By William Secor
The outlook for the dairy industry going into 2026 was cautious. After strong prices in the latter half of 2024, milk production expanded rapidly mid-way through 2025. Milk prices came down significantly as a result. Given the size of the dairy cow herd, there was little indication the supply situation would resolve itself in the short term.
January 2026 data indicated that this price situation was playing itself out. The average all milk price in January 2026 was just $17.50/cwt (see Figure 1). This was the lowest January reading since 2021. This low milk price appeared to be the result of significant milk production (see Figure 2; over 3% higher year over year).
Fast forward just one month, and the story seemed to be shifting. In February 2026, milk production was again up compared to year-ago levels (just under 3% year over year). However, the all milk price rose by $0.80/cwt compared to January 2026 (around 5% jump month-over-month). These improved February prices contributed to higher milk margins despite higher feed costs.
Recent weekly data shows continued price improvements in March compared to January. Wholesale dairy product prices from cheese, butter, non-fat dry milk, and whey have increased from the start of the year (e.g., butter and cheese) and/or are higher compared to year-ago price levels (e.g., non-fat dry milk and whey).
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