Dairy product prices have continued to gain strength even as milk production grew 2.9% on a liquid basis in February. While milk supplies weighed on markets in 2025, new processing capacity coming online in early 2026 has funneled milk towards product production. Even as dairy product production grows, demand is growing for most products, both domestically and abroad.
Butter, cheese, and dry whey showed growth in both domestic use and exports in February. Despite recent focus on high-protein products, butter had a particularly strong month, with exports up 94% and domestic use up 15% year-over-year. Healthy demand for dairy products is supporting commodity prices at the CME, with all except dry whey posting monthly gains in March. Nonfat dry milk (NFDM) reached record levels in mid-April as high protein products competed for skim solids. DMC margins improved slightly from January, settling at $8.46/cwt for February, and recent price rallies in commodity prices are expected to boost margins in the coming months.
| GRAPH OF THE MONTH |
| American consumers are seeking out higher-protein products like cottage cheese and Greek yogurt, sending less milk to dryers (see March’s Graph of the Month). That in turn is tightening availability of NFDM and contributing to record high NFDM prices. With over 70% of NFDM typically exported, the U.S. now sits significantly above EU and NZ pricing. If U.S. sales to these markets begin to ease, prices are likely to follow. Yet even if prices eventually decline, thanks to the strength and pull of protein in products like yogurts, cottage cheese and beverages, NFDM prices should be firmer than the last several years, even if today’s altitude is unlikely to be maintained indefinitely. |
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The Dairy Market Report is produced by the National Milk Producers Federation and Dairy Management, Inc.
