Benchmark up 35 cents, $5.24 below a year ago
Farm milk prices are slowly heading back up. The Agriculture Department announced the February Federal order Class III price at $14.94 per hundredweight (cwt.), up 35 cents from January but $5.24 below February 2025 and the highest Class III price since October 2025. The two-month average stands at $14.77, down from $20.83 a year ago.
Late Friday, March 6, morning Class III futures portended a March price at $16.43; April, $17.02; May, $17.33; and June, $17.77; with a peak of $18.50 in September.
The February Class IV price is $16.29, up $2.74 from January but $3.61 below a year ago. Its two month average is $14.63, down from $20.32 a year ago.
Dairy margins strengthened nicely, particularly in third quarter, over the second half of February as milk price increases more than offset a modest feed market increase, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.
“Both the Class III and especially the Class IV milk futures continued to see strength,” The MW stated. “Some of the increase was attributed to an announcement from USDA to buy additional nutritional items for food banks and nutrition assistance programs. Of the $263 million allocation, $75 million will be used to purchase butter, $32.5 million will be used to purchase cheddar cheese and cheese products, $10 million will be used to purchase Swiss cheese, $20.5 million on fresh fluid milk, and $10 million on ultra-high temperature milk.”
The MW stated that January milk production was lower than analysts’ estimates and stated; “US herd expansion continues, particularly in South Dakota and Kansas to fill demand from new processing plants. Despite elevated production, days of available supply for both butter and cheese remain relatively low.” The MW also detailed the January Cold Storage data, concluding that it implied “Strong demand in the face of increased production domestically and globally.”
Meanwhile, another drop in the All Milk Price pulled the January feed price ratio lower for the fourth consecutive month. The Ag Prices report showed January at 2.09, down from 2.26 in December, and compares to 2.82 in Jan. 2025.
The All Milk Price dropped to $17.50 per cwt., with a 4.48% butterfat test, down $1.50 from December’s $19 on a 4.51% test. It was $6.60 below a year ago which had a 4.46% test. The January price is the lowest since July 2023’s $17.30.
The national corn price averaged $4.10 per bushel, unchanged from December and 19 cents below Jan. 2025. Soybeans averaged $10.30 per bushel, down a dime from December, but 30 cents per bushel above a year ago. Alfalfa hay averaged $160 per ton, down $1 from December, and $1 below a year ago.
The December average cull price for beef and dairy combined inched up to $158 per cwt., up $1 from December, $32 above Jan. 2025, and $86.40 above the 2011 base average.
Milk production margins decreased for the fifth month in a row to the lowest level since August 2023’s $7.79 per cwt., with a $1.47 per cwt. loss from December to $9.11 per cwt., according to according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo.
“Income over feed costs in January were above the $8 per cwt. level needed for steady to higher milk production for the 27th month in a row,” Brooks said. “Input prices were steady to lower in January with one of the three input commodities inside of the top 10 for January all-time. Feed costs were the 10th highest ever for the month of January and decreased 3 cents per cwt. from December.”
Increasing cow numbers and more milk per cow kept U.S. bulk tanks filled in the first month of the new year. January milk production hit 19.810 billion pounds, up 3.2% from Jan. 2025. The 24 State total, at 19.058 billion, was up 3.4%. Fat and protein content were both up from last year which pushed component adjusted production in the 50 states up 4.2% from last year, according to StoneX.
Production for all of 2025 was officially announced at a record 232 billion pounds in the 50 States, up 2.6% from 2024, and up 9% from 2016. You’ll recall that output was down in both 2023 and 2024. Cow numbers in 2025 totaled 9.5 million head, up 153,000 from 2024, and up 1.8% from 2016. Output per cow averaged 24,390 pounds, up 218 pounds from 2024. That average annual rate has increased 7.2% from 2016.
The latest World Agricultural Supply and Demand Estimate report projects 2026 output to hit 234.5 billion pounds which would be up 2.8 billion or 1.2% from 2025.
December production was revised down 39 million pounds to 19.529 billion, 4.2% above a year ago, instead of the 4.4% originally reported. The 24 State total was revised down 36 million pounds, to 18.787 billion, up 4.4% instead of 4.7%.
January cows numbered 9.580 million, up 14,000 from the December count, which was revised down 1,000 head, but up 189,000 or 2.0% from Jan. 2025. The 24 State count was 9.154 million, up 15,000 from the December total, which was revised up 1,000 head, but is 200,000 head or 2.2% above a year ago.
