Benchmark drops $1.27, $5.75 below a year ago
The Agriculture Department announced the first Class III milk price of 2026 at $14.59 per hundredweight (cwt.), down $1.27 from December, $5.75 below Jan. 2025 and the lowest Class III price since July 2023’s $13.77. Late Friday, Feb. 6, morning futures had the February price at $15.38; March, $17.13; April, $17.25; May, $17.40; and June at $17.55, with the peak at $18 in November.
The Class IV price is $13.55, down 9 cents from December, $7.18 below a year ago, and the lowest Class IV since Feb. 2021’s $13.19.
You’d almost think U.S. dairy farms were in the spring flush. December milk output hit 19.568 billion pounds, up 4.4% from Dec. 2024. The 24 State total, at 18.823 billion pounds, was up 4.6%. Fat and protein were both up from last year which put component adjusted production up 5.9%, according to StoneX.
November output was revised up 6 million pounds to 18.796 billion, 4.5% above a year ago. The 24 State total was revised up 3 million pounds, to 18.081 billion, up 4.7%.
Output for all of 2025 amounted to 231.482 billion pounds, up 2.5% from 2024, and 222.476 billion for the 24 States, up 2.6%. Cow numbers for the year were up 148,000 head and output per cow averaged 24,392 pounds, up 214 pounds.
December cows numbered 9.567 million, up 9,000 from the November count, which was revised down 12,000 head, but was up 212,000 or 2.3% from a year ago. The 24 State count was 9.138 million, up 9,000 from the November total, which was revised down 4,000 head, but is 222,000 or 2.5% above a year ago.
December output per cow averaged 2,045 pounds in the 50 States, up 41 pounds or 2.0% from a year ago. The 24 state average, at 2,060 pounds, was up 42 pounds or 2.1% from 2024. The November average was revised up 4 pounds in the 50 States and up 2 pounds in the 24-States.
California cows put just under 3.5 billion pounds of milk in the tank in December, up 305 million or 9.6% from a year ago, which follows an 11% increase in November. Cow numbers were up 3,000 head in December and output per cow was up 175 pounds from a year ago when it was still fighting avian influenza.
Wisconsin’s December output totaled 2.8 billion pounds, up 75 million or 2.8% from a year ago, on 20,000 more cows and a 25 pound gain per cow.
Idaho was up 5.6%, thanks to 40,000 more cows offsetting a 5 pound drop per cow. Kansas again marked the biggest percentage gain, up 26.2%, on 45,000 more cows and a 20 pound gain per cow. Michigan was up 4.5% and Minnesota was up 3.9%.
New Mexico, one of five states showing a decline in milk output, was down 4.9%, on 10,000 fewer cows and a 15 pound drop per cow. New York was up 3.9%, Oregon was up 8.9% on 9,000 more cows, and a 15 pound gain in output per cow. Pennsylvania was down 2.4%, and South Dakota was up 11.4%, on 25,000 more cows. Output per cow was off 5 pounds.
Texas produced just under 1.6 billion pounds, up 69 million or 4.7% from a year ago, thanks to 30,000 more cows and a 5 pound gain per cow. Washington State again posted the biggest decline, down 6.0%, on 19,000 fewer cows, although output per cow was up 30 pounds.
There’s plenty of dairy in the freezer though exports have kept stocks in check. The Agriculture Department’s latest Cold Storage report showed December butter stocks had shrunk to 199.3 million pounds, down 11.1 million pounds or 5.3% from November, and a whopping 14.96 million or 7.0% below December 2024.
American type cheese crept to 789.8 million pounds, up 2.5 million or 0.3% from the November level, and up 18.6 million pounds or 2.4% from a year ago. The “other” cheese holdings climbed to 559.9 million pounds, up 7.2 million or 1.3% from November, but were just 468,000 pounds above a year ago.
The total December cheese inventory hit 1.372 billion pounds, up 10.2 million or 0.7% from November, and up 18.0 million or 1.3% from a year ago. There were no revisions in any of the November data.
Speaking of exports, U.S. dairy sailings in November hit 515.2 million pounds, up 13.8% from November 2024. The totals were buoyed by stronger shipments to Canada, South Korea, Indonesia and Australia, according to HighGround Dairy’s analysis, where exports increased by at least 6.6 million year-over-year. Sales to Mexico, the top U.S. destination, however, dropped on an annual basis for the fourth month in a row, down 1.6%. Sailings to China, our No. 2 export market, were up just 0.7%.
