Milk Prices Improve as Volatility Builds into Spring

manage risk as milk price volatility increases.

Dairy farmer 1280x720.jpg

Market Day Report

NASHVILLE, TENN. (RFD NEWS) — Milk prices are improving in early 2026, but growing supplies and shifting product markets are setting the stage for increased volatility in the months ahead.

Analysis from Terrain economist Ben Laine shows Class III milk prices are expected to average $17 per hundredweight in the second quarter, while Class IV is projected near $19.50. That outlook reflects stronger-than-expected price movement early in the year, despite a global oversupply of milk entering 2026.

Production remains a key pressure point. U.S. milk output rose 2.8 percent in 2025, with continued growth into early 2026 supported by a larger herd and higher yields. January production was up 3.4 percent year over year, and reports of milk dumping in California highlight capacity constraints in some regions.

Recent price strength has been driven by gains in whey and nonfat dry milk, tied to strong global protein demand. At the same time, exports remain critical, with U.S. dairy shipments valued at $9.51 billion in 2025, helping balance growing supplies.

With supply expanding and product markets shifting, price swings are expected to remain elevated through the year.

Farm-Level Takeaway: Manage risk as milk price volatility increases.
Tony St. James, RFD NEWS Markets Specialist
Related Stories
Richlands Dairy & Creamery says its direct-from-farm model is helping connect consumers more closely to where their food comes from.
Strong rail and ocean demand support grain movement, but weak barge traffic and high diesel costs keep freight pressure elevated.
Corn exports remained active the week of May 7, but weak soybean, cotton, and sorghum sales kept attention on China and late-year demand.
Higher food costs are showing up beyond the grocery aisle, with some major restaurant chains shrinking their U.S. footprint.

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

LATEST STORIES BY THIS AUTHOR:

Dr. David Anderson says lean beef demand and lighter cow culling are still giving cull cow prices room to push higher.
Stronger overseas demand for both fuel ethanol and feed co-products continues to reinforce corn use beyond the domestic market.
The inverted Choice-Select spread is not a strong warning sign in today’s tighter, higher-quality beef market, according to new analysis from Terrain.
Based on USDA data compiled by the U.S. Meat Export Federation, pork exports increased by six percent in March compared to the previous year, while beef exports weakened overall.
Genevieve Collins from Americans for Prosperity discusses rising Texas property taxes, potential relief, and impacts on farmers, ranchers, and rural communities.
RealAg Radio’s Shaun Haney joins us to discuss geopolitical trade tensions, energy market volatility, and what global shifts could mean for U.S. agriculture exports.