Dairy Industry News Roundup: Week of January 3-9, 2026

# Dairy Industry News Roundup: Week of January 3-9, 2026 Welcome to the second roundup of 2026! As dairy producers settle into the new year, the industry faces a complex mix of tightening margins, shifting trade dynamics, and evolving genetic strategies. Here are the top stories from January 3 through January 9. **Heading to World Ag Expo?** The Therio team will be in Tulare, CA from February 9-11. [Schedule time to meet with us](https://calendly.com/therio) or email us at [info@therio.ai](mailto:info@therio.ai). --- ## 1. China Announces Potential 42.7% Tariffs on EU Dairy Imports China's Ministry of Commerce concluded that EU dairy imports have caused "material injury" to domestic producers and announced potential tariffs of **up to 42.7%** on cheese, high-fat milk, and cream. The tariffs could take effect as early as February 21, 2026. Key implications: - **Estimated annual cost**: €118-280 million for the EU dairy industry in added border deposits - **Products affected**: Cheese, high-fat milk, and cream from EU member states - **Context**: This is part of ongoing trade tensions between China and the EU - **U.S. opportunity**: American dairy exporters may find new openings in the Chinese market if EU products become less competitive The announcement follows a months-long investigation by Chinese authorities into European dairy subsidies and dumping allegations. EU dairy associations are urging diplomatic intervention before the tariffs take effect. *Read more:* [Dairy Reporter](https://www.dairyreporter.com/Article/2026/01/05/chinas-new-eu-dairy-tariffs-all-you-need-to-know/) --- ## 2. Class I Milk Prices Hit Lowest Level Since April 2021 The USDA announced that the **Class I Base Skim Milk Price for January 2026** is **$11.17 per hundredweight**, down $1.57 from December and more than $4 below January 2025 levels. This marks the lowest Class I base milk price since April 2021. Price outlook for 2026: - **All-Milk Price Forecast**: $18.75/cwt (down from $21.00/cwt in 2025) - **Class III and IV prices**: Expected to remain under pressure due to lower cheese and butter commodity prices - **Feed costs**: Corn near $3.90/bushel offers some relief with record-high feed grain supply The good news: **Global Dairy Trade prices jumped 6.3%** in the first auction of 2026 on January 6, with all seven product categories seeing gains. This marks the first increase since August 2025 and could signal improved export competitiveness for U.S. dairy. *Read more:* [USDA Advanced Prices](https://www.ams.usda.gov/mnreports/dymadvancedprices.pdf) --- ## 3. U.S. Dairy Herd Grew by 211,000 Cows in 2025 Despite Collapsing Margins The U.S. dairy herd expanded by **211,000 cows in 2025** even as producer margins collapsed. Analysts warn that the first half of 2026 represents a critical window for operations to adjust strategies before options narrow further. The structural challenge: - **$11 billion in new processing capacity** is hungry for milk volume, pressuring prices - Many producers are underestimating true break-even costs by **$2-4 per hundredweight** - Industry consolidation is expected to accelerate, with fewer operations, larger scale, and concentration in lower-cost regions The beef-on-dairy crossbreeding trend is both helping and hurting. While calf premiums of **$900-1,400** provide critical revenue, keeping lower-genetic-merit cows in the herd longer to capitalize on these premiums is slowing genetic progress. *Read more:* [The Bullvine](https://www.thebullvine.com/news/211000-more-dairy-cows-bleeding-margins-the-2026-math-that-wont-wait/) --- ## 4. Replacement Heifer Inventory Hits 20-Year Low The beef-on-dairy boom has created an unintended consequence: **replacement heifer inventories are at their lowest level in 20 years** and won't fully recover until at least 2027. By the numbers: - **Replacement ratio**: Just 27 heifers per 100 cows (down from 31 five years ago) - **2025 shortfall**: 357,490 fewer dairy heifers compared to the prior year - **Day-old beef-on-dairy calf value**: Around $1,000 in some markets - **Nearly 1 million beef-on-dairy crosses** added to fed cattle markets annually The industry now faces a strategic crossroads. Every year of delayed genetic turnover costs operations an estimated **$50-75 per cow** in foregone production improvement. Producers who prioritized beef-on-dairy revenue may find themselves scrambling for quality replacements as the heifer shortage persists. *Read more:* [Mid-West Farm Report](https://www.midwestfarmreport.com/2026/01/07/u-s-leading-the-pack-in-beef-on-dairy/) --- ## 5. New Dietary Guidelines Give Prime Placement to Meat and Dairy The Trump administration released updated dietary guidelines on January 8, 2026, and **meat and dairy products received prime placement** in the recommendations. Industry reaction: - **Dairy groups praised** the guidelines for recognizing the nutritional value of milk, cheese, and yogurt - **Whole milk advocates** noted continued support for dairy's role in healthy eating patterns - **Critics