Insight Focus
Dairy markets diverged as tightening supplies boosted key products. Nonfat dry milk extended its rally as buyers scrambled for limited supplies, with tight production expected to keep prices well supported through the end of 2026. Meanwhile, WPC 80 eased from record highs as production increased, while butter demand softened as earlier coverage buying reduced seasonal purchasing needs.
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Dairy markets were mixed this week. Dry products firmed, led by another push higher in nonfat dry milk, while butter moved in the opposite direction.
Buyers Scramble for Coverage as NDM Climbs
Nonfat dry milk (NDM) continued to rally, showing no signs of slowing as buyers scurried to secure dwindling supplies. One trader said the sharp run-up earlier this year had also changed how some were approaching coverage. Buyers caught short during that rally appear more willing to pay current levels rather than risk another round of gains.
Finding uncommitted production was particularly difficult in the Midwest and East. Little additional NDM was being produced in those regions, and much of what was available had already been spoken for.
One source expected those supply constraints to put a relatively high floor under NDM through the rest of 2026. Buyers may be reluctant to extend coverage well into 2027 at current levels, but those with needs this year have less flexibility to sit on the sidelines.
Growing WPC Supply Tempers Prices
Whey protein concentrate (WPC) 80% presented a different picture. After climbing above USD 13/lb earlier this year, WPC 80 eased to roughly the USD 12 range. Additional production, rather than a significant deterioration in demand, appeared to be behind the pullback.
As the price gap between WPC 80 and whey protein isolate (WPI) narrowed, manufacturers gained more incentive to direct whey streams toward WPC 80.
Meanwhile, supplies of WPI were scarce and values were around USD 14-15/lb. Some plants were directing more production toward WPI because of strong demand. That shift could alter the balance between the two protein markets later this year.
Butter Demand Softens After Earlier Coverage Buying
Butter was notably weak for this time of year when, historically, purchasing tends to pick up ahead of Labor Day.
The downturn was not necessarily evidence of poor end-user demand. Instead, buyers may have secured more of their needs earlier in the year, creating less urgency to make purchases ahead of the fall baking and holiday season.
