farmers here were building a strong dairy industry that continues to thrive today,” says Carolyn Matthews Eaglehouse, a dairy farmer in Chester Springs. “I’m proud to be part of that legacy.”

The artists used more than 1,000 lb. of butter, donated by Land O’Lakes, to bring the sculpture to life over several weeks on-site. After the show, the butter will be recycled at Reinford Farms via digester and turned into renewable energy, keeping the tradition of sustainability alive.

The sculpture is on display during the eight-day Farm Show and expected to draw more than 500,000 visitors. Watch the video below for a time-lapse look at how the butter sculpture came together:

Dairy Markets Face Winter Blues: Will Inventory Data Spark Demand for Butter, Cheese and Cream?

Tue, 30 Dec 2025 17:08:45 GMT

As the festive season winds down and the last of the holiday baking is complete, U.S. dairy markets find themselves at a critical juncture, pondering their next move.

While demand for butter, cream, and cheese typically surges in the weeks leading up to the holidays, leaving retail scrambling for spot loads, the post-holiday landscape is shrouded in uncertainty. This comes after a year where dairy markets struggled to find positive momentum, intensified by a recent data vacuum from the USDA, which left industry players eagerly awaiting the next cold storage report to shed light on true inventory levels and potential price direction.

The difficult thing about the timing of answering that question is that the USDA has been slow to release data since the government shutdown. We can see the trend with milk production; we can see the spot loads trading, but recently all we had for information regarding stocks is a cold storage report that was several months old. Fortunately, USDA released its latest cold storage report Dec. 23 , the first since September’s release of data from August.

In August, cheese inventories were down slightly from the previous report but higher than the previous year. Butter, on the other hand, was 8% lower in both the previous month as well as 6% lower than the previous year. August was a long time ago, and a long time for the market to question what its inventory truly was.

Due to the tighter inventory, butter spent the week after September’s cold storage report rallying but it was short-lived. The market had continued the steady path of decline from the highs set back in July. Cheese had a similar fate with highs peaking in June and falling on a bumpy path to the lows set earlier this month. While the last couple weeks have been more friendly, the markets still have a long way to go to reach the highs we saw this summer.

Plants are currently running at full capacity with the abundance of cream available, however now that the holidays are nearly past us, it is anticipated that production will be reduced and we will begin building stock. Cream supplies have been plentiful with the most recent demand based in the retail market. However, what we are gaining for demand in retail has been offset by the struggling food service demand. Traders are mixed on their opinions about what inventory is on hand.

What information we have received is that milk production numbers are up year over year. The November milk production report, released Dec. 22, had milk production at 18,790 million pounds, up 4.5% from the previous year.

What is not being talked about is the sharp decline in milk production from last month’s report to this month. The USDA pegs the November milk production 665 million pounds less than October. That is 3.4% lower milk production in just one month’s time, the lowest production we have seen since February.

While it is seasonally on trend for winter production to decline, the pace at which production has dropped off begs the question of whether this trend will continue into late winter.

If milk production falls dramatically in the coming months, the importance of the data released with the latest cold storage report is increased. Should we find stocks low on top of the trailing production, it could be the catalyst to finally help prices. While this is grasping at bullish straws, it is still important to remember that while milk production has fallen from the spring and summer highs, we are still well above production from 2024 and have been for most of the year.

Your Next Read: U.S. Milk Production Surges 4.7% in November as Dairy Herd Expands

U.S. Loses Global Competitiveness on Butter

Wed, 24 Dec 2025 14:36:20 GMT

This holiday season has been anything but typical when it comes to butter, a time of year when prices tend to spike. However, this year, CME spot butter prices reached their annual high in July, then dropped precipitously between August and November, putting in a bottom of $1.43/lb. on November 25, then leveled out in the mid-$1.40s, before taking another step lower on December 19.

“Throughout 2025, U.S. butter has been the lowest-priced product among global dairy exporters, and as a result, the United States has seen an uptick in international butter sales. In fact, the United States moved from being a net importer of butterfat in 2024 to being a net exporter by 41.8 million pounds through September 2025,” said Betty Berning, market analyst with the Daily Dairy Report. “However, international butter markets have been eroding of late, and the U.S. price advantage is shrinking.”

In Europe, butter prices in June averaged $3.90/lb., their 2025 monthly high. The monthly average through the first half of December had dropped more than 40% to $2.31/lb., making European butter much more competitive with U.S. product.

