Insight Focus
Milk powder prices surged while cheese and butter markets weakened. US milk production remained above year-ago levels in August, supported by a larger dairy herd despite slightly lower milk yields. Scarce supplies and strong demand lifted NDM and WPC prices sharply, while cheese and butter prices extended losses amid weak demand and abundant milkfat supplies.
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Dairy product prices were mixed this week. Milk powder prices were sharply higher, while cheese and butter values weakened for a fourth consecutive week.
US Milk Output Rises as Dairy Herd Expands
US milk production continued to run above year-ago levels despite constrained spot availability in several regions. August production totalled 20 billion lbs, up 2% from August 2025, according to the USDA.
Source: USDA
The US dairy herd reached 9.71 million cows, 167,000 more than a year earlier and 15,000 more than in July. Milk output per cow slipped by 1 lb from a year ago to 2,049 lbs.
Larger Dairy Herd Supports US Milk Production Growth
Source: USDA
Central handlers had little to no excess milk available for spot purchasing. As a result, Class III milk traded at as much as USD 2 per cwt above the benchmark price. Output in the East was stable. Sources suggested that cooler nights might soon spur a seasonal increase.
NDM and WPC Prices Surge on Limited Availability
Nonfat dry milk (NDM) notched double-digit gains as scarce supplies and strong nearby demand kept upward pressure on the market. Central and Eastern manufacturers delayed filling contracted volumes, leaving little product available for spot buyers.
High-heat NDM was particularly difficult to source, as dryers prioritized low- and medium-heat production. Demand from yogurt manufacturers continued to draw on available supplies. Elevated diesel costs compounded supply constraints by making it more expensive to move loads between regions.
Whey protein concentrate (WPC) 34% moved sharply higher at the top end of the range. Inventories were snug, and some buyers were willing to pay a premium to secure product. WPC 80% traded in the mid USD 10s to mid USD 11s per lb, while whey protein isolate held in the USD 14 range established earlier in the year.
Source: CLAL
Weak Domestic Demand Weighs on Cheese and Butter
Cheese prices were steady to lower amid slow domestic demand. Mozzarella demand picked up as the fall pizza season got underway. Western production was supported by demand for whey and whey derivatives.
Butter prices softened as abundant milkfat weighed on the market. Holiday buying picked up, however, helping manufacturers work through inventories. East Coast trade sources said current holiday orders were beginning to outpace churn output and expected stocks to be largely cleared by year-end. Export demand was also strong, particularly for 82% unsalted butter.
