Dairy Industry News Roundup: Week of April 25 - May 1, 2026

# Dairy Industry News Roundup: Week of April 25 - May 1, 2026 Welcome to your weekly dairy industry briefing! It was a remarkable week for U.S. dairy markets and policy. Spot Grade A nonfat dry milk powder broke its all-time price record at $2.26 per pound, May Class IV futures opened a $4.73 per cwt spread over Class III (the second-widest in 15 years), the FMMO May Class I base price jumped another $1.49 to $20.15 per cwt, and USDA APHIS rolled out the most consequential H5N1 policy change since the federal order: 42 states are now classified "Unaffected" under the National Milk Testing Strategy, and lactating dairy cattle from those states can move interstate without H5N1 testing. On the policy front, three of the largest organic dairy operators sued the federal government over FMMO inclusion. Here are the stories that mattered from April 25 through May 1. --- ## 1. This Week From Therio The team is in build mode this week, no new long-form publication landed. If you missed our two-part infrastructure series from co-founder Greg Cochara, both pieces are worth catching up on: - [Herdscripting 101: The Hidden Infrastructure Behind Every Dairy Treatment](/news/herdscripting-101) (April 17), the deepest public explainer on how dairy treatment protocols actually work, the legal scaffolding (VCPR, AMDUCA, ELDU) that makes them lawful, and the five failure modes that quietly cost farms thousands of dollars every year. - [Interstate Movement of Dairy Cattle: The Compliance Maze Nobody Talks About](/news/interstate-movement-101) (April 24), Greg's deep dive into the Certificate of Veterinary Inspection, the USDA Animal Disease Traceability rule, the 50-state patchwork of import requirements, and the identity, test-validity, and withholding gaps that cost producers $30,000 to $50,000 per non-compliant shipment. With the new NMTS "Unaffected State Status" reshaping interstate movement requirements this week (story #2 below), the Interstate Movement piece is suddenly required reading. --- ## Industry News ## 2. USDA APHIS Eases Interstate Lactating Dairy Movement: 42 States Now NMTS "Unaffected" The biggest regulatory news of the week came out of USDA APHIS. Effective immediately, lactating dairy cattle may move interstate without H5N1 testing if they originate from a state classified as "Unaffected" under the National Milk Testing Strategy (NMTS). As of May 1, 2026, 42 states are listed on the APHIS website as Unaffected. **What changed:** | Item | Old Rule (2024 Federal Order) | New Rule (Effective May 1, 2026) | |------|-------------------------------|-----------------------------------| | H5N1 test required for interstate lactating dairy movement | Yes, all states | No, if origin state is NMTS Unaffected | | Number of states currently Unaffected | n/a | 42 | | States still affected (testing required) | All | Arizona, California, Colorado, Idaho, Iowa, Nevada, and select others | | Surveillance basis | Pre-movement individual testing | Bulk-tank-based statewide surveillance | | Federal Order otherwise | In effect | Still in effect for affected states | This is a meaningful win for the industry. Pre-movement individual H5N1 testing was costing the cattle trade an estimated $40 to $100 per head and adding 24 to 72 hours of friction to every interstate shipment. The shift to bulk-tank-based surveillance is the right policy move: it puts the surveillance burden on the milk supply (where most affected herds were going to show up first anyway) and removes friction from the much larger volume of healthy cattle moving between non-affected states. The list of affected states is short and unsurprising: California (still in Stage 3), Arizona and Nevada (where the D1.1 genotype was confirmed earlier this year), Idaho, Colorado, and a small number of others where active or recent detections keep the affected designation. Texas, surprisingly, is now Unaffected after a clean stretch of bulk-tank surveillance. For producers, the practical effects are immediate. Calf ranches in Iowa shipping bred heifers to Wisconsin, Minnesota, or New York no longer need pre-movement H5N1 testing. The CVI compliance burden shrinks. Replacement heifer supply chains that had been priced with a $50 to $100 per head test friction can now run leaner. Watch for replacement heifer prices to firm modestly into the spring placement window. The policy is, however, fragile. Any meaningful detection in an Unaffected state can trigger reclassification, and bulk-tank positives propagate fast through the system. Biosecurity discipline through the spring migration window remains the single most important variable for keeping a state Unaffected. ## 3. Spot NDM Powder Hits All-Time