The Latest: March - 2026
Fresh Infusion of Global Turmoil
The dairy markets are contending with an abundance of milk and a fresh infusion of global turmoil. That amped up the volatility on LaSalle Street. CME spot Cheddar blocks came out strong on Monday and rallied to a four-month high at $1.63 per pound. But as the week wore on, blocks’ enthusiasm waned. They settled today at $1.53, down 8.75ȼ for the week. “Export cheese demand is strong, but some contacts are concerned that rising shipping costs will negatively impact international interest.” American cheese remains the least expensive option, but with both the dollar index and cheese prices up sharply from where they stood a few weeks ago, some international buyers may no longer view it as a bargain.
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Every week, U.S. dairy producers send about 10,000 fewer milk cows to beef packers than they used to. That’s slowly adding up to more cows in the barn. Even so, dairy cow head counts are not as high as previously thought. After its quarterly survey, USDA trimmed its estimates of January and February milk cow inventories.
View reportFor producers who have been considering retirement for years, slim margins and high cow values offer a lucrative exit ramp. The auction docket is growing, which could allow producers to buy replacements and boost cull rates. Eventually, that could shrink the dairy herd. But for now, slaughter volumes remain low and milk output is on the rise.
View reportSpring has sprung and the resurgence of allergies isn’t the only sign of the season. Milk volumes are also expanding in most regions as the spring flush moves across the country. Seasonal increases are compounding milk volumes that are growing year over year both in liquid terms and in component values.
View reportAn intensifying trade war is likely to further complicate the outlook for U.S. dairy exports, which had already come under pressure. During February, U.S. exporters sent 463 million pounds of product abroad, 4.3% less than in the same month last year after adjusting for the leap day. The bulk of the decline came from milk powder with shipments of nonfat dry milk (NDM) and skim milk powder falling to the lowest volume seen for the month since 2016.
View reportDairy producers are doing all they can to keep their barns and milk tanks full, and it shows. In the week ending March 15, they sent just 52,431 milk cows to beef packers, the lowest mid-March tally since 2008. In the first 11 weeks of 2025, the industry culled roughly 109,000 fewer cows than the historic average, helping to raise head counts despite the heifer shortage. More cows mean more milk, especially during the flush.
View reportBetter demand could also lift the dairy markets out of the bargain basement. Even after accounting for new tariffs, U.S. dairy products are competitively priced, especially when compared to dairy products priced in euros rather than dollars. The invisible hand will slowly bring U.S. dairy products to new buyers and boost prices, but it could be a slow, painful process.
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