MARKET NEWS

Butter Stocks Balloon

Daily Dairy Report | April 24, 2026

Butter inventories jumped 32.6 million pounds last month, marking the largest February-to- March increase since 1991, at the height of the low-fat craze. According to USDA’s Cold Storage report, there were 288.8 million pounds of butter in refrigerated warehouses Mar. 31. While that was 10.6% smaller than the butter stockpile in March 2025, the deficit narrowed significantly from a 16.2% year-over-year shortfall in February. U.S. milkfat output has been growing quickly enough to offset record-setting exports and allow for significant increases in butter inventory. In January and February, concerns that big exports and low stocks would translate to a shortage in the summer and autumn pushed futures sharply higher. Those anxieties have evaporated. This week MAY to SEP butter futures logged life-of contract lows.

Cheese inventories rose seasonally, with stocks up 13.5 million pounds from February to March, in line with typical spring increases. Thanks to record-smashing exports and decent domestic demand, cheese stocks have not been burdensome. Inventories were 1.6% lower than March 2025 volumes and the lowest monthly tally since 2020. Relatively tight stocks buoyed Cheddar prices from their late-2025 and early-2026 lows south of $1.40/lb. But the market has stalled around $1.65. The U.S. dairy industry has invested in significant increases in cheese production capacity, and prices must stay low enough to maintain robust exports. Otherwise, cheese can pile up very quickly.

CME spot nonfat dry milk (NDM) notched a fresh all-time high this week and closed at $2.26/lb. USDA’s Dairy Market News (DMN) reported that “Milk output is strong and drying operations are running busy schedules.” However, due to lower U.S. milk powder output in 2025 and early 2026, inventories have been tight, and “spot purchasers say it is difficult to find loads.” Facing record-high prices, NDM users “are only buying loads to meet their immediate needs,” according to DMN. But enough milk powder buyers have been caught short to keep a bid under an already pricey market.

The relentless rise in U.S. NDM has been boosting other markets. At this week’s Global Dairy Trade (GDT) auction, Mexico bid on skim milk powder (SMP). That was unusual, as Mexican buyers typically source their NDM and SMP from the U.S. But the chasm between U.S. and international prices has stretched wide enough to overcome America’s geographic and administrative advantages. Despite strong milk powder output in Europe and Oceania, GDT SMP climbed to its highest price since 2022.

Strength in the NDM market is lifting Class IV futures to extremely lofty values relative to Class III milk. Today, May Class IV’s settlement is $22.29/cwt., $4.73 higher than May Class III futures. That’s the second-highest premium to Class III futures of any month in the past 15 years. It appears Class IV futures are pulling Class III prices higher as well. Cheese processors who use milk powder to fortify their vats are likely inclined to do without it at today’s prices. Over time, that will reduce demand for NDM and could slow the growth in U.S. cheese production. While the price impact of this gradual shift takes time, the forward-looking futures market seems to anticipate the adjustment. For now, though, the wide III-IV spread benefits dairy producers who sell Class I milk under the “higher of” formula that was reinstated last June.

NMPF NEWS ALERT

• NMPF submitted comments to EPA last week supporting the USDA application to produce the NovoFly male-only genetically engineered New World screwworm because it’s a scientifically sound and practical tool. NMPF is encouraging others to share support with EPA through this call-to-action before the public comment period ends at 11:59 p.m. ET tonight.
• The farm bill is set to move in the House this week, starting with a meeting today in the House Rules Committee to set terms of a vote on the farm bill, including how many of the 361 proposed amendments will make it onto the House floor. The vote is expected on Thursday.

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The Trump administration's tariffs, and other countries' retaliatory measures that followed have gutted the export markets Delta farmers depend on, leading to major losses for small farmers like Sledge Taylor in the Mississippi Delta, who is now also grappling with rising costs caused by a war thousands of miles away.

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‘Staggering’ number of people believe claims about raw milk

Scientific American – April 26

More than two-thirds of the public believe at least one false or unproven health claim — such as the idea that taking paracetamol during pregnancy causes autism — a new survey finds. The results hint that a large, and potentially growing, number of people are questioning scientific evidence. The survey of more than 16,000 people across 16 countries asked whether they believed claims that are not supported by research, including that ‘raw milk is healthier than pasteurized.’