Milk Surplus Pressures Prices as 2026 Begins

Low prices are painful now, but production response could support stronger milk markets later in 2026.

herd of cows in cowshed on dairy farm_Photo by Syda Productions via AdobeStock_132201757.jpg

Photo by Syda Productions via Adobe Stock

LUBBOCK, Texas (RFD NEWS) — Milk prices are entering 2026 under heavy pressure as global and domestic production continues to outpace demand, raising concerns about how quickly the market can work through a growing surplus.

According to analysis from Ben Laine of Terrain, the all-milk price fell to $20 per hundredweight in October, more than 20 percent below a year earlier.

U.S. milk production has expanded sharply, with output up more than 4 percent year over year late in 2025, driven by the largest milk cow herd in decades and higher per-cow productivity. At the same time, milk output has increased across the European Union and New Zealand, flooding global markets and intensifying price competition for exports.

Product markets adjusted quickly. Butter prices led the downturn, followed by cheese, as ample cream supplies and expanded processing capacity collided with weaker global pricing. Nonfat dry milk declined more modestly, while whey remained comparatively firm due to strong protein demand.

Despite lower prices, production may be slow to respond. Beef-on-dairy revenues and risk management coverage have softened the immediate financial signal for some producers. Still, higher slaughter rates suggest adjustment has begun.

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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.

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