Farm milk prices continue to rebound, slowly. The May Federal order Class III benchmark was announced by the USDA at $16.92 per hundredweight (cwt.), up 10 cents from April, but is $1.65 below May 2025. It’s the highest Class III price since November 2025 and put the five-month average at $15.89, down from $19.04 at this time a year ago, and compares to $16.33 in 2024.

Wednesday’s Class III futures portended a June price at $16.92; July, $16.66; August, $17.18; with a peak at $18.40 in November before heading back down.

The May Class IV price is $22.32, up $2.10 from April, $4.19 above May 2025, and the highest Class IV price since Nov. 2022. Its five-month average stands at $18.26, down from $18.98 a year ago, and compares to $19.99 in 2024.

CME block Cheddar, after closing Friday at $1.4750 per pound, was trading Thursday morning at $1.48, 37.75 cents below a year ago, as traders anticipated the afternoon’s April Dairy Products report. The barrels were at $1.44 per pound, 42 cents below a year ago, after closing Friday at $1.44.

Milk production is steady in the Central region, according to Dairy Market News, and up year over year. Class III spot trades were lighter this week and prices ranged from $1-under to $2-over Class at mid-week. Cheese output was strong and plants were running full schedules though some scheduled downtime for maintenance. Domestic cheese demand was unchanged. Export demand was strong though lighter than earlier in the year.

Milk production is ticking down from peak spring output in the West but cheese manufacturers reported more than sufficient volumes. Cheese production and domestic demand were steady. Some sellers indicated that sales have shifted from food service to retail, but domestic demand has not changed overall.

Demand from international buyers is mixed, according to DMN.

Butter, after finishing Friday at $1.6675 per pound, reached $1.71 Tuesday, highest since April 21, but fell to $1.68 Thursday, 87.50 cents below a year ago.

Central region cream production remains strong but strong demand from Class II and Class III processors was keeping inventories snug. Some butter makers in the region said they were exclusively using cream from within their network while others in the Southwest were purchasing cream at favorable multiples from other regions. Butter makers were running full production. Retail sales are strong, while food service demand remains light. Export interest is strong, says DMN.

Western butter makers reported that milk and cream were meeting churning needs despite spring peak milk output sliding into the rearview mirror. Butter production is generally stable. Domestic butter demand is steady. International buying is mixed, according to DMN.

Grade A nonfat dry milk climbed to $2.15 per pound Tuesday but closed Thursday at $2.11, 84.75 cents above a year ago, after closing Friday at $2.09.

Dry whey was trading Thursday at 67 cents per pound, following a Friday finish at 70 cents, and is 9 cents above a year ago.

Another increase in the All-Milk Price was again tempered by increased feed prices in April, however the month’s feed price ratio inched a little higher, the third consecutive gain. The USDA’s latest Ag Prices report showed April at 2.26, up from 2.25 in March, and compares to 2.28 in April 2025.

The All-Milk Price was $20.80 per cwt., with a 4.34 percent butterfat test, up $1.10 from March’s $19.70 on a 4.39 percent test, and up for the third month in a row, topping $20 for the first time since Sept. 2025, but compares to $21.10 a year ago, which had a 4.32 percent test.

Feed costs moved to the highest level since May 2025, according to dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo. He said milk production margins increased for the third straight month, gaining 66 cents per cwt. and was above $11.00 per cwt. for the first time in five months at $11.59.

“Income over feed costs in April were above the $8 per cwt. level needed for steady to higher milk production for the 32nd month in a row,” says Brooks.

“Input prices were higher with two of the three input commodities inside of the top 10 for April all-time. Feed costs were the 11th highest ever for the month of April and increased 44 cents per cwt. from March. The April All-Milk price was inside the top ten for the month, at the fourth highest ever recorded for the month.”

“Dairy producer profitability for 2025 in the form of milk income over feed costs, was $12.44 per cwt. Profitability was 96 cents below 2024 and $2.17 higher than the 2020-24 average,” according to Brooks.

“The decrease in milk income over feed costs was a result of the milk price decreasing more than feed prices dropped,” he explained, “And income over feed cost in 2025 was above the level needed to maintain or grow milk production.”

Milk income over feed costs in 2026 (using May 29 CME settling futures prices for Class III milk, corn, and soybeans plus the Stoneheart forecast for alfalfa hay) are expected to be $11.66 per cwt., says Brooks, a loss of 25 cents per cwt. versus last month’s estimate. “Income over feed costs in 2026 would be above the level needed to maintain or grow milk production, down 78 cents per cwt. from 2025s level, and 95 cents higher than the 2021-25 average.”

Milk income over feed costs for 2027 are expected to be $11.73 per cwt., a gain of 7 cents per cwt. versus 2025. Income over feed costs would also be above the level needed to maintain or grow milk production and up $1.02 per cwt. from the 2021-25 average, Brooks concludes.

Highlights were also given from the April Cold Storage report, which I detailed last week, showing total cheese stocks of 1.42 billion pounds at the end of April, up 12.4 million from March, with American-style cheeses including Cheddar accounting for nearly all the increase. 

New World screwworm (NWS) has entered the U.S. The Agriculture Department confirmed detection in a 3-week-old calf in Zavala County, Texas. The National Milk Producers Federation stated, “The return of NWS to the U.S. decades after its initial eradication is a disappointing milestone, but it’s also one for which dairy producers have been preparing for more than a year, in collaboration with USDA and across agriculture. It’s important to remember that this development has no effect on food safety, and that measures to combat both the screwworm and its spread are in place and time-tested.”