“The timing of Europe’s butter price descent has been different than that which occurred in the United States, with the largest losses in Europe occurring between September and December. In fact, U.S. butter held a large discount of more than $1.40/lb. to European butter in August and September. But then as the fourth-quarter milk supply began to swell on the continent, European prices plunged, and the U.S. discount fell to 81 cents per pound, the closest the two prices had been in at least a year,” Berning said.

A similar situation occurred in New Zealand. Global Dairy Trade (GDT) butter prices peaked in May at $3.59/lb. and have since dropped 35% averaging $2.31/lb. at December’s auctions. While prices decreased throughout the second half of 2025, they plummeted between October and December. In December, butter from New Zealand sold for only 84 cents per pound more than U.S. product—after holding a premium of $1.40/lb. in October.

“Looking ahead to 2026, U.S. butter exports should continue their strong pace, given that most sales are booked about three months in advance, and deals for January and February would have been struck when the U.S. discount was still quite large,” Berning said.

“However, as prices converge, U.S. butter exports will likely slow, returning to more historical levels.”

Over the past two years, U.S. butterfat production has grown at a breakneck pace, and while exports are a small part of total demand, the increase has absorbed some of the surplus cream in the United States.

“As export sales slow, butter will pile up more than it already has,” Berning said. “Class IV futures prices have been quite dismal, yet further deterioration in prices to maintain U.S. export flow could greatly crimp on-farm finances, but losing the exports altogether would be even worse.”

Is Dairy Headed Into Another Down Year?

Mon, 22 Dec 2025 18:04:22 GMT

Milk prices remain flat heading into 2026, with no clear sign of a sustained recovery as strong supplies keep buyers on the sidelines.
Milk production continues to climb, driven by larger herds, higher output per cow and incentives from strong beef-on-dairy calf prices.
Demand is steady but not strong enough to significantly reduce inventories, keeping pressure on margins despite solid cheese and butter exports.

Dairy producers don’t need a futures chart to know conditions are challenging. Milk prices have leveled off, margins remain tight and the outlook offers little sign of quick improvement. According to dairy analyst Robin Schmahl of AgMarket.net, the industry is likely heading into another tough year without a clear driver for stronger prices.

Looking at the price structure, Schmahl says the market is basically flat out through the first quarter of 2026. What troubles him most is not just the level of prices but the lack of urgency from buyers.

“The buyers of cheese, buyers of butter and dairy products are not concerned about supplies,” he says. “So, they don’t have to be aggressive. They can just wait. That’s the bottom line.”

Milk supplies are abundant, and that’s weighing heavily on prices. Production continues to climb, with more cows in the herd and higher output per cow, leaving the market well-stocked and buyers in no rush to secure more milk.

“On the last milk production report, we’re running 3.7% higher than the previous year,” Schmahl notes. “We’ve got over 200,000 more cows, and those cows are producing around 20 lb. of milk more than last year. We have a lot of milk.”

Demand is Good, But Not Good Enough

On the demand side, the picture is more complicated. Cheese and butter markets have held steady and exports are providing some support, especially with U.S. prices remaining competitive globally.

However, even with these positives, demand isn’t strong enough to make a meaningful dent in the large milk surplus. Domestic consumption is steady rather than growing, and while exports help, they can’t fully absorb the extra supply that continues to build.

“Cheese demand has been steady and even picked up a little,” Schmahl says. “International demand is very strong and holding well, largely because U.S. prices remain lower than world prices.”

Butter tells a similar story.

“Butter plants are running seven days a week,” Schmahl adds. “Cream supplies are very large, and world butter prices are about a dollar higher than U.S. prices. That price gap has fueled strong butter exports.”

However, global signals aren’t offering much optimism. The Global Dairy Trade auction, which tracks international dairy prices, dropped another 4.4% in its latest update. That’s the ninth decline in a row, showing buyers around the world are pulling back. This means lower global prices make it harder to sell milk overseas and harder for the domestic market to work through the extra supply.

Even positive developments, like the return of whole milk to school lunch programs, are unlikely to be game changers near term. Still, Schmahl calls it “real positive news,” noting that when whole and 2% milk were removed in 2012, “consumption in the schools went down because students didn’t like the skim and 1%.”

“It’s looking like it will be a lower year price wise,” Schmahl adds. “Demand exists, but not at levels that can chew through inventories and turn the price tide.”

Why are Butterfat Premiums Disappearing?

Processors are changing their priorities when it comes to milk components. For years, farmers focused on breeding and feeding strategies to boost butterfat because it was in high demand and paid well. Now, processors are pulling back, and the premiums for higher butterfat have all but disappeared.

