The March Federal order benchmark Class III milk price is $16.16 per hundredweight up $1.22 from February, but $2.46 below March 2025. It is the highest Class III price since Nov. 2025. The three-month average stands at $15.23, down from $19.71 a year ago, and compares to $15.86 in 2024. Thursday’s Class III futures settlements portend an April price at $17.73, May at $18.21, June at $18.65 and July at $19, with a peak at $19.08 in August.
The March Class IV price is $18.94, up $2.65 from February, 73 cents above a year ago, and the highest Class IV price since Feb. 2025. Its three-month average is at $16.26, down from $19.61 a year ago, and $19.78 in 2024.
Dairy margins were flat to slightly firmer over the second half of March as feed costs were steady awaiting the key Prospective Plantings and Grain Stocks reports from the U.S. Department of Agriculture at the end of the month while milk prices firmed, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging, LLC. “Milk futures are being supported by strong demand, particularly on the export front, which is preventing a build in dairy product stocks despite increased domestic milk production,” according to the Margin Watch.
The Margin Watch detailed the February Milk Production and Cold Storage reports which I have previously reported. It also stated recent strength in the powder market has added $5 to $6 per hundredweight in Class IV prices.
You’ll recall February milk output was up 2.9% from a year ago. The Dairy Products report details where the milk ended up. Cheese output totaled 1.161 billion pounds, down 9% from January, but up 3.9% from February 2025. Output for the first two months of 2026 totaled 2.4 billion pounds, up 4.2% from 2025.
Wisconsin produced 284.2 million pounds of February’s total, down 8.7% from January, but 0.7% above Feb. 2025. California provided 185.8 million pounds, down 10.3% from January, and 7.4% less than a year ago. Idaho cheese totaled 80.1 million pounds, down 12.3% from January, but 5.4% more than a year ago.
Mozzarella production totaled 394.8 million pounds, up 5.8% from a year ago. Year to date, 825.9 million pounds has been produced, up 5.2% from 2025.
American cheese came in at 451 million pounds, down 9.3% from January, but 1.9% more a year ago. Year to date, 948.2 million had been produced, up 2.6%.
Italian style cheeses totaled 506.3 million pounds, down 8.8% from January, but up 6.8% from a year ago, with year to date hitting1.1 billion pounds, up 6.8%.
Cheddar output fell to 314.7 million pounds, down 37.2 million or 10.6% from January’s level, which was revised down 1.4 million pounds from last month’s report but was up 7 million pounds or 2.3% from a year ago. Year to date, cheddar hit 666.6 million pounds, up 4.7%.
Butter production fell to 221.2 million pounds, down 19.7 million pounds or 8.2% from January’s level, which was revised up 9.5 million pounds. Output was up 18.5 million pounds or 9.1% from a year ago. Year to date, 462.1 million pounds of butter had been produced, up 9.8% from a year ago.
Yogurt production totaled 447 million pounds, up 5.8% from a year ago, with year-to-date output at 886.3 million pounds, up 5.1%. Hard ice cream, at 57.6 million pounds, was up 3.7% from 2025, with year-to-date output hitting 114.7 million pounds, off 0.3%.
Dry whey slipped to 67.3 million pounds, down 10.3 million pounds or 13.3% from January, but was up 7.2 million pounds or 12% from a year ago. Year to date, whey hit 144.9 million pounds, up 9.7%. Whey stocks fell to 58.1 million pounds, down 4.5 million or 7.1% from January, and down 4.6 million or 7.3% from 2025.
Nonfat dry milk output climbed to 159.3 million pounds, up 7.9 million or 5.2% from January, and up 12.7 million or 8.7% from a year ago. Year-to-date output, at 310.7 million pounds, was up 33.1%. Stocks grew to 220.3 million pounds, up 7.3 million or 3.4% from January, but down 30 million or 12% from a year ago.
Skim milk powder production dropped to 28.2 million pounds, down 18.9 million pounds or 40.1% from January and down 2.6 million or 8.3% from a year ago. Year to date, skim milk powder stands at 75.4 million pounds, up 15.4% from a year ago.