Butter exports totaled 25.1 million pounds, up 245.2% from a year ago, second-highest all-time total, just behind August 2008, according to HighGround. “U.S. butter has been at a sizable discount to global prices for some time,” says HGD. “The largest discount occurred in September and October 2025 when some of these sales would have been booked.”
Cheese exports hit 111.9 million pounds, up 28.1%, and up 20.1% year to date.
Nonfat/skim milk powder totaled 121.3 million pounds, up just 0.1%, but down 11.1% year to date. Dry whey, at 37.8 million pounds, was up 18%, marking the six month in a row of an increase, according to HGD.
Another drop in the All Milk Price and higher prices for corn and hay pulled the December feed price ratio lower, down for the third month in a row.
The U.S. Department of Agriculture’s Ag Prices report showed December at 2.26, down from 2.38 in November, and compares to 2.73 in December 2024.
The All Milk Price dropped to $19 per cwt., with a 4.51% butterfat test, down 70 cents from November’s $19.70 on a 4.46% test. It was the lowest level of 2025 and $4.30 below a year ago, which had a 4.46% butterfat test.
The national corn price averaged $4.10 per bushel, up 12 cents from November, which followed a nickel rise last month, but is still 13 cents below December 2024. Soybeans averaged $10.40 per bushel, down a dime from November, and follows a 79 cent jump last month, but are 61 cents above a year ago. Alfalfa hay averaged $161 per ton, down $2 from November, and $3 below a year ago.
The November average cull price for beef and dairy combined fell to $157 per cwt., down $2 from October, after losing $3 the month before. It was still $38 above Dec. 2024, and $85.40 above the 2011 base average.
Quarterly milk cow replacements averaged $2,860 per head in January, down $250 from October, but $200 above January 2025. Cows averaged $2,800 per head in California, down $200 from October, but $200 above a year ago. Wisconsin’s average, at $3,170 per head, was down $190 from October, but $310 above January 2025.
Milk production margins decreased for the fourth month in a row to the lowest level since January 2024’s $9.74 per cwt., with an 84 cent per cwt. loss from November to $10.58 per cwt., according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.
“Income over feed costs in December were above the $8 per cwt. level needed for steady to higher milk production for the 26th month in a row,” he said. “Input prices were mostly higher in December with two of the three input commodities inside of the top 10 for December all-time. Feed costs were the 11th highest ever for December and increased 14 cents per cwt, from November.”
Milk income over feed costs for 2025 were $12.44 per cwt., a loss of 2 cents from the previous estimate, and income over feed would be above the level needed to maintain or grow milk production, and down 96 cents per cwt. from 2024’s level.
Milk income over feed costs for 2026 (using Jan. 30 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $10.14 per cwt., said Brooks, a loss of $2.30 per cwt. versus 2025. Income over feed costs would also be above the level needed to maintain or grow milk production, and up 50 cents per cwt. versus the previous estimate.
Cheese vats and butter churns were busy in December. The USDA’s latest Dairy Product report shows Cheese output totaled 1.279 billion pounds, up 4.4% from November, and up 6.7% from Dec. 2024.
Output for all of 2025 totaled 14.7 billion pounds, up 2.9% from 2024.
Wisconsin provided 315 million pounds of the December total, up 6.6% from November, and 2.8% above December 2024. California contributed 216.6 million, up 4.1% from November, and 5.8% more than a year ago. Idaho vats produced 88.2 million pounds, up 4.0% from November, but down 4.4% from a year ago.
Mozzarella production totaled 440.6 million pounds, up 5.9% from a year ago, with output for the year hitting 4.9 billion pounds, up 2.9% from 2024.
American cheese, at 500.2 million pounds, was up 5.7% from November, and up 6.8% from a year ago. American output for 2025 hit 5.8 billion pounds, up 4.0%. Italian style cheeses totaled 561.0 million pounds, down 5.2% from November, and up 7.4% from a year ago, with 6.3 billion pounds for the year, up 3.7%.
