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
Expanding supplies are weighing on global coffee and cocoa prices.
NMPF’s Alan Bjerga discusses pending trade agreements with Indonesia and Ecuador and how they will benefit U.S. dairy producers and improve overall global competitiveness of U.S. ag products.
Lewis Williamson with HTS Commodities discusses how tensions in the Middle East are impacting producer’s spring planting decisions.
Mike Steenhoek with the Soy Transportation Coalition discusses supply chain disruptions, rising costs, and the potential impact on agriculture as farmers navigate ongoing global uncertainty.
Strong exports support ethanol margins and corn demand.
Export competition remains heavy despite solid trade.

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:

USDA Cattle-on-Feed report for March shows slightly lower inventory and higher February placements, signaling a tighter supply but steady outlook for the U.S. cattle herd.
Energy risks could reshape global ag trade flows.
The ag trade deficit is narrowing, but export competition remains strong.
E15 policy could shape future corn demand outlook.
Agricultural groups warn that the deal could limit competition and raise transportation costs for farmers
The Trump Administration’s new rule limiting CDL renewals for immigrant truckers is seeing mixed reactions in agriculture. While some support the change, it is raising concerns about higher freight costs and impacts on U.S. grain export competitiveness.