“We’ve seen record butterfat production for about a year,” Schmahl says. “For a long time, processors encouraged higher fat levels. Now they’re capping it — anything over 4.5% they’re not going to pay for.”

This cap affects producers who have invested in genetics, crossbreeding and feed strategies to increase milk components.

“What producers have worked toward for years is now becoming a disadvantage,” Schmahl says. “It seems like processors expect cows to adjust instantly, but that’s not realistic.”

This change takes away one of the few tools producers had to earn more for their milk without increasing output.

Is Beef-on-Dairy Changing the Game?

Even though the market doesn’t need more milk, dairy cow numbers continue to see an increase. One reason is the growing beef-on-dairy trend, which has changed how producers make culling decisions. Strong calf prices have created an incentive for farmers to keep cows that might otherwise be culled.

“We do need more beef,” Schmahl adds. “That demand pushed calf prices higher, which in turn drove up heifer prices, so dairy farmers have started to think differently. Instead of buying a $4,000 replacement heifer, they could keep a cow that produces less milk, breed her to a beef sire and sell the calf for around $1,000. Plus, that cow will produce another calf down the road.”

He describes the beef-on-dairy trend as a modified Black Swan event. While it hasn’t appeared suddenly, it’s still unprecedented for the industry. Because there’s no historical model to draw from, analysts are finding it difficult to predict its long-term impact on herd management and milk supply.

That uncertainty is part of what makes the current cycle so tricky. As long as a 3-day-old beef-on-dairy calf can fetch $800 to $1,000, producers have a strong incentive to hang on to older, lower-producing cows. The result is elevated cow numbers that keep milk flowing even when milk price signals would traditionally force a contraction.

Risk Management in a Flat Dairy Market

Schmahl says the biggest risk many dairies are taking going into 2026 is doing nothing.

“Producers don’t want to do anything, because they think we’re at the low,” he says. “It may stay here for a little bit, but the upside potential is there. I’m concerned … about what could happen in the first quarter, or maybe first half of the year if our production trajectory follows what it is.”

On milk price protection, Schmahl favors options over DRP at current levels.

“I firmly believe that a put option strategy is the best way to go,” he said. “With Dairy Revenue Protection (DRP), you automatically give up about 5% of your insured price —usually around 80¢. That means your floor starts lower than the current market.”

By comparison, he says a well-structured option plan can keep your protection closer to today’s price. On inputs, Schmahl advocates taking advantage of relatively cheap corn and soybean meal.

“You’ve got a lot of year ahead — to just guess the market is not a good way to manage risk,” he adds.

Pressure Persists, Opportunities Remain

Looking ahead, 2026 is shaping up to be another challenging year for dairy. Milk supplies remain strong, and prices are expected to stay under pressure, leaving producers with tight margins. However, there are still some bright spots.

Export demand for cheese and butter continues to provide support, and U.S. prices remain competitive globally. Domestic programs, like the return of whole milk to school lunches, could help boost consumption over time.

While the market isn’t signaling a quick turnaround, disciplined risk management and careful planning can help producers navigate the year ahead and position themselves for opportunities when conditions improve.

Canada’s Dairy Industry Thrives

Thu, 20 Nov 2025 14:00:00 GMT

Canada’s population growth climbed 3% in 2024, primarily through immigration, which has been good for the Canadian dairy industry and has helped the country maintain its highly protected and subsidized dairy industry, according to Sarina Sharp, analyst with the Daily Dairy Report. After years of exceptional gains, the rate of growth has slowed to a year-over-year increase of 0.9% for the first six months of the year to just shy of 41.6 million people. By comparison, the U.S. population grew by 0.98% in 2024 compared to 2023.

“Due primarily to an increasing population, Canadian dairy demand appears to be sufficient to absorb domestic milk production growth and accommodate more imports, and that’s good news for the U.S. and European dairy exporters,” Sharp said.

Canadian milk production reached an all-time high in the first half of the year, with output up 1.4% from 2024 volumes after adjusting for leap day, which means dairy producers are sending increasing volumes of milk to dairy processors. According to Statistics Canada, first-half deliveries were up 1% increase compared to the first six months of 2024. For the year, Canadian dairy processors expect to take in more than 7 million metric tons of milk this year, a record high.