raised concerns** about financial ties between advisory panel members and beef/dairy industries The guidelines come at a strategic time for dairy, reinforcing the industry's messaging about protein, calcium, and essential nutrients. However, advocacy groups have questioned whether industry influence shaped the recommendations. *Read more:* [STAT News](https://www.statnews.com/2026/01/07/new-dietary-guidelines-review-panel-financial-ties-beef-dairy-industry/) --- ## 6. USDA Begins 2026 Down 20% in Staff The agency charged with supporting American agriculture enters 2026 with a significantly reduced workforce. Over **20,000 USDA employees (roughly 20% of staff)** departed in 2025, raising concerns about a "brain drain" at an agency managing a **$234 billion budget**. Impact on dairy: - **Fewer resources** for Farm Service Agency programs that support dairy producers - **Slower processing** of Dairy Margin Coverage and other risk management applications - **Reduced capacity** to manage ongoing HPAI response and surveillance - **Additional relocations** planned for Washington D.C. staff in 2026 Industry groups are urging Congress to address staffing concerns before critical farm programs face operational challenges. The workforce reduction comes as dairy producers increasingly rely on federal risk management tools during a period of margin pressure. *Read more:* [Farm and Dairy](https://www.farmanddairy.com/news/usda-begins-2026-down-20-in-staff-with-plans-to-cut-more/900277.html) --- ## 7. New Study Validates Dairy Wellness Profit Index for Genomic Selection Research published in the Journal of Dairy Science confirms that selecting for higher **Dairy Wellness Profit Index (DWP$)** scores delivers measurable improvements in commercial herds. Key findings from 11 commercial herds: - **Top-quartile DWP$ cows** showed improved health, longevity, and reduced methane intensity - The multi-trait index combines wellness, fertility, production, and longevity traits - Study validated DWP$ for both Holstein and Jersey cattle - Results support genomic testing via CLARIFIDE Plus as an effective selection strategy For producers navigating tight margins, the research underscores that genetic selection for wellness traits can reduce veterinary and culling costs while maintaining production levels. Healthier cows that stay in the herd longer contribute more lifetime value, even if their peak production is slightly lower than herd mates selected purely for output. *Read more:* [The Cattle Site](https://www.thecattlesite.com/articles/new-study-genetic-selection-with-dairy-wellness-profit-index-supports-measurable-productivity-gains-for-dairy-producers) --- ## 8. Protein Shift: Cheese Plants Want More Protein, Less Fat Component pricing is shifting, and genetic strategies need to follow. While **butterfat premiums dominated** dairy economics for years, cheese processors are now signaling stronger demand for **milk protein**. What this means for breeding: - **Lifetime Cheese Merit (CM$)** may become more relevant than fat-focused indexes - Genetic transitions take **3-5 years** to implement, so breeding decisions made now will define 2029+ herd performance - Producers selling to cheese plants should evaluate whether their current sire selections align with future component demand The Council on Dairy Cattle Breeding (CDCB) publishes CM$ evaluations that weight protein more heavily than Net Merit. Operations locked into fat-focused genetics may want to diversify their sire portfolios as markets evolve. *Read more:* [Council on Dairy Cattle Breeding](https://uscdcb.com) --- ## Market Snapshot: Week Ending January 9, 2026 | Indicator | Price/Value | Change | |-----------|-------------|--------| | Class I Base Skim (January) | $11.17/cwt | Down $1.57 from December | | 2026 All-Milk Price Forecast | $18.75/cwt | Down from $21.00 in 2025 | | GDT Price Index (Jan 6) | +6.3% | First increase since August 2025 | | Corn (nearby futures) | ~$3.90/bu | Favorable for feed costs | | Replacement Heifer Ratio | 27 per 100 cows | 20-year low | | U.S. Dairy Herd Growth (2025) | +211,000 cows | Despite margin pressure | --- ## Looking Ahead **Key dates to watch:** - **January 21, 2026:** American Dairy Products Institute 2026 Dairy Market Outlook webinar - **February 9-11, 2026:** World Ag Expo in Tulare, California. **The Therio team will be there!** If you're attending, we'd love to connect. [Schedule time to meet with us](https://calendly.com/therio) or email us at [info@therio.ai](mailto:info@therio.ai). - **February 21, 2026:** Potential effective date for China's EU dairy tariffs **Industry priorities:** - Managing through multi-year low milk prices - Balancing beef-on-dairy revenue against replacement heifer needs - Monitoring China-EU trade tensions for U.S. export opportunities - Navigating USDA staffing reductions that may slow program delivery - Evaluating genetic strategies as component demand shifts toward protein --- *Stay informed with our weekly dairy industry roundups. For questions or tips, reach out at [info@therio.ai](mailto:info@therio.ai).*