The markets were closed for Good Friday so cash block cheddar finished Thursday at $1.6725 per pound, up 9 cents on the week, highest Chicago Mercantile Exchange price since Oct. 31, 2025, and 3.25 cents above a year ago. The barrels closed at $1.5925, 2.75 cents higher on the week, but 6.75 cents below a year ago. There were 15 sales of block on the week and no barrel.
Central region milk production is strong and Midwest contacts told Dairy Market News that output is trending higher. Spot milk was available and cheesemakers were getting additional offers. The increased milk and downtime at some plants caused processors to offer milk below-Class prices and ranged $7-under to $2-under Class midweek. Cheese production was steady to lighter, as some plants had downtime this week. Domestic cheese demand from retail and food service users was unchanged, according to Dairy Market News.
Spring milk production is strong in the West and sufficiently meeting cheese manufacturer needs. Cheese production was steady but was not abundant and spot avails were somewhat dependent on variety.
Some manufacturers said inventories were extremely limited and production is anticipated to be focused on contractual commitments through second quarter. Domestic demand is steady. Export demand is steady to strong, says Dairy Market News.
Chicago Mercantile Exchange butter fell to $1.7525 per pound Wednesday but regained 3.75 cents Thursday to close at $1.79, down 3.5 cents on the week, and 50.5 cents below a year ago. There were 55 sales on the week.
Cream production is strong in the Central region. Some processors planned downtime last weekend and were offering loads on the spot market. However, demand from Class II and III processors kept inventories tight and well balanced. Churning was active. Demand is strong from retailers, while food service demand is steady, but remains somewhat light. Export interest was unchanged.
Spring milk output and cream production continues strong in the West. Spot cream availability was tighter as interest from other manufacturers has increased. Cream prices continue to have upward momentum. Demand from butter makers was light to steady and butter output was heavily active and above a year ago. Retail demand is steady to strong, food service lighter to steady. Butter makers note strong bulk butter demand from domestic and international buyers.
Grade A nonfat dry milk closed Thursday at $1.9725 per pound, highest Chicago Mercantile Exchange price since April 8, 2014, and 81.50 cents above a year ago on five sales.
National Milk Producers Federation says that nonfat dry milk’s price rally is in part due to “an insatiable domestic demand for high protein dairy products like Greek yogurt and cottage cheese. Alongside cheese, these products have pulled skim milk out of the dryers, leading to tighter supply of nonfat dry milk. While dairy protein demand shows no signs of slowing, nonfat dry milk’s recent price rally places the US above EU and New Zealand powder prices, which may slow exports to Asia until prices converge.”
Dry whey closed Thursday at 68.75 cents per pound, a quarter-cent lower on the week, but 19.75 cents above a year ago, with no sales for the week.
The March 30 Daily Dairy Report stated “Rising cheese production has ensured that an abundant stream of raw whey is available for whey processors to use. However, manufacturers are persistently routing raw whey toward higher-value ingredients, limiting input availability for low-protein products. And that is helping support the price of commodity dry whey. In 2025, total production of dry whey slipped to 831.6 million pounds, down 3% from the prior year, marking the lowest annual output since 1982. At the same time, production of whey protein isolates (WPI) rose 11% in 2025. Growing demand, both here and abroad, has underpinned the push toward high-value whey ingredients. As consumers pursue healthier diets and with the expanding use of GLP-1 medications further encouraging protein consumption, demand for high-value whey ingredients, such as WPIs and whey protein concentrates, has soared.”
Bottom line, the Daily Dairy Report concludes “Milk pricing formulas consider the dry whey price, and these values can provide critical support, with each penny gain in the dry whey price adding about 6 cents to the Class III price. Thus, if dry whey production remains limited and prices remain supported, the relationship between whey prices and Class III prices will likely provide some welcome support to producer incomes over coming months,” according to the Daily Dairy Report.
The USDA’s Prospective Plantings report, issued on March 31, showed corn at an estimated 95.3 million acres, down 3% or 3.45 million acres from last year. Planted acreage is expected to be down or unchanged in 37 of the 48 estimating states, according to the report. Soybean plantings were estimated at 84.7 million acres, up 4% from a year ago. Planted acreage is up or unchanged in 20 of the 29 estimating states.
The Grain Stocks report showed March 1 corn stocks at 9.02 billion bushels, up 11% from March 1, 2025. Soybeans totaled 2.1 billion bushels, up 10%.