“A growing population and greater demand for dairy have allowed Canada’s dairy sector to grow even as the historically insulated industry has been forced to open the door to more imports,” said Sharp. “While Canada has tried creative ways to import less dairy than agreed to in recent trade negotiations and dispute resolutions, Canada’s January through August imports of cheese and butter hit all-time highs.”

In the first nine months of 2025, butter imports outpaced 2024 volumes by an impressive 33%. The United States accounted for two-thirds of that total. For cheese, the United States supplied 36% of Canada’s imports, second only to the EU-27’s 50% share, according to data from Trade Data Monitor.

“While Canada remains a net exporter of skim milk powder, the positive trade balance has been shrinking,” Sharp noted. In August, Canada sent just 410,000 metric tons more skim milk powder abroad than it took in, the smallest monthly net exports since early 2016.

Record Class Price Spreads and Butter Cheese Inversion

Wed, 15 Oct 2025 12:55:20 GMT

U.S. dairy prices are struggling to find ground, amid low demand and plenty of production to meet needs. Exports have been helpful, despite an ongoing trade war with China, but world dairy prices have drifted lower for the third month in a row. Among all the negative news, we have seen a few rare occurrences take place, giving opportunities to a few and uncertainty of where prices will go from here.

Butter fell to $1.605 last week, creating an inversion in the market where butter is trading below the current price of cheese at $1.70 for blocks, and barrels closing last week out at $1.71. This is rare occurrence not seen in several years.

Relatively high cream production, with lower seasonal orders and lower food services demand, on top of a world price decline are to blame for butter’s price demise. Seasonal retail orders, while picking up, haven’t materialized as normal ahead of the holidays and cold-storage inventories have remained heavy due to the lack of buying interest. It is expected that inventories will pull back slightly but not nearly the drop seen in a normal year for this season.

Cheese markets have remained a little bit of a bright spot in a dim marketing situation. They have held steady or drifted lower at a slower pace than the rest of the dairy industry prices. Giving way for the inverted butter to cheese price. There has been a slight increase in processed and aged cheese with decent export demand, shipped to Mexico, South Korea and Central America.

In the meantime, the Class III and Class IV price have drifted apart, coming in at a $2.47 per cwt spread between the two classes last week, the widest seen since 2021. Class III has been impacted by cheese prices, while Class IV has fallen with the decline in butter and powder prices.

This wide spread between classes affects pooling decisions under the Federal Milk Marketing Orders (FMMO) and many handlers have started to “de-pool” their Class IV milk to keep more value within their own system. The imbalance certainly raises questions about potential adjustments to the FMMO modernization proposals.

Farmers in cheese heavy regions are benefiting slightly, relative to those producers in higher butter/powder regions, but overall, most producers are concerned about margins everywhere. Without a clear demand rebound, the market’s path forward depends on an uptick in holiday buying or a decline in world production.

Your Next Read:
Why Beef-on-Dairy Is Shaking Up The Dairy Industry Landscape

Navigate the Shift: U.S. Dairy Markets and the Impact of New FMMO Changes

Tue, 30 Sep 2025 11:38:19 GMT

U.S. milk output has been surging most of the year, bringing dairy prices to some of the lowest we’ve seen in years. USDA reports August 2025 saw an increase of more than 3% higher milk output than August of last year.

It is a perplexing issue with lower cow numbers. However, feed is cheap, and if there is one thing the American farmer is good at, it is creating efficiencies in every corner of their operation.

As a result of the abundance of milk supply, there have been new lows in nearly every sector of the dairy market — but most notably in butter, cheese and Nonfat Dry Milk (NDM). Butter fell below $2.00 per pound, something we have not seen in months, due to the higher cream supply and higher churning activity as of late.

Demand is steady domestically, but the supply of milk is more than we can use. Exports have been the bright light in the demand picture, as world demand is strong, but demand struggles to keep up with the national milk production rising the fastest pace we’ve seen in two years.

While markets struggle to find support, farmers have begun to adjust to the new changes in the Federal Milk Marketing Order (FMMO). It has been long awaited for the FMMO to get a new, modern facelift to reflect more of what we are seeing in dairy today by updating the old, outdated formulas. However, it did not come without costs for some farmers.

For others, such as farmers in the southeast, where fluid milk is usually a deficit in that region, the changes are favorable. For example, Class I Pricing has changed to the “higher-of” formula — which ties fluid milk prices to whichever is greater between Class III or Class IV. There have also been adjustments for location-specific premiums, which are meant to better reflect hauling and supply costs.