Cheddar output jumped to 340.4 million pounds, up 18.1 million or 5.6% from November’s level, which was revised up 2.6 million pounds from last month’s report, and was up a whopping 28.1 million pounds or 9.0% from a year ago. Cheddar output for all of 2025 hit 3.98 billion pounds, up 5.3% from 2024.
Butter production climbed to 203.8 million pounds, up 26.6 million pounds or 15% from November’s level, which was revised up 2.6 million pounds. Output was up 4 million pounds or 2% from a year ago, and output for all of 2025 came to 2.4 billion pounds, up 5.7% from 2024.
Dry whey production climbed to 69.8 million pounds, up 5.7 million pounds or 9% from November, and up 800,000 pounds or 1.2% from a year ago. Output for the year hit 828.7 million pounds, down 2.9% from a year ago. Whey stocks grew to 59.1 million pounds, up 4.5 million or 8.3% from November, but were down 1.1 million pounds or 1.7% from a year ago.
Nonfat dry milk (NFDM) output jumped to 127.2 million pounds, up 19.2 million pounds or 17.7% from November, but was down 3.5 million or 2.7% from a year ago. NFDM for the year totaled 1.7 billion pounds, down 0.9% from 2024. December stocks climbed to 214 million pounds, up 15 million, or 7.5% from November, and up 11.5 million pounds or 5.6% from 2024.
Skim milk powder production crept to 43.1 million pounds, up 2.6 million pounds or 6.4% from November, but was down 7.7 million or 15.2% from a year ago. Output for the year totaled 488.3 million pounds, down 18.5% from 2024.
The Feb. 5 Daily Dairy Report stated; “The whey complex was up to its old tricks as the raw whey stream continued to be increasingly routed toward higher-value products. Production of whey protein isolates rose 11.7% to 20.644 million pounds while dry whey production grew just 4%. Whey protein concentrate production continued to skew toward higher protein products.”
StoneX Dairy Group stated “We’ve estimated that the market is taking on 69.5 million pounds of extra cheese per month due to the increased production capacity at this point. However, exports and domestic consumption have put in a lot of work to eat through this glut of product. It appears to be more in balance than the market was expecting at this time.”
The Chicago dairy markets were buoyed by a strong Global Dairy Trade last week. Block Cheddar raced to $1.4725 per pound Friday, Feb. 6, highest CME price since Nov. 25, 2025, up 11 cents on the week, but still 38.75 cents below a year ago. The barrels hit $1.44 Wednesday, Feb. 4, all on unfilled bids, and held there Friday, 5 cents higher on the week but 34 cents below a year ago. There were 51 sales of block on the week, highest since the week of June 23, 2025, and no barrel.
Milk output is steady in the central region, according to Dairy Market News. Spot volumes were available following downtime at production facilities throughout the region last week, due to a winter storm. Production resumed last week and spot market demand for Class I and Class III milk was strengthening. Spot milk prices ranged $3-under to flat at mid-week. Cheese vats were staying busy. Domestic cheese demand is steady and export demand is strong, according to DMN.
Class III spot milk availability was tight in the northwest. Demand from cheesemakers was stronger and cheese output was steady to stronger. Domestic cheese demand from retail and food service was mixed. Demand from food manufacturers was steady while global demand was steady to stronger.
Cash butter hit $1.71 per pound Thursday, Feb. 5, and stayed there Friday, highest since Oct. 3, 2025, 13 cents higher on the week, but still 67 cents below a year ago. There were 21 CME sales put on the board last week.
Cream production is strong in the central region. Downtime at plants due to winter weather, pushed more cream to the spot market last week. Class II processors were ordering fewer loads last week while interest from butter makers was steady to higher. Churns were busy. Domestic and export demand is strong.
Western butter makers have plenty of cream and most were running at or close to capacity. A few noted improperly working equipment was holding back building of inventory. Domestic butter demand is lighter to steady and exports are strong.
Grade A nonfat dry milk soared to a $1.64 per pound Friday, Feb. 6, closing, highest CME price since July 28, 2022, up 18 cents on the week and 31 cents above a year ago. There were three sales reported for the week.
Dry whey slipped to 70.50 cents per pound Tuesday, Feb. 3, but rallied Wednesday and Thursday and closed Friday at 73 cents per pound, down 2 cents on the week but 14.25 cents above a year ago, on three sales.
