So far in 2026, Class III milk futures have traded in a volatile manner with prices back and forth with about a $2 trading range. Demand fundamentals support the market while abundant supplies keep any rallies in check.
What’s happened
The largest theme of the dairy complex for now appears to be abundant milk production. This theme started back in 2025 and now continues into early 2026.
The reality of higher production keeps the Class III futures from being able to trade much higher than $18 when looking at the nearby April 2026 futures contract. However, the strong underlying demand for dairy products keeps the April 2026 contract price well supported at the $16 area for now.
From a marketing perspective
Digging deeper into the fundamentals, specifically, that USDA in the most recent milk production report set United States Milk Production in January 2026 at 19.81 billion pounds, up 3.20% from the same month last year.
Milk production per cow averaged 2,068 pounds, which was up 24 pounds per cow from January 2025. Total milk cows on farms in the U.S. came in at 9.58 million head, up 189,000 head year-on-year, and were up 14,000 head from the month prior.
Demand for dairy is strong. The most recent USDA report suggested that U.S. dairy exports in December 2025 totaled 239,083 metric tons, up 15% from December 2024 and 2% higher than the month prior.
- Cheese exports came in at 54,133 metric tons, up 24% from last year.
- Powder exports were up 18% from last year.
- Butter exports were solid at 15,714 metric tons.
Prepare yourself
In the short term, this current trend seems likely to continue, with sufficient milk production in the United States balanced by equally strong demand for dairy products, both domestically and internationally. If this should occur, continued sideways trading for Class III milk futures may be likely.
But be aware, some upcoming reports in the milk market might change the tone. The next global dairy trade auction event is March 17. And the next U.S. milk production report will be released on March 20. Depending on the outcome of these upcoming reports, the Class III milk futures may sway from their current trading pattern.
If you have questions, you can reach Naomi at naomi@totalfarmmarketing.com or find her on X at @naomiblohm.
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