High of $2.26/lb The CME spot Grade A nonfat dry milk market staged one of the more remarkable runs in recent dairy history this week, closing at a record $2.26 per pound on Friday May 1, up about 6 cents week-over-week and an all-time high in the spot market. The T.C. Jacoby Weekly Market Report (week ending April 24) had already flagged a "short squeeze" forming, and that thesis played out cleanly through the holiday-shortened trading week. The driver is straightforward and global. Skim milk powder hit a 3.5-year high at the prior GDT auction on April 21 on heavy Asian and Middle East demand, and U.S. drying capacity is fully booked through the spring flush. Mexico is buying aggressively, Southeast Asia is buying steadily, and the Middle East stepped up after a quiet first quarter. Domestic powder users are bidding to make sure they don't get squeezed on contracts that index to spot. For producers, the powder strength is a meaningful tailwind to Class IV milk prices and to the all-milk price. For ingredient buyers (recombined milk plants, infant formula, ice cream, bakery, candy), the new high is a reset on procurement budgets that had been built around a $1.60 to $1.80 powder. Expect to see formula reformulation conversations at the ingredient buyer level, especially in low-margin commodity bakery and ice cream applications where powder substitutability with other ingredients is real. ## 4. Class III/IV Spread Hits $4.73 , Second Widest in 15 Years for Any Single Month The futures market wrote one of the more unusual stories of the past decade this week. On Tuesday, May Class IV futures settled at $22.29 per cwt while May Class III settled at $17.56, a spread of $4.73 per cwt. That is the second-widest Class IV premium to Class III for any month going back roughly 15 years. The spread is being driven by extreme product divergence. Class IV (which is heavily weighted to butter and nonfat dry milk) is being lifted by record powder and reasonably firm butter. Class III (heavily weighted to cheese and dry whey) is being held back by adequate cheese supplies (despite record exports), soft whey, and a cream complex that has been cratering for weeks. For producers in Federal Order regions where milk is heavily Class IV-utilized (the Pacific Northwest, parts of the Mountain region, parts of the Upper Midwest), this is a windfall. For producers in cheese-heavy markets (Wisconsin, Idaho, parts of California, Pennsylvania), the Class III drag is real and the producer price differential will reflect it. The spread also opens a meaningful structural arbitrage at the processor level. Plants with the flexibility to shift milk from cheese vats to dryers are doing it. Plants that are locked into cheese (most of them, given multi-year capital investments) are eating the lower Class III. Expect the spread to compress somewhat as butter rebalances and as the spring flush moderates by mid-summer, but probably not back to historical norms in the near term. ## 5. FMMO May Class I Base Price Jumps $1.49 to $20.15 The Federal Milk Marketing Order announced its May Class I base price at $20.15 per cwt, an increase of $1.49 from April's $18.66. This is the second consecutive month of double-digit-percentage increases in the Class I price. The driver is again the higher-of formula and the underlying movement in advanced Class III and Class IV pricing factors used in the Class I calculation. With Class IV running so far above Class III, the higher-of mover is anchored to Class IV, which is itself being pulled up by record powder. For Class I-heavy markets (Northeast, Southeast, Florida, Arizona, Pacific Northwest), this continues to be a producer-positive story. The producer price differential and the uniform price will both reflect the higher Class I mover. For bottlers, the procurement story keeps getting more expensive and the spread between fluid milk costs and butter realizations continues to compress. Expect continued pressure on private-label and contract fluid pricing into the summer. ## 6. Organic Dairy Sues USDA Over FMMO Inclusion In a major policy story, on April 28 a coalition of the largest U.S. organic dairy operators filed three federal lawsuits against the U.S. government seeking two remedies: (1) an exemption for organic dairy from the USDA's Federal Milk Marketing Order program, and (2) compensation for organic dairy farmers required to pay into a pool that, the coalition argues, does not serve them. The Coalition for Organic Dairy Exemption (CODE) is comprised of Aurora Organic Dairy, Horizon Organic Dairy, and CROPP Cooperative (Organic Valley). Together those three account for the majority of the organic fluid and ingredient milk supply in the United States. **The argument, in plain