DAIRY MARKET REPORT VOLUME 29 | ISSUE 5
5/21/2026
EXECUTIVE SUMMARY Milk production grew 2.3% on a liquid basis in March, marking the fourth consecutive month of positive but slowing milk production. Despite decelerating production, milkfat supplies remain ample, and CME butter prices have eased over the last month as a result. Skim solids tell a different story: Nonfat dry milk (NFDM) prices set records throughout April and into May as new cheese capacity and insatiable demand for highprotein dairy products competed with dryers for milk. Yogurt and cottage cheese production and retail sales continue to gain momentum, and whey protein concentrate use rose almost 20% in March despite steep prices. However, even as protein demand remains high, warning signs of economic pressures on consumers are beginning to flash. Inflation in April accelerated to 3.8%, and consumer sentiment dropped to a record low. Economic pressures have translated to softer foodservice volumes, highlighted by cheese and butter domestic use easing. Overall, the Class IV rally driven by NFDM has helped buoy the All Milk Price, resulting in a March DMC Margin of $9.57/cwt, yet that improved margin disguises significant regional variation.
GRAPH OF THE MONTH Milk production is still growing but has recently showed signs of deceleration. While component growth contributed heavily to increases in milk production in 2025, recent year-over-year increases were almost entirely due to growth in the milking herd. Beef-on-dairy is contributing significantly to farm income as dairy commodity prices ease; producers are producing additional black calves in response but are not pushing for additional component growth due to the cost of the additional feed input relative to the marginal gain in production. Still, genetic advancements continue, meaning that some growth in liquid milk per cow and higher component production are built into today’s herd.