Processors saw a benefit in higher allowances for butter, cheese, nonfat dry milk and whey — which are supposed to reflect the updated manufacturing costs. Unfortunately for farmers, this translates into lower component values on their milk checks.

In the cheese pricing formula, they have removed the 500 lb. barrel price from Class III calculations, leaving only 40 lb. blocks as the sole reference price for cheese.

There have also been some changes in component assumptions. Protein and solids factors will increase. This is meant to align formulas more closely with today’s milk composition. These changes have been delayed until December 2025. This is to give risk management tools such as DRP insurance, contracting and hedging strategies some time to adjust or adapt before the new pricing structure roll out begins.

For the producers, the biggest impact seen so far is the immediate difference on their settlements, which have shown lower-than-expected returns under the updated system, especially if they are focused on components due to the new make allowances.

For the future, the shift in protein and solids should improve valuations. Producers shipping into fluid milk markets should stand to benefit from stronger Class I values and higher differentials. But today, it is clear changes in policies may help improve transparency and make calculations easier — but not always the best financially for the producers.

As far as where to go from here for the farmer, learn as much as you can about the new policy changes, how it affects your farm prices and talk with your marketing professionals about what needs to be done for hedging or insurance needs going forward.

Your Next Read:
A Fresh Perspective on Young Dairy Farmers and the Digital Revolution

Milk, Cheese, Butter, Oh My! What's Driving these Markets

Thu, 04 Sep 2025 20:26:46 GMT

CME markets remain relatively range-bound. Butter futures are trading a whopping 23¢ premium just a month out, signaling butter likely won’t break below the $2 mark. Cheese is still finding support at $1.65 and has a lot of sell-side interest at $1.85, with trade feeling choppy in between. School milk needs might help tighten up cream and spot milk supplies, but milk still feels like it’s long in most of the country.

CME cheese markets dropped today, with blocks slipping 3.5¢ to $1.73 per pound and barrels shedding $0.0375 to close at $1.7425. Four lots of blocks changed hands. Spot NDM declined to $1.2275 per pound, losing $0.0075, with six lots exchanged. Spot butter ticked up just a quarter cent to $2.015 per pound.

Milk was more available in the Midwest amid cooler temperatures and holiday downtime at cheese plants. USDA reported spot milk in the region at a midpoint of 25¢ per hundredweight under class. That compares to +$1.00 last week, +$1.75 in 2024 and -5¢ on the five-year average. Class II multiples in the Central region also declined, down to 127 compared to 130 last week, 131 last year and the five-year average of 136.

Globally competitive prices kept U.S. cheese and butter exports strong in July. Outbound cheese volume totaled 114.9 million pounds, up 29% year-over-year. Mexico purchased 38.9 million pounds, up just 1% versus 2024. Butter exports totaled 18.5 million pounds, up 206% on the year. But milk powder exports continued to lag prior-year levels at 131.9 million pounds, down 16% compared to July 2024.

The Surprising Reasons Behind Butter’s Rapid Decline

Wed, 03 Sep 2025 11:23:29 GMT

Last week, butter prices were hit hard, losing 19¢ in the spot market and closing the month out at $2.045 per pound, which is the lowest price seen since Dec. 6, 2021. Just one year ago, butter was trading at $3.17 per pound — over $1 higher than last Friday’s price. As we start this short trading week off, the question remains, is the freefall in butter prices over or can butter continue to churn lower from here?

In order to answer that, we need to look deeper into the reason for butter’s sharp decline and what has changed to warrant prices more than $1 lower year over year. Here in the United States, dairy farmers have been producing a high-quality product with higher butterfat content than last year. This has allowed for more butter supply to be available for the market. In fact, milk and butter production remains historically high — exceeding 2024’s output by over 1.2 billion pounds and leading to a surplus of supply and lower prices.

On the world front, there is a surging global supply. Most significantly seen in Europe where local production is rampant, imports are high, and exports have been reduced. They are left with a massive surplus, estimated at over 56,500 metric tons. Many countries are seeing the same. Due to a recent surge in demand, prices escalated short term and world dairy production increased from trying to meet the demand. But getting a wave of better weather produced an oversupply of product. Now there is plenty of product, but the demand is declining.

While all these factors point to a bearish outlook in the short term, as we saw last week, there is some hope on the horizon here in the United States. Exports in the U.S. have surged, up nearly 41% year over year in parts of 2025. This has helped to absorb some of the domestic overproduction.

