DMR - February 2026

DAIRY MARKET REPORT VOLUME 29 | ISSUE 2

2/26/2026

OVERVIEW Milk production is still strong, up 4.2% overall, with milkfat production up 5.6% year-over-year. Several signs of particularly strong domestic protein demand shone through in recently released November data: commercial disappearance of all products on a skim solids basis (which includes protein) rose 4.8% September–November 2025 over a year prior; cheese saw an increase in domestic use of 2% after several months of declines; and stocks of whey protein concentrate fell 16% as demand outpaces supply. Exports also rose, with butter exports nearly tripling (+199%), and American-type cheeses doubling (+119%). However, DMC margins fell to $9.42/cwt, just under the $9.50/cwt maximum coverage level.

The Consumer Price Index eased month-over-month to 2.4% annually in January 2026, from 2.7% in December 2025, signaling cooling inflation. Dairy products continue to give consumers a break from inflation at the grocery store, with prices for almost all products falling since early 2025, exception for cheddar cheese.

COMMERCIAL USE OF DAIRY PRODUCTS Domestic commercial use of dairy products increased by 3.1% over 2024 levels on a milk solids basis, supported by surging demand for high protein products. Cheese products saw an increase in commercial use after slight

DOMESTIC COMMERCIAL USE

decreases in previous months, largely driven by high demand in November. By contrast, domestic butter use did fall in November.

SEPT-NOV 2025

SEPT-NOV 2024

2024-2025 CHANGE

PERCENT CHANGE

(million pounds) Total Fluid Milk Products

10,934

10,914

20

0.2%

Butter

576

655

-79

-12.1%

American-type Cheese

1,392

1,367

25

1.8%

All Other Cheese

2,088

2,046

42

2.1%

Total Cheese

3,480

3,413

67

2.0%

Dry Skim Milk

139

132

7

5.4%

All Products (milkfat)

2,434

2,431

3

0.1%

All Products (skim solids)

4,319

4,120

199

4.8%

All Products (total solids)

6,754

6,551

202

3.1%

All Products (milk equiv., total solids basis)

50,300

48,821

1,478

3.0%

U.S. DAIRY TRADE U.S. dairy exports have continued to soar on a milk solids basis, increasing 6% over September–November 2024 levels. Butter and cheese, bolstered by strong milk solids production, ample product production, and market development efforts, have found triple digit export growth in percent terms. Exports of nonfat dry milk/skim milk powder as well as high protein whey products have been

U.S. DAIRY EXPORTS

constrained due to limited availability.

Strong milk production domestically has lessened the need for foreign products, resulting in lower imports. However, as domestic protein demand continues to soar, low domestic availability of dry skim milk contributed to higher imports, especially compared to particularly low levels in late 2024.

SEPT-NOV 2025

SEPT-NOV 2024

2024-2025 CHANGE

PERCENT CHANGE

(metric tons) Butter

25,575

8,565

17,009

199%

Anhydrous Milk Fat/Butteroil

9,060

5,021

4,039

80%

Total Cheese

158,690

121,361

37,328

31%

27,219

12,442

14,776

119%

Cheddar Cheese

27,087

12,378

14,709

119%

All Other Cheese

131,471

108,919

22,552

21%

Dry Skim Milk

167,017

178,214

-11,197

-6%

Whole Milk Powder

9,718

6,122

3,596

59%

Dry Whey

53,281

44,569

8,712

20%

Whey Protein Concentrate/Isolate

47,185

57,508

-10,323

-18%

Lactose

105,631

107,817

-2,187

-2%

Percent of U.S. Milk Solids Exported

16.6%

16.6%

0.0%

0%

Total Exports (Milk Solids)

1,284

1,211

72.60

6%

U.S. DAIRY IMPORTS

SEPT-NOV 2025

SEPT-NOV 2024

2024-2025 CHANGE

PERCENT CHANGE

Butter

7,790

26,413

-18,623

-71%

Cheese

48,258

60,209

-11,951

-20%

Dry Skim Milk

867

55

812

1469%

MPC (all protein levels)

12,460

12,919

-460

-4%

Casein

9,911

10,985

-1,074

-10%

Percent of U.S. Milk Solids Imported

2.8%

3.6%

-0.8%

-22.2%

Total Imports (Milk Solids)

215

261

-45.50

-17.4%

American-type Cheese

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MILK PRODUCTION Milk production ended a strong year with Q4 liquid milk production up 4.2% over the fourth quarter of 2024. Driven by increases in butterfat tests, milkfat production rose 5.6% in Q4, boosting total milk solids production to improve by 4.5% over the same period. Milking cow numbers grew only

slightly within October–December 2025, indicating that herd expansion may be losing steam. However, the addition of 202,000 cows over the last 12 months, with each cow producing 2% more pounds of milk than a year ago, has led to significant domestic milk supply.

MILK PRODUCTION

OCT-DEC 2025

OCT-DEC 2024

2024-2025 CHANGE

PERCENT CHANGE

Cows (1,000 head)

9,562

9,360

202

2.2%

Per Cow (pounds)

6,047

5,930

117

2.0%

Total Milk (million pounds)

57,820

55,507

2,313

4.2%

Total Milk Solids (million pounds)*

7,821

7,456

365

4.9%

Total Skim Milk Solids (million pounds)*

5,318

5,086

231

4.5%

Total Milkfat (million pounds)*

2,504

2,370

133

5.6%

Milk Solids Composition of Milk (percent)*

13.5%

13.4%

0.1%

0.7%

Skim Solids Composition of Milk (percent)*

9.2%

9.2%

0.0%

0.4%

Milkfat Composition of Milk (percent)*

4.3%

4.3%

0.1%

1.4%

*Federal Milk Marketing Order data

DAIRY PRODUCTS Record demand for dairy protein, particularly in whey protein concentrates, continued to drive strong cheese and whey production. Similarly, demand for milk protein concentrates

DAIRY PRODUCTS PRODUCTION

and ultrafiltered milk diverted solids away from nonfat dry milk and skim milk powder. High milkfat component growth and ample cream supplies kept churns busy.