January output per cow averaged 2,068 pounds in the 50 States, up 24 pounds or 1.2% from a year ago. The 24 state average, at 2,082 pounds, was up 24 pounds or 1.2% from 2025. The December average was revised down 3 pounds in the 50 States and 4 pounds in the 24-States.
California milk output hit 3.5 billion pounds in January, up 158 million or 4.7% from a year ago, after a 9.6% gain in December.
Cow numbers were up 2,000 head and output per cow was up 90 pounds from a year ago. Wisconsin put just under 2.8 billion pounds in the tank in January, up 56 million or 2.1%, on 20,000 more cows and a 10 pound gain per cow.
No. 3 Idaho was up 3.2%, thanks to 22,000 more cows. Output per cow was unchanged.
Kansas continues to show the biggest percentage gain, up 26.1%, on 45,000 more cows and a 20 pound gain per cow. Michigan was up 3.6% on 15,000 more cows and a 5 pound gain per cow. Minnesota was up 3.4%, on 15,000 more cows with output per cow unchanged.
New Mexico, one of four states showing a decline in milk output, was down 3.8%, on 8,000 fewer cows and a 5 pound drop per cow. New York was up 3.4% on 23,000 more cows, though output per cow was off 5 pounds.
Oregon was up 4.9% on 6,000 more cows, however output per cow was unchanged.
Pennsylvania was down 3% on 11,000 fewer cows and 10 pounds less per cow. South Dakota was up 10.9%, on 24,000 more cows. Cow output was unchanged.
Texas produced just under 1.6 billion pounds of milk, up 113 million or 7.6% from a year ago, thanks to 37,000 more cows and a 45 pound gain per cow. Washington State posted the biggest decline again, down 6.1%, on 17,000 fewer cows, although output per cow was up 15 pounds.
StoneX said “It’s pretty clear that the most profitable part of the dairy farm right now are the calves. Farmers will hold onto all the cows that they can get bred which should keep cow numbers steady to a little higher but the record pace of expansion that we saw in 2025 is slowing down. The collapse in milk prices in fourth quarter sent a clear signal to the farmers to cut milk production and they’ve made adjustments in rations to save some cash which have probably cut the fat content in the milk and slowed the growth in milk production per cow. Milk production growth will likely continue to slow as we move through the year and face tougher and tougher year-over-year comparisons.”
Dairy cow culling continues to run ahead of a year ago. USDA’s latest data showed 58,300 cows sent to slaughter the week ending Feb. 21, up 6,700 or 13% more than a year ago. Year to date 460,000 cows had been culled, up 32,400 or 7.6% from 2025.
U.S. butter stocks jumped in January but are still well below those a year ago. The Agriculture Department’s latest Cold Storage report showed January stocks had grown to 215.4 million pounds, up 27.8 million or 14.8% from December. But, they were a whopping 45.6 million or 17.5% below Jan. 2025. The December total was revised 11.6 million pounds lower from last month’s report.
American type cheese stocks slipped to 792.3 million pounds, down 1.5 million or 0.2% from the December level, which was revised up 4 million pounds.
It was down 360,000 pounds, virtually unchanged, from a year ago. The “other” cheese holdings crept to 564.8 million pounds, up 3.4 million pounds or 0.6% from December and up 2.4 million pounds or 0.4% above a year ago.
The total cheese inventory hit 1.380 billion pounds, up 2.4 million or 0.2% from December, and up 2.2 million or 0.2% from a year ago. December’s total was revised up 5.6 million pounds from last month’s data. The report is seen as bullish on butter and slightly bullish for cheese. U.S. exports and good domestic demand is helping keep product out of the freezer.
The United States is truly blessed with a bountiful dairy industry that benefits consumers. The National Milk Producers Federation points out “In the decades-old saga of Real Milk versus Plant-based Imposters, Team Real had another good year in 2025. While retail sales of fluid milk stayed steady, sales of imitators made from almonds, oats and other items fell 6% to 358.4 million gallons last year, according to Circana data. Since its peak in 2021, plant-based sales have declined by nearly one-fifth; last year’s drop of 6% was the steepest of all four.”
