Market Reports

But even though the specter of excess global milk supplies has by now become familiar, the bears seem to have taken a breather this week. For the second event in a row, the Global Dairy Trade index moved up, rising 1.5% on the back of stronger prices for fats and powders. Similarly, the CME spot market did an about face with values rising across nearly every product. While we remain a far cry from declaring that the bulls have returned, these increases are nevertheless an indication that the market may be finding some support at prevailing levels.

The dairy markets have been swamped under a tidal wave of milk and are now fumbling around for the bottom. After catching a quick breath last week, spot nonfat dry milk (NDM) slipped back under the surface, falling a penny to $1.255. CME spot butter bounced back from multi-year lows, climbing 5.5ȼ to $1.355 per pound. And CME spot Cheddar blocks continued to sink, falling 2.5ȼ to $1.29. Meanwhile, whey remained buoyant. Spot whey powder rallied 3.5ȼ to 73.5ȼ.

It strengthened every day so far in 2026. The unexpected rally propelled CME spot nonfat dry milk to $1.265 per pound today, up 9ȼ for the week to its highest perch since mid-August. It’s unusual to see milk powder prices climb amid a rapid increase in U.S. milk output. But the dramatic expansion in U.S. dairy processing capacity has reduced the need for balancing.

While impressive, the U.S. is far from the only place that is demonstrating such a growth trajectory for milk production. Volumes are rising in nearly every corner of the globe. While complete data is not yet available, cumulative milk production across the top five main dairy exporters - Argentina, Australia, Europe, New Zealand, and the U.S. - likely grew by at least 3.5% between September and November, a feat that has not been achieved since 2014.

The U.S. dairy industry is drowning in butterfat. In October, America’s dairy herd cranked out 3.7% more milk than the year before, and cream production soared 5.9% year over year. On Monday, USDA will publish a fresh round of milk production data, and even greater gains are likely.

In a world flush with milk, competition for market share is getting fiercer by the day. The U.S. has struggled to gain traction on milk powder sales, and it may lose ground for cheese, butter, and whey powder if the price is not right. It’s possible that first-quarter cheese sales will disappoint after the October rally pushed importers to look elsewhere. Indeed, given the scale of U.S. cheese output, anything short of the recent record-setting volumes is likely to feel inadequate.