From a domestic perspective, consumers seek healthy fat options derived from butter — as butter’s current image is a healthier option compared to other fat sources. This helps Class IV demand giving support to prices. We see this in the retail sector as prices for an 8-ounce package fell 15¢ from last week, yet still remain 80¢ higher than one year ago. A 1 lb. package is only 9¢ higher than one year ago.

In July, U.S. butter inventory was 6% below one year ago. This has not concerned buyers yet, but could be the silver lining of hope needed to boost prices. As fall approaches, we start to focus on holiday demand. Typically, demand surges well beyond production. While manufacturers have been able to freeze excess butter lately, that lower inventory number will become more and more concerning if it’s not higher as we see the August inventory report.

So, will butter continue to freefall, or is there support on the horizon? That question currently relies on the calendar. Here in the short term, world supply is excessive, and demand is strong — yet faltering. As the holiday season approaches, and inventory levels are tighter, there is hope for support over the next few months. But still, there is plenty of downside risk in the near future.

Your Next Read:
Milk Production Soars: Record-Breaking Growth for Dairy Industry in Four Years

Shifting Tides in the Dairy Market: A Closer Look at Butter and Cheese Prices

Tue, 02 Sep 2025 21:27:08 GMT

The CME spot butter market continues to steal the attention as prices dropped another few cents. Can this market break $2? The answer will likely come sooner than most expected. Although USDA’s July report showed tighter inventories, supply appears ample to start September. Reports suggest demand for bulk butter remains soft, certainly compared to normal for this time of year. That’s likely adding to the heavier supply feeling. Spot cheese prices dipped slightly today as well, which combined with weaker spot butter ultimately knocked nearby Class III and IV prices down by more than a dime.

The CME butter market continued to fall, down $0.0325 to a new year-to-date low of $2.0125 per pound. One lot changed hands. Spot blocks slipped slightly, down a penny to $1.7650 per pound, with 13 loads exchanged. Barrels, NDM and dry whey were unchanged with no trades.

Most commodities dropped at today’s GlobalDairyTrade event on the highest volume offered season-to-date. Milk powders led the way, with WMP down 5.6% to $1.73 per pound and SMP down 4.9% to $1.19. Butter slipped 2.4% to $3.16 per pound (adjusted to 82% butterfat). Cheddar logged the only increase, up 3.5% to $2.14 per pound.

As of Aug. 31, 69% of the U.S. corn crop was in good or excellent condition compared to 71% last week and 59% on the five-year average. The soybean crop was 65% good or excellent, down from 69% last week, but up from the five-year average of 59%.

Your Next Read:
From Brew to Moo: The Sustainable Dairy Practices at Ayers Farm

Market Resurgence: Butter Futures' Surprising Rebound

Thu, 28 Aug 2025 21:25:05 GMT

Butter futures recovered much of their losses from yesterday with the help of today’s increase at the spot session. This was a surprising move after spots fell apart yesterday, leading to limit-down trading for multiple futures contracts. Even with blocks trading higher on the day, Class III saw more red, leading some to wonder if the block market will test $1.60 again. Q4 Class III found itself in new lows today, at one point trading below $17.60 as a pack.

The CME spot markets finished mostly higher Thursday. Butter recovered a bit after yesterday’s plunge, climbing 3.5¢ to $2.085 per pound. No lots changed hands. Blocks gained 1.5¢ to close at $1.775 per pound, with three loads trading. Barrels were the lone decliner, dipping to $1.78, a half-cent loss. Whey ticked up a half-cent to 55.5¢ per pound on three lots, while NDM rose a half cent to $1.26, with one lot trading.

Spot milk volume in the Midwest is light as production declines seasonally and Class I demand increases. USDA reported prices at a midpoint of $1 per hundredweight over class, down from +$1.38 last week and +$1.25 last year, but up from +13¢ on the five-year average. Cream is less easily obtained this week, pushing multiples higher. USDA pegged Class II multiples in the Central region at 130 compared to 129 last week, 135 in 2024 and 140 on the five-year average.

For the week ending Aug. 16, slaughter rates were just slightly ahead of prior-year levels at 51,600 head. Culling dropped in the West (-20.5%) and Mid-Atlantic (-7.5%), but increased in the South (+10.0%), Midwest (+5.8%) and Northwest (+1.6%).

Butter's Slippery Slope and Cheese Wobbles on the Markets

Wed, 27 Aug 2025 21:49:26 GMT

The view was mostly a sea of red on the dairy trading screen today. Butter fell hard, landing below the $2.10-per-pound mark. The stock decline in last Friday’s Cold Storage report hasn’t stopped the price slide. Instead, physical traders are looking at heavy and cheap cream volumes, which are creating big margins for the butter churn. Cheese continues to bounce between $1.70 and $1.80, still weighed down by increased milk volume and component levels.

