U.S. dairy producers are facing a complex price environment in 2026 as global markets show renewed strength while domestic butterfat supplies continue to pressure prices. The latest Global Dairy Trade (GDT) auction 404 reported a 0.6 percent increase in the overall price index, marking the first rise after two consecutive declines. The weighted average price reached $4,198 per metric ton, with 12,972 tons of product sold, led by gains in butter, mozzarella, whole milk powder (WMP), skim milk powder (SMP). WMP rose 1.2 percent, SMP 0.2 percent, and lactose 0.5 percent, while butter declined 2.6 percent, anhydrous milk fat (AMF) declined1.6 percent and cheddar dropped 1.3 percent reflecting ongoing weakness in global fat markets.
These global trends intersect with significant domestic supply-side pressures. From 2021 to 2025, CME spot butter prices averaged $2.44/lb, but since August 2025, prices have remained well below that benchmark. A key driver is the surge in U.S. butterfat production: the national average fat test climbed to 4.32 percent in 2025, up 1.9 percentage points from 2024. Combined with last year’s strong milk output, the U.S. produced over 400 million more pounds of butterfat than the prior year. Churns have been running at full capacity, with January butter production hitting a record 241.9 million pounds, and March output reaching 231.5 million pounds, the second‑highest on record. The abundant cream supply continues to depress domestic butter prices.
Source : iastate.edu