“As a result, for the fourth straight year, good-old-fashioned fluid milk’s market share rose compared to plant-based beverages, holding 90.7% of the combined dairy-and-alternative-beverage market in 2025. That’s the fourth straight annual increase in milk’s market share, and it’s up from 89.4% in 2021,” said NMPF.
“Slowly, but surely, consumers are choosing the better value in nutrition, in price and in trustworthiness,” argued NMPF. “In a rational world, real milk and plant-based beverages wouldn’t even be in the same category as their nutritional profiles are radically different, and their ingredients bear no similarity. Decades of plant-based marketing as dairy alternatives have made their mark; but despite that, dairy remains dominant. That’s a tribute to milk’s irreplaceable nutritional package and to consumers who dig past the hype and make the choices that best fit their nutritional needs.”
“Not that plant-based beverages are ever going away, far from it,” warned NMPF. “Even though beverages made from almonds, which is 63% of the plant-based market, fell by 8.6% last year, and soy fell 8.3%, oat-based beverages rose 1.8%, as it’s become a solid-though-distant second place to almonds.”
“People have their reasons to choose ultra-processed beverages of inferior nutritional value. But the decline of plant-based beverages fits within several trends of the 2020s, from the embrace of real food to renewed appreciation of dairy’s nutritional benefits, especially at fuller-fat levels, to consumers who are more critical of what they consume,” according to NMPF.
“Confusion remains in the marketplace over the inferior nutrition of plant-based versus true dairy beverages; that’s shown by surveys and studies. Enforcing federal standards of identity that define milk as an animal product and reserving dairy terms on labels only for true dairy beverages would further these positive marketplace trends.
Nutrition science has spoken, and consumer behavior is changing too. Slowly but surely, milk’s integrity is carrying the day, and real dairy is winning. Often, it just takes time,” NMPF concluded.
Block Cheddar closed the first Friday of March at $1.6175 per pound, up 9.50 cents on the week, highest since Nov. 11, 2025, and only a half-cent below a year ago. The barrels finished at $1.57, a penny higher, highest since Nov. 26, 2025, but 6 cents below a year ago. There were 10 sales of block and one barrel.
CME butter skyrocketed 26.50 cents Monday, March 2, topping $2 per pound for the first time since Sept. 9, 2025, highest single day gain since June 4, 2020 when it pole vaulted 29 cents. It hit $2.1375 Tuesday, March 3, highest since Aug. 26, 2025, but gave back 11.75 cents Wednesday and 3 cents Friday, to close at $2.01, up 17 cents on the week, but 30 cents below a year ago. There 92 sales on the week, 47 on Friday alone, highest single day total since Oct. 16, 2024.
Grade A nonfat dry milk fell to $1.6525 Thursday, March 5, but closed Friday at $1.68, 3 cents lower on the week, but still 55.50 cents above a year ago, with a whopping 59 sales on the week, highest weekly total since the week of Feb. 1, 2021.
Dry whey closed Friday at 64 cents per pound, 0.75 cent higher on the week, and 15 cents above a year ago, with one sale reported for the week.
In politics; the House Agriculture Committee passed its farm bill last week, 34 to 17. The National Milk Producers Federation applauded the bill, which includes “Key provisions that support and strengthen the dairy industry,” said Gregg Doud, president and CEO. “We stand ready to work with members of both the House and Senate on a bipartisan basis to pass a farm bill this year that will provide critical support for dairy farmers and their cooperatives.”
Meanwhile, NMPF said it “Significantly escalated its public engagement ahead of this summer’s U.S.-Mexico-Canada trade agreement review, with an NMPF coop farmer testifying before Congress and the head of its trade team speaking on behalf of a new coalition NMPF launched to help strengthen the agreement.”
Ted Vander Schaaf, an Idaho dairy farmer and board member of both the Northwest Dairy Association/Darigold and Idaho Dairymen’s Association, testified at a Feb. 12 Senate Finance Committee hearing on the importance of USMCA for the dairy community and the targeted improvements that must be addressed.
He emphasized that USMCA is vital for providing open and predictable market access, particularly to Mexico, while also highlighting areas where the agreement has fallen short. He emphasized the glaring shortcoming of Canada’s continued manipulation of its dairy tariff-rate quotas and its circumvention of USMCA dairy protein export disciplines to shortchange U.S. dairy exporters. He also noted Mexico’s delay in fully implementing its commitments to protect common cheese names and explained its importance to dairy producers and processors.”