Butter plunged to a new year-to-date low of $2.05 per pound at the CME, with 12 lots changing hands. The 13.5¢ slide was the biggest single-day drop since November 2023. Blocks fell five cents to $1.76, while barrels slipped 1.5¢ to $1.785. Volume traded: three lots of blocks, zero of barrels. Dry whey lost two cents to close at 55¢, with four lots exchanged. NDM ticked up a quarter cent to $1.255 per pound, with a healthy 14 loads trading.

The butter drop carried over to futures, with September ($2.2203), October ($2.255), November ($2.275), February ($2.30), April ($2.3953) and July ($2.4988) all settling limit down (-7.5¢). Fourth quarter Class IV declined to $17.51 per hundredweight, a 34¢ loss. Class III also tumbled, down 36¢ to $17.73.

The global butter price gap remains wide. The CME weekly average is $2.16 per pound compared to $3.16 in New Zealand and $3.61 in Europe. U.S. cheese also remains at a steep discount at $1.80 per pound, well below New Zealand’s $2.06 and Europe’s $2.30. Milk powder is still tightly clustered. CME NDM’s average sits at $1.26 per pound, just slightly ahead of $1.25 in New Zealand and Europe.

Your Next Read:
New Dairy Training Platform Boosts Consistency and Compliance

Understanding the Reason for the Movement in the Dairy Markets

Tue, 26 Aug 2025 20:49:14 GMT

Implied Class III moved higher today, dragging futures along with it. Spot butter continued to decline, and Class IV followed along. The decline in butter prices comes despite inventories below expectations and short of the five-year average. Inventories are telling us one thing, but the CME market, butter production and cream supplies all point to surplus butter. If the inventory numbers are correct and we get no material revisions higher, we should expect tight supplies in Q4. The big question will be how much of the holiday demand has already been accounted for and is that what’s eating into those inventories on top of record exports?

The CME butter market resumed its downward trajectory. The spot price dropped to $2.185 per pound, shedding 5.5¢ to hit a new year-to-date low, with one load exchanged. Spot blocks rose 1.5¢ to $1.81 per pound, while barrels jumped to $1.80, 4¢ higher. One lot of blocks traded. NDM slipped a half cent to $1.2525 per pound, with one load changing hands. Dry whey held steady at 57¢.

The drop in CME butter carried over to futures markets. Q4 Class IV contracts declined to $17.85 per hundredweight, a 19¢ loss. Fourth quarter butter futures tumbled to $2.3425 per pound, 6.04¢ lower. Class III futures jumped, with Q4 settling up 24¢ at $18.10 per hundredweight.

Milk powder prices slipped at this week’s GlobalDairyTrade Pulse auction. SMP closed at $1.22 per pound, down 4.9% versus the latest Pulse and -1.6% from the previous main event. WMP eased to $1.79 per pound, down 0.1% on a Pulse-to-Pulse basis and -1.7% compared to the most recent main auction.

Your Next Read:
U.S. Dairy Herd Continues to Grow: Fastest Pace in 17 Years

The Unexpected Shift in Butter Stocks

Mon, 25 Aug 2025 20:53:30 GMT

USDA released its July Cold Storage on Friday after market close. Butter storage data was bullish according to our Insights team, highlighted by a larger-than-expected drawdown of stocks that increased the year-over-year deficit. Despite that, spot butter started this week with just a small move upward. Cream remains relatively inexpensive and butter production has been strong, so the storage decline might suggest healthy demand. While spot butter only rose a half cent, futures contracts added between a penny and a nickel, which could signal more increases at the CME in the coming days.

Blocks were the biggest mover to start the week, climbing 4.5¢ to $1.795 per pound with nine lots changing hands. Barrels held at $1.76 with no trades. Butter inched up a half cent to $2.24 per pound, with three lots exchanged. Nonfat dry milk eased slightly, down a quarter cent, to $1.2575. Five lots traded. Dry whey gained 1.5¢ to close at 7¢. One load traded.

Following spot blocks, fourth quarter Class III milk futures settled higher at $17.86 per hundredweight, up 12¢. The September “all cheese” contract also gained ground, ticking up to $1.8790 per pound, a 1.5¢ gain. But November and December moved in the opposite direction, closing at $1.819 and $1.796 per pound, $0.001 and $0.004 lower, respectively.

