Lawmakers averted another government shutdown last week by approving a spending bill that passed the Senate after President Trump agreed to Democrat demands for restraint on immigration enforcement. It narrowly passed the House.
The Agriculture Department announced the first Class III milk price of 2026 at $14.59 per hundredweight, down $1.27 from December, $5.75 below January 2025, and the lowest Class III price since July 2023’s $13.77. Late Friday morning futures had the February price at $15.38, March at $17.13, April at $17.25, May at $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 February 2021’s $13.19.
You’ll recall December milk was up 4.4% from a year ago. Milk components kept rising as well, leaving plenty for the Dairy Products report to detail. 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% 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%.
Italian style cheeses totaled 561 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% 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.
Yogurt production totaled 401 million pounds, up 6.5% from a year ago, with output for the year hitting 5.3 billion pounds, up 7.6%.
Hard ice cream, at 48.9 million pounds, was down 5.4% from 2024. Production for the year totaled 720.5 million pounds, down 2.2% from a year ago.
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 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. Nonfat dry milk 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.”
Another drop in the all milk price and higher prices for corn and hay pulled the December feed price ratio lower for the third month in a row. USDA’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 $19.00 per hundredweight 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 hundredweight, down $2 from October, after losing $3 the month before. It was still $38 above December 2024, and $85.40 above the 2011 base average.
Quarterly milk cow replacements averaged $2,86 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 hundredweight, with an 84 cent per hundredweight loss from November to $10.58 per hundredweight, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Missouri.
He adds “Income over feed costs in December were above the $8 per hundredweight level needed for steady to higher milk production for the 26th month in a row. Input prices were mostly higher in December with two of the three input commodities inside of the top ten for December all time. Feed costs were the 11th highest ever for December and increased 14 cents per hundredweight, from November.”
Milk income over feed costs for 2025 were $12.44 per hundredweight, 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 hundredweight 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 hundredweight, says Brooks, a loss of $2.30 per hundredweight versus 2025. Income over feed costs would also be above the level needed to maintain or grow milk production, and up 50 cents per hundredweight versus the previous estimate.
The latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC says, “Dairy margins strengthened over the second half of January as higher milk prices more than offset a slight rise in feed costs.” The MW reported highlights from the December Milk Production and Cold Storage reports.
It stated, “The January Cattle Inventory report revealed a continued decline in heifer numbers with 3.905 million in the national herd on Jan. 1, down 11,000 from last year, which was revised slightly upward from the previous estimate, and the lowest since 1978 as the ongoing beef on dairy breeding trend to capitalize on historically high beef and calf prices exacerbates the shortage.”
“The number of replacement heifers expected to calve also declined to 2.498 million head, down 3,000 from last year, and total heifers as a percentage of the total milking herd at 40.8% is historically very low,” the MW concluded.
Dairy culling appears to be picking up. USDA’s latest data showed 60,800 head were sent to slaughter in the week ending Jan. 24, up 1,000 from the previous week, and 9,300 or 18.1% more than a year ago. Year to date 209,000 cows have left the dairy business, up 17,400 or 8.3% from a year ago.
The Chicago dairy markets were buoyed by a strong Global Dairy Trade last week. Block cheddar raced to $1.4725 per pound Friday, 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, 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 Dairy Market News.
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 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 two weeks ago, due to winter weather, pushed more cream to the spot market last week. Class II processors were ordering fewer loads this week while interest from butter makers was steady to higher. Churns were busy. Domestic demand is strong, while interest from retail and food service end users was unchanged from two weeks ago. Export demand was strong and inventories are tight, according to Dairy Market News.
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 $1.64 per pound Friday 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, 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.
Technical difficulties again plagued last week’s Global Dairy Trade, however its weighted average wasn’t, jumping 6.7%, following a 1.5% rise on Jan. 20, and 6.3% on Jan. 6. It was the third gain following nine consecutive declines. Volume fell seasonally to just under 53 million pounds, down from 61.3 million on Jan. 20, lowest since July 15, 2025. The average metric ton price climbed to $3,830, up from $3,615 on Jan. 20, and the highest in seven events.
All commodities saw gains, led by skim milk powder which jumped 10.6%, after a 2.2% rise on Jan. 20. Whole milk powder was up 5.3%, following a 1% gain. Buttermilk powder was up 6.4%. Butter jumped 8.8%, following a 2.1% rise last time, and anhydrous milkfat was up 5%, after rising 3%. Cheddar was up 3.8%, following a 1.4% loss, while GDT mozzarella was up 10.6%, after leading the declines last time, down 2.3%. Lactose was up 1.5%, following a 1.8% dip.
StoneX says the GDT 80% butterfat butter price equates to $2.5549 per pound, up from $2.3515 on Jan. 20, and compares to CME butter which closed Friday at $1.71. Cheddar equated to $2.1646, up from $2.0838 last time, and compares to Friday’s CME block cheddar at $1.4725. GDT skim milk powder averaged $1.3037 per pound, up from $1.1862, and whole milk powder averaged $1.6395, up from $1.5644, while CME Grade A nonfat dry milk closed Friday at $1.64 per pound.
NEXT member cooperatives secured 82 contracts in January, adding 19.3 million pounds of product in NEXT-assisted sales in 2026, as the program built on its record-level activity in the second half of 2025. Products will go to customers in Asia, Oceania, Middle East-North Africa, South America, Central America, the Caribbean and Sub-Saharan Africa from January through December.
The USDA’s Animal and Plant Health Inspection Service (APHIS) announced a shift in its 100 million per week sterile fly dispersal efforts to stop the northern spread of New World screwworm (NWS). “USDA will reallocate aircraft and sterile insects to reinforce coverage along the US-Mexico border,” according to a website press release. “The new dispersal area, or polygon, will include operations about 50 miles into Texas, along the US border with the state of Tamaulipas, Mexico. Mass production and targeted dispersal of sterile insects are critical components of an effective strategy to fight NWS. Other tools including import protocols and surveillance continue to support these robust efforts to keep NWS out of the US.”
Farm Progress reported that the U.S. saw its first case of screwworm in at least 10 years. The discovery was made in the wound of a horse from Argentina, in a routine inspection by APHIS in Florida.
Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota, and can be contacted at lkmielke@juno.com.
This article originally appeared on Farmers Advance: US saw its first case of screwworm in at least 10 years
Reporting by Lee Mielke, Farmers’ Advance / Farmers Advance
USA TODAY Network via Reuters Connect