terms:** | Claim | Substance | |-------|-----------| | Constitutional challenge | Forced participation in the FMMO program is challenged on constitutional grounds. | | Class action takings claim | Organic dairy farmers seek compensation for six years of payments into a pool that the coalition argues does not serve organic milk markets. | | Market data | Organic fluid milk has grown from 1.9% of U.S. fluid sales in 2006 to 7.0% in 2025. | | Farms affected | Over 10% of U.S. dairy farms are now certified organic. | | Financial scale | Six years of pool payments across organic dairy is, by industry estimates, in the hundreds of millions of dollars. | The substantive argument has real weight. The FMMO system was designed in the 1930s for a fluid market that was conventional and largely undifferentiated. Organic milk commands a premium price, follows a different supply chain, and rarely if ever competes head-to-head with conventional Class I in the markets that the FMMO pool is designed to balance. Forcing organic producers to pay into a pool that primarily redistributes value among conventional producers is the heart of CODE's complaint. The procedural path is long. Constitutional challenges to USDA programs typically take 18 to 36 months even before any meaningful injunctive relief, and a class-action takings claim can run longer. But the political environment is unusually favorable to a market-based reading of the FMMO, and USDA's own FMMO modernization process has already opened the door to discussion of organic and other differentiated milk classes. Watch for a regulatory negotiation track to open up alongside the litigation. ## 7. California Co-ops Tap Down Spring Milk Volumes In what has become an annual story but with new urgency in 2026, California cooperatives are aggressively managing spring flush volumes. The Daily Dairy Report this week noted that "in California, milk is abundant, and dryers are running as hard as possible," and at least one major California cooperative has begun incentivizing producers to rein in over-base milk output for the next 60 to 90 days. The mechanics vary by co-op but the patterns are familiar: tighter over-base acceptance, reduced over-base premiums, expanded base reallocation requests, and in some cases direct payments to producers who voluntarily reduce daily volumes during the peak weeks of flush. A handful of co-ops have also extended hauling lanes and shifted milk to drying capacity in Idaho, Nevada, and Arizona to relieve in-state plant pressure. The structural problem is that California's drying and cheese capacity has not grown in step with the herd. The state's herd is up materially year-over-year, the spring flush is running long, and the export window for nonfat dry milk through West Coast ports is constrained by container availability and trans-Pacific shipping economics. Even with NDM at record prices, the bottleneck is processing throughput, not demand. For producers outside California, watch for two downstream effects: (1) some California milk that would normally stay in-state is being trucked east into Idaho and Nevada and even further to South Dakota and Kansas dryers, modestly pressuring component prices in those receiving regions, and (2) the over-base economics in California suggest that further herd expansion in the state will face a hard processing wall absent meaningful new dryer or cheese capacity coming online. ## 8. March Milk Production: 20.391 Billion Pounds, +2.3% YoY USDA NASS's March Milk Production report (released April 22 and absorbed by the trade this week) confirmed the herd-led production growth story from February. Total U.S. milk production in March was 20.391 billion pounds, up 2.3 percent year-over-year. **March 2026 production at a glance:** | Metric | March 2026 | YoY Change | |--------|-----------|------------| | U.S. total milk production | 20.391 billion lbs | +2.3% | | U.S. dairy herd | 9.621 million head | +187,000 (+2.0%) | | U.S. avg. milk per cow | 2,119 lbs | +7 lbs | | 24-state production | 19.591 billion lbs | +2.4% | | 24-state herd | 9.183 million head | +188,000 | | Top growth state (Kansas) | n/a | +25.45% | | Decline state (Washington) | n/a | -5.77% | | Decline state (New Mexico) | n/a | -3.16% | Kansas was the runaway growth leader at +25.45 percent year-over-year, reflecting the Heilman, Schwartz, and other large dairy buildouts in southwestern Kansas. South Dakota (+6.90 percent) and Utah (+5.88 percent) followed. The declines in Washington and New Mexico reflect specific herd reductions and processing capacity issues in those states rather than any broader slowdown. The takeaway is consistent with the February data: the U.S. is in a clear herd-led production expansion. With cull rates