USDA’s Crop Progress report indicated U.S. crops remain very healthy. As of Aug. 24, 71% of the U.S. corn crop was in good or excellent condition, unchanged on the week and well ahead of the five-year average of 59%. Soybeans were 69% good or excellent compared to 68% last week and 60% on the five-year average.

Your Next Read:
U.S. Dairy Herd Continues to Grow: Fastest Pace in 17 Years

Latest Milk Production Report Sets the Tone

Fri, 22 Aug 2025 20:43:51 GMT

Dairy futures traded lower again today on the heels of yesterday’s Milk Production report showing milk flows increasing at the strongest rate in four years. Spot block cheese dropped to a three-week low, while butter prices dipped to the lowest level since 2021. This weighed on Class III and Class IV markets, with Q4 futures making new year-to-date lows for both. USDA’s Cold Storage report was released after markets closed for the weekend, so those results will likely set the tone for trading next week.

Today’s Highlights:
It was red almost across the board today at the CME. Butter was down $0.0050 to settle at $2.235, the lowest price since December 2021. Spot blocks slipped 3¢ to $1.75 per pound, with six lots changing hands. Barrels dropped to $1.76, shedding a nickel with no trades. Nonfat dry milk held at $1.26 with six lots traded, while dry whey gave up 1.5¢ and closed at $0.5550 per pound.

Class III and IV futures also dropped, with Q4 Class III slipping to $17.74 per hundredweight, a 14¢ loss. Q4 Class IV declined to $18.04 per hundredweight, easing by 6¢. Q4 butter futures tumbled $0.0413 to $2.3828 per pound.

USDA’s July Cold Storage report was surprisingly bullish for butter. Stocks were down on the year and month-over-month at an above-average pace. It was more neutral for cheese, with inventories up versus 2024, but down on the month at a pace that was close to the five-year average.

Spot Milk Supplies Tight as Kids Go Back To School

Thu, 21 Aug 2025 16:00:00 GMT

The USDA’s Dairy Market News report for the week of August 11-15th, showed a decline in supply for milk, Nonfat dry milk (NDM), dry buttermilk, dry whey, lactose, and unsalted butter. However, there is plenty of salted butter available, stocks up 9% with prices falling to the lowest price seen since April at $2.30.

Milk, on the other hand, has struggled with heat recently, reducing production especially in the Central and Eastern regions, leading to a short-term decline in milk output and component levels. On top of that, some plants are experiencing downtime or running lighter schedules temporarily. This has implications for cheese as well, since many processors are pulling back production of cheese while Class I milk takes all the attention for bottling efforts to supply schools as they are back in session.

U.S. schools use approximately 8% of all fluid milk sold in the country, accounting for about $1 billion in annual fluid milk sales through the school meal programs. While not the largest demand creator for milk, it is a reliable, structured demand that serves over 7.3 billion servings to students around the U.S. annually.

While the USDA contracts ensure that priority is placed on school milk production, the distributors have the ability to limit options when supply is tight. Such as less flavored options or fewer fat-choice options. Menus at the school can be easily adjusted to pivot towards unflavored options when harder to source or when school budgets are tight with higher milk prices.

The question about a short-term impact or longer-term rally may be answered by looking at the weather and data from the USDA. For the weather, there is a cooler stretch coming for the Midwest while a heatwave will impact the West. So, it appears that milk production will see a boost as cow comfort increases in the regions that need it the most and possibly a pullback in the one area that has an abundance of supply.

From the USDA, the August WASDE report released last week, showed higher milk production in both 2025 and 2026. Forecasted at 229.2 billion pounds for 2025, up 900 million pounds since the July report. On the demand side, we see exports higher on both fat basis and skim-solid basis for 2025 and 2026. This, on top of higher domestic use, keeps USDA forecasted prices steady at $18.50 for Class III in 2025 and $17.85 for 2026.

The spot milk supply shortage may have a cause-and-effect impact on cheese, cream and whey prices especially to the consumer. As said above, priority is placed on meeting school fluid milk needs, so cheese makers may pay more for the same product leading to higher snack, pizza and bakery good prices. It can also lead to less options available for the organic, lactose-free and flavored buyers, as well as a longer-term impact on frozen meals.

So, while the current spot milk shortage may cause some support in milk prices, the bigger impact is more on the consumer side, facing higher prices in store. The schools still get their supply, albeit with less variety, but consumers will feel higher prices down the line.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.