Producer Pay Forecast: January 22, 2026

While we have seen a slight increase in prices at the CME spot market over the past few sessions, it is important to note that trading activity is thin, and this does not yet indicate a meaningful shift in the overall market. The price movement appears to be more consistent with short-term positioning and weather-related logistics concerns.

CME Spot Market Snapshot:

• Cheese had experienced a slight gain in prices over the last few days, with spot blocks landing at $1.3600/lb. on 1/21 before coming down $0.0100/lb. on 1/22.
• Spot butter gained more than $0.1000/lb. between 1/16 and 1/21, landing at $1.4600/lb. and holding steady on 1/22.  
• February Class III Futures values came down to $14.99
• Class IV Futures bumped up to $14.67
• Spot dry whey held steady at $0.7350/lb.(1/22)
• Spot NDM prices continue to grow, jumping up to $1.2825/lb.(1/22)

From a fundamental standpoint, markets continue to face ample product availability. U.S cheese production remains strong, and while exports have been historically large, they are absorbing a surplus rather than creating tightness or demand. A significant portion of the recent export growth has come from non-traditional destinations, which may be less durable. We do not see a significant increase in purchases from our traditional trade partners. While many of their purchases have also grown, the increased percentages do not compare to the non-traditional purchasers. Global relationships and trade agreements will play a large role in markets this year. As countries like Canada begin weighing their options, the U.S economy could begin to feel more of an impact from the threats against our allies. If our significant export growth falters, dairy markets are likely to face a further decline. On the other hand, if trade negotiations go well, and U.S exports continue to exceed expectations, markets may pick up further in the second half of the year as supply would likely tighten up.

Butter production increased more than 6% year-to-date through October 2025. Although the Cold Storage report shows that stocks have been running below prior year levels, the on-going butterfat growth suggests that inventories could have grown over November and December if exports did not offer enough support.

NFDM availability is constrained. U.S production levels were down throughout 2025, making supply tighter. As milk continues to be pulled into cheese vats and protein streams like WPC 80 and WPI, this tightness will likely continue, and spot prices will be lifted further.

In the near term, winter weather across the southern U.S could introduce volatility to the market due to hauling disruptions and plant logistics. Overall, the market currently remains defined by heavy supply, strong but fragile export demand, and unenthusiastic, but stable domestic demand.

Please feel free to reach out with any questions or comments.

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