An increase in the all-milk price, first rise since August 2025, offset higher feed prices to give the February feed price ratio a lift, ending four consecutive declines. The USDA’s latest Ag Prices report has February at 2.17, up from 2.09 in January, but that compares to 2.68 in February 2025.
The all-milk price hit $18.3 per hundredweight, with a 4.46% butterfat test, up 80 cents from January’s $17.50 on a 4.48% test, but compares to $23.60 a year ago which had a 4.43% test.
The national corn price averaged $4.11 per bushel, up a penny from January, but 47 cents below February 2025. Soybeans averaged $10.60 per bushel, up a dime from January, and 40 cents per bushel above a year ago. Alfalfa hay averaged $159 per ton, down $1 from January, and dead even with a year ago.
The February average cull price for beef and dairy combined inched up to $162 per hundredweight, up $4 from January, $27 above February 2025, and $90.40 above the 2011 base average.
Milk production margins increased to break a five-month run of decreasing margins by gaining 77 cents per hundredweight but remained below $10 per hundredweight for the second month in a row at $9.88, according to according to dairy economist Bill Brooks of Stoneheart Consulting in Dearborn, Missouri. “Income over feed costs in February were above the $8 per hundredweight level needed for steady to higher milk production for the 28th month in a row,” he said. “Input prices were mostly higher in February with one of the three input commodities inside of the top ten for February all-time. Feed costs were the 11th highest ever for the month of February and increased 3 cents per hundredweight from January.”
“The February all-milk price was outside the top ten for the month, at the 11th
highest ever recorded for the month,” says Brooks.
“Milk income over feed costs in 2025 were $12.44 per hundredweight Income over feed costs would be above the level needed to maintain or grow milk production and down 96 cents per hundredweight from 2024’s level and $2.17 higher than the 2020-24 average,” according to Brooks.
Milk income over feed costs for 2026, using March 30 CME settling futures prices for Class III milk, corn and soybeans plus the Stoneheart forecast for alfalfa hay are expected to be $11.49 per hundredweight, a loss of 94 cents per hundredweight versus 2025. Income over feed costs would be above the level needed to maintain or grow milk production and up 86 cents versus the previous estimate,” says Brooks.
The USDA’s latest slaughter data shows 52,200 dairy cows were culled the week ending March 21, down 300 head or 0.6% below a year ago. Year to date 644,000 cows had been culled, up 40,700 head or 6.3% from a year ago.
February U.S. dairy exports remain strong totaling 239,541 metric tons and, on a 30-day adjusted basis, ranked as the second-highest month on record behind May 2022, according to HighGround Dairy. Shipments increased sharply across nearly all product categories.
Cheese exports totaled a record 128.8 million pounds, up 30.1% from a year ago, despite February only having 28 days. Butter totaled 22.3 million pounds, up 93%, and nonfat/skim milk powder sailings hit 115.4 million pounds, up 8% from a year ago. Dry whey, at 47.3 million pounds, was up 36.4%.
In politics, Agriculture Secretary Brooke Rollins and U.S. Secretary of the Interior Doug Burgum announced new actions last week they say will “Boost the supply of American born, raised, and harvested beef by supporting American ranchers with the signing of a new Memorandum of Understanding that will strengthen coordination, cut bureaucratic red tape, and deliver immediate, tangible support for America’s farmers and ranchers who rely on public lands.”
Meanwhile, the National Milk Producers Federation warned that as spring temperatures rise, the threat of New World screwworm making its way into the U.S. is increasing. The National Milk Producers Federation is working with agencies to ensure dairy preparedness, as infestations continue to push north toward the U.S. border.
National Milk Producers Federation also commended the U.S. Trade Representative for spotlighting persistent trade barriers facing U.S. dairy exporters in the 2026 National Trade Estimate report. National Milk Producers Federation President Gregg Doud said “When foreign markets are closed off by bogus restrictions, the pain is felt directly on farms across this country. The administration’s work through reciprocal trade negotiations to knock down these barriers is exactly the kind of advocacy American dairy farmers need.”
This article originally appeared on Farmers Advance: ‘When foreign markets are closed off by bogus restrictions, the pain is felt directly on farms across this country’
Reporting by Lee Mielke, Farmers’ Advance / Farmers Advance
USA TODAY Network via Reuters Connect
