Producer Pay Forecast: June 18, 2026

Dairy markets have weakened through June despite continued strength in exports. CME spot cheese prices have been stuck in the $1.40's, with spot blocks falling to $1.45/lb. on June 18th for the first time since February. Spot butter has been trading at record volumes, but prices have fallen around $0.10/lb. over the last week, landing at $1.5550/lb. on June 18th. Nonfat dry milk spot markets have experienced the sharpest decline, falling more than $0.10/lb. over the last week, and more than $0.40/lb. since June 1st.

As exports become increasingly more important to the U.S. dairy industry, domestic prices must remain competitive in global markets. Europe and New Zealand continue to experience milk production growth similar to the U.S., while cheese and butter prices have softened internationally. The U.S has maintained a competitive pricing advantage in export markets, supporting record shipments. That advantage limits upside potential for domestic prices as the U.S. must maintain around a $0.30 gap to remain attractive to international buyers.

The steep decline in nonfat dry milk prices appears to be largely inventory driven. Earlier this spring, recall related disruptions affected a substantial amount of powder, and at the same time, powder production was declining. While near-term pressure may persist, continued low production levels suggest a recovery later in the year.

At present, markets appear to be signaling that demand may not be keeping pace with growing supplies. As a result, the forecast reflects a more cautious near-term outlook. Despite the recent softening of commodity prices, U.S. export volumes highlight the competitiveness of U.S. dairy products in the global marketplace, which could support longer-term market balance.

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