light, beef-on-dairy economics still favorable for keeping cows, and meaningful new processing capacity coming online in the Plains and Mountain West, the growth trajectory is durable. The constraint is increasingly going to be processing throughput and export pull, not raw milk supply. ## 9. Cheese: Blocks Rally, March Stocks Lowest Since 2020 The CME spot cheese complex rallied this week, with Cheddar blocks adding 6.75 cents to close at $1.645 per pound. Barrels also moved up. The fundamental backdrop is supportive: March natural cheese stocks came in at 1.450 billion pounds, 1.6 percent lower than March 2025 and the lowest March tally since 2020. The supportive setup is being driven by three things: (1) record cheese exports running 15 to 20 percent ahead of last year on price competitiveness against EU cheddar, (2) decent domestic foodservice demand in pizza, retail cheese, and ingredient cheese, and (3) more measured cheese vat builds in March than the seasonal norm as some processors flexed milk into the powder complex to chase the NDM rally. The 13.5 million pound month-over-month build in cheese stocks was in line with seasonal trends. With exports continuing to run hot and stocks below year-ago and below the five-year average, the cheese market is well-positioned heading into the summer demand window. ## 10. Whey Hovers Below 70 Cents, Global Demand Steady CME spot dry whey ticked up 0.75 cent to 69.75 cents per pound this week, hovering just below the 70 cent mark. Global whey demand remains steady, with the usual bid from Southeast Asian feed markets and continued strong demand for whey protein concentrate and isolate from human nutrition channels. The whey story is the anti-NDM story. While powder is exploding to record highs on a global short squeeze, whey is sitting in a comfortable balanced market with neither runaway demand nor concerning oversupply. For Class III milk pricing, the soft whey is one of the principal weights holding the III price down relative to IV. --- ## Quick Hits - **Cream multiples**: Spot cream multiples in the Central region remain in the 1.15 to 1.20 range on heavy spring flush. Western multiples are softer still, with California cream regularly trading at multiples below 1.10. - **Cull cow slaughter**: Federally inspected dairy cow slaughter ran 50,800 head this week, still notably below year-ago levels and consistent with the high-retention story. - **Butter**: CME spot butter held a $2.40 per pound area handle through the week despite the GDT butter weakness, supported by strong domestic foodservice and Q2 retail features. - **Feed**: Iowa corn basis steadied this week. Meal continued to drift sideways. Spring planting is running ahead of the five-year average pace, supporting a constructive 2026/27 feed outlook. - **Exports**: U.S. dairy exports for March (released this week) showed cheese and NDM continuing at record paces. Dairy exports as a percentage of U.S. milk solids production now sit just below 18 percent, an all-time high. - **Next GDT**: Event 405 is Tuesday May 5. Watch milkfat for any sign that the butter selloff has bottomed and watch SMP for whether the rally has further to run. --- ## What to Watch Next Week **GDT Event 405 (May 5).** The single most important data point of next week. Watch SMP for follow-through on the U.S. NDM rally. Watch milkfat for whether the April selloff has run its course. **NMTS Unaffected State list.** APHIS is updating the list weekly. Any state moving from Unaffected to Affected (or back) will move replacement heifer markets and CVI compliance economics meaningfully. **Class III versus Class IV.** Watch for whether the historic spread compresses, holds, or widens further. Cheese pricing is the single biggest variable. **Spring flush peak.** The next two to three weeks should mark the peak. Watch in-state cream multiples and out-of-region milk movement for early signals on when the spring wave is rolling over. **Organic dairy lawsuit.** The first procedural responses from USDA are due in coming weeks. The substantive timeline is long, but the political signal is more immediate. Watch for any sign of a parallel regulatory negotiation. That is the week. NDM at all-time highs, the widest Class III/IV spread in 15 years, the most consequential interstate movement policy change since the 2024 Federal Order, and an organic dairy lawsuit that could reshape the FMMO. Watch the cream complex, the powder complex, and the NMTS state map; these are the variables that will set the tone for May. *The Therio Dairy Newsdesk publishes a free weekly briefing every Friday covering markets, policy, and the operational stories that move the U.S. dairy industry. Subscribe via the Therio newsletter to get it in your inbox.*