Market Reports

Product scarcity seems to be driving the gains in the milk powder market as buyers seeking product are coming up empty-handed. According to USDA’s Dairy Products report, combined output of NDM and skim milk powder (SMP) was just 170.3 million pounds in December, down 6.2% compared to the same month last year. NDM prices have been climbing since January, but the trajectory accelerated meaningfully this week. After taking a brief respite on Monday, the spot price for NDM rose every day between Tuesday and Friday, delivering an 18¢ increase, and qualifying as the commodity’s strongest week since May 2007.

After rising unabashedly last week, the resolve of dairy markets was tested in recent days with mixed results. The CME was abuzz with activity as buyers and sellers gathered to test the limits and fortitude of the market’s newfound vigor.

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.