OCT-DEC 2025

OCT-DEC 2024

PERCENT CHANGE

(million pounds)

Cheese American Types

2024-2025 CHANGE

1,466

1,400

65

4.7%

Cheddar

991

948

43

4.5%

Italian Types

1,635

1,526

109

7.2%

Mozzarella

1,284

1,208

76

6.3%

All Other Types

664

644

20

3.1%

Total Cheese

3,765

3,570

195

5.5%

567

544

23

4.2%

Nonfat Dry Milk

356

376

-20

-5.2%

Skim Milk Powder

119

136

-17

-12.2%

Dry Whey

202

200

2

0.8%

Whey Protein Concentrate

128

123

4

3.6%

Butter Dry Milk Products

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DAIRY PRODUCT INVENTORIES Demand for dairy proteins led to a decrease in whey stocks in December, particularly in whey protein concentrate. Despite robust production of cheese, vigorous export volumes kept stocks largely stable. There remains a disconnect between

DAIRY PRODUCT INVENTORIES

U.S. imports of butter and EU exports of butter destined for the United States, which suggests official butter inventories may be understating volumes to some extent.

DEC-25

NOV-25

DEC-24

2024-2025 CHANGE

(million pounds) Butter

199

210

214

-7%

American Cheese

790

787

771

2%

Other Cheese

560

553

559

0%

Dry Skim Milk

218

204

209

4%

Dry Whey

59

55

60

-2%

Whey Protein Concentrate

48

47

58

-16%

DAIRY PRODUCT AND FEDERAL ORDER CLASS PRICES Even as dairy prices rallied in January, NDPSR prices for all dairy commodities are well below 2025 levels. Federal Order

DAIRY PRODUCT AND FEDERAL ORDER PRICES

Class Prices still lag prior year levels, with Class IV and Class II more than $7.00 per hundredweight below last January.

JAN-26

DEC-25

JAN-25

2025-2026 CHANGE

(per pound)

NDPSR Dairy Product Prices Butter

$1.43

$1.53

$2.61

-$1.18

Cheddar Cheese

$1.40

$1.52

$1.89

-$0.49

$1.40

$1.52

$1.89

-$0.49

Nonfat Dry Milk

$1.19

$1.15

$1.39

-$0.20

Dry Whey

$0.70

$0.69

$0.72

-$0.02

40-Pound Blocks

(per hundredweight)

Federal Order Class Prices for Milk Class I Base

$16.35

$18.21

$20.38

-$4.03

Class I Base (Effective for ESL Milk)

$16.18

$17.30

$20.38

-$4.20

Class II

$13.92

$14.41

$21.58

-$7.66

Class III

$14.59

$15.86

$20.34

-$5.75

Class IV

$13.55

$13.64

$20.73

-$7.18

Fluid Whole Milk (per gallon)

$4.10

$4.05

$4.14

-$0.09

Lowfat Fluid Milk (per gallon)

$3.43

$3.37

$3.78

-$0.36

Cheddar Cheese (per pound)

$5.98

$5.79

$5.62

$0.36

Butter (per pound)

$4.38

$4.41

$4.73

-$0.35

Retail Dairy Product Prices

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MILK AND FEED PRICES December’s DMC margin of $9.42/cwt dipped below the maximum coverage level of $9.50/cwt, suggesting many dairy farmers will receive a modest DMC payment. Except for soybean meal, feed prices fell slightly, but a sharp decline in the All Milk Price led to a noticeable drop in DMC margins.

At time of writing, the DMC Decision Tool forecasts that DMC margins will drop to $8.33/cwt in January before finding a minimum of $8.23/cwt in February, after which it predicts margins will improve.

DEC-25

NOV-25

DEC-24

2024-2025 CHANGE

$19.00

$19.70

$23.30

-$4.30

Corn (per bushel)

$4.10

$3.98

$4.23

-$0.13

Soybean Meal (per ton)

$312

$331

$304

$8.30

Premium Alfalfa Hay (per ton)

$211

$216

$230

-$19.00

Corn

$4.40

$4.27

$4.54

-$0.14

Soybean Meal

$2.29

$2.43

$2.23

$0.06

Premium Alfalfa Hay

$2.89

$2.96

$3.15

-$0.26

DMC Feed Cost* (per cwt.)

$9.58

$9.66

$9.92

-$0.34

DMC Margin* (per cwt.)

$9.42

$10.04

$13.38

-$3.96

MILK AND FEED PRICES Producer Prices All Milk (per cwt.)

Feed Prices

Feed Prices (per cwt of milk)

*DMC calculations are not revised

LOOKING AHEAD Milk production remains incredibly robust both in the U.S. and around the world. While ample supply weighed on prices in 2025 and will continue to into early 2026, hope remains: Dairy protein demand shows no signs of slowing, and exports continue to provide destinations for U.S. products. Additionally, consumption of whole milk continues to increase, and may be bolstered by the allowance of whole milk in school meals.

Dairy Management Inc.™ and state, regional, and international organizations work together to drive demand for dairy products on behalf of America’s dairy farmers, through the programs of the American Dairy Association®, the National Dairy Council®, and the U.S. Dairy Export Council®.

Peter Vitaliano, National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org

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The National Milk Producers Federation (NMPF) develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies.