Insight Focus
Dairy markets strengthen despite softer USDA price outlook. Strong demand and tight supplies lifted NDM, whey proteins and cheese prices, while the USDA lowered its milk and butter price forecasts for 2026 and 2027. Whey protein markets remained particularly tight, and increased Mexican buying alongside back-to-school demand supported NDM, lactose and cheese markets.
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Dairy product markets strengthened in several areas this week, led by nonfat dry milk and whey proteins, while butter moved lower. Nonfat dry milk (NDM) posted broad gains, whey protein concentrate (WPC) 34% continued to strengthen amid constrained supplies, and CME cheese prices advanced.
USDA Revises Dairy Outlook with Lower Milk and Butter Prices
In its August WASDE report, the USDA left its 2026 milk production forecast unchanged but lowered its 2027 outlook slightly due to reduced output per cow.
Source: USDA
The 2026 all-milk price forecast was lowered to USD 19.85/cwt (100 lbs) from USD 20/cwt in July, while the 2027 projection slipped to USD 19.80/cwt from USD 19.85/cwt.
Source: USDA
Among other dairy products, the USDA made its largest adjustment to butter, lowering its 2026 and 2027 price forecasts by 4.5c/lb. The agency also trimmed its 2026 nonfat dry milk outlook by 1c/lb while raising whey forecasts by 1c/lb for 2026 and 3c/lb for 2027. The cheese forecast increased by 0.5c/lb, while the 2027 projection was unchanged.
Source: USDA
Whey Protein Markets Tight as Buyers Seek Alternatives
Whey protein concentrates continued to draw attention as high prices began to test buyer appetite. One analyst described WPC 34% as “very tight” based on demand, manufacturers’ stocks and current prices. WPC 80% was also difficult to source, although prices have begun to moderate as elevated values encourage some buyers to slow purchases or consider alternatives. Some WPC 34% users could shift toward nonfat dry milk, while WPC 80% buyers have looked at milk protein concentrate.
Sweet whey powder was relatively stable, though stronger demand for value-added products limited conventional production and reduced the availability of certain specifications.
Improving Demand Lifts NDM, Lactose and Cheese Prices
NDM values strengthened as domestic interest improved and Mexican purchasing increased. In the Central and East regions, inventories were particularly slim, as school openings diverted milk toward Class I bottling and away from dryers. Lactose prices also strengthened as buyers sought fourth-quarter coverage amid low inventories and near-capacity spot availability.
Cheese markets rallied on strong demand as back-to-school bottling pulled more milk into Class I channels and tightened spot availability.
Milk production improved with milder weather in the Central region but was mixed in the West amid heat, fires and smoke.
