DAIRY MARKET REPORT VOLUME 29 | ISSUE 8
8/26/2026
EXECUTIVE SUMMARY U.S. milk production grew 3.0% in June on a liquid basis as producers added 52,000 head to the milking herd to satisfy demand for protein – both milk and beef. Dairy protein demand has continued to support nonfat dry milk (NFDM) prices at the CME on account of limited supplies. Meanwhile, rising butter production continues to limit price gains, even as demand grows at home and abroad. Domestic demand for cheese remains limited as the decrease in quick service restaurant foot traffic is now being compounded by decelerating retail sales. Record export volumes are helping support cheese, and thus Class III, prices, from sliding further (see the Graph of the Month). DMC margins were $10.88/cwt in June as feed prices and the All-Milk Price both slid. Expectations for the formula to reflect the recent increase in feed prices and a lower All-Milk Price set the stage for a potential DMC margin below the maximum payment threshold in August.
GRAPH OF THE MONTH Exports are becoming increasingly important for cheese and butter. Strong milk production has increased production for both products beyond incremental increases in domestic consumption, but as U.S. prices sit below EU and New Zealand, international buyers have bridged the gap and lent support to the market, buying an estimated 66% of the “new” cheese produced over the last two years. Cheese exports have risen 24% and butter exports have soared 90% through the first half of 2026, adding stability to these categories as changing consumer behavior and economic pressure reshape retail and food service demand at home.
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