Dairy Industry News Roundup: Week of March 28 - April 3, 2026

# Dairy Industry News Roundup: Week of March 28 - April 3, 2026 Welcome to your weekly dairy industry briefing! This week brought the biggest story in dairy data in months: USDA's February production numbers confirmed a record-setting dairy herd, while the processed products report showed butter and cheese output climbing. NFDM keeps pushing toward $2/lb, DFA stunned New York farmers by cutting 120 contracts, and California officially cleared its last HPAI quarantines. Here are the top stories from March 28 through April 3. --- ## 1. This Week From Therio If you missed it last week, Therio co-founder Greg Cochara's field guide on dairy cow identity fragmentation is still making the rounds. [Dairy Cows Are Having an Identity Crisis!](/news/dairy-cows-are-having-an-identity-crisis) walks through how a single cow can accumulate 18 or more separate identifiers, and why that costs farmers real time and money. Give it a read if data reconciliation is eating into your weekends. --- ## Industry News ## 2. DFA Drops 120 Milk Contracts in New York's Finger Lakes Region Dairy Farmers of America abruptly terminated 120 independent milk contracts in upstate New York, leaving Finger Lakes-area dairy farmers scrambling for a buyer. DFA cited hauling logistics and regional oversupply as the rationale, but the move blindsided producers, many of whom recently invested in automated milking systems and specialized infrastructure that cannot easily be repurposed. **The financial squeeze:** | Factor | Detail | |--------|--------| | Contracts canceled | 120 independent farms | | DFA's U.S. milk share | ~29% of all U.S. milk | | Base milk price (current) | ~$16.50/cwt | | Stranded capital risk | Robotic milking systems, bulk tanks, automated feeders | The cancellation of these contracts removes market access for small-to-midsize dairies in a region where alternative buyers are limited. Farmers who invested heavily in automated equipment now face the prospect of servicing debt on infrastructure they cannot use without a cooperative contract. Independent producers have struggled in recent years as the milk marketing landscape has become increasingly concentrated, and DFA's regional exit compounds that pressure. **Why it matters:** This is a cautionary story about cooperative concentration. When a single cooperative handles nearly a third of the nation's milk and decides to exit a region, the affected farmers have few options. The Finger Lakes situation will likely renew calls for greater transparency in cooperative contracting and farmer protections. ## 3. USDA Dairy Products Report: Butter Up 9.1%, Cheese Up 3.9% in February USDA NASS released the February 2026 Dairy Products report this week, showing production increases across nearly every major category. Butter production hit 221 million pounds, 9.1% above February 2025. Total cheese output (excluding cottage cheese) reached 1.16 billion pounds, up 3.9% year over year. **February 2026 production by category:** | Product | February 2026 | YoY Change | |---------|--------------|------------| | Butter | 221 million lbs | +9.1% | | Total cheese (excl. cottage) | 1.16 billion lbs | +3.9% | | American-type cheese | 451 million lbs | +1.9% | | Cheddar | 314.7 million lbs | +2.3% | | Italian-type cheese | 506.3 million lbs | +6.8% | | Mozzarella | 394.8 million lbs | +5.8% | | Parmesan | 48.5 million lbs | +20.4% | Cheese production during the first two months of 2026 totaled 2.44 billion pounds, up 4.2% from the same period in 2025. The most striking number is parmesan, which surged 20.4% year over year, reflecting growing domestic demand for specialty Italian-type cheeses. **Why it matters:** The butter production increase of 9.1% is notable given the tight cream supply narrative that has been pushing prices higher. Plants are clearly finding enough cream to run, but the question is whether production can keep pace with seasonal demand heading into spring and summer baking season. ## 4. March FMMO Class Prices: Class IV Jumps $2.65 to $18.94/cwt USDA announced March 2026 Federal Milk Marketing Order class prices this week, with Class IV posting the largest gain. Class IV rose $2.65 to $18.94/cwt, driven by the ongoing NFDM rally. Class III climbed $1.22 to $16.16/cwt, and Class II increased $2.00 to $17.34/cwt. **March 2026 FMMO class prices:** | Class | March Price | Change from February | |-------|-----------|---------------------| | Class II | $17.34/cwt | +$2.00 | | Class III | $16.16/cwt | +$1.22 | | Class IV | $18.94/cwt | +$2.65 | | Butterfat | $2.0220/lb | - | | Protein | $2.0905/lb | - | | Other solids | $0.4178/lb | - | The April 2026 advanced Class I base price was set at $18.66/cwt. The wide gap between Class III and Class IV reflects the diverging fortunes of the cheese and powder markets: cheese prices have been relatively flat while NDM has surged. **Why it matters:** The Class IV jump is the headline. Farmers on Class IV contracts are seeing meaningfully better checks, and the spread between Class III and Class IV is now nearly $3/cwt, one of the widest gaps in recent memory. ## 5. NFDM Closes in on $2/lb as Rally Enters Third Month CME spot nonfat dry milk closed the week at $1.9725/lb, adding another 5 cents and inching closer to the psychologically significant $2.00/lb mark. The rally is now in its third month, with prices up 64% from $1.1750/lb at the start of January. **NFDM price trajectory in 2026:** | Date | NDM Spot Price | Cumulative Gain | |------|---------------|----------------| | January 2, 2026 | $1.1750/lb | - | | Week ending March 14 | $1.765/lb | +$0.59 | | Week ending March 21 | $1.87/lb | +$0.695 | | Week ending March 27 | $1.9225/lb | +$0.7475 | | Week ending April 3 | $1.9725/lb | +$0.7975 | The driver remains a supply squeeze rather than a demand surge. Ultrafiltered skim milk is absorbing a growing share of skim solids, leaving less available for powder production even as total milk output rises. German skim milk powder values are 37% higher than the start of the year, confirming the rally is global. NDM overtook butter prices in mid-March for the first time since April 2014. **Why it matters:** If NDM crosses $2.00/lb, it will mark a level not seen since the 2022 commodity spike. The ultrafiltered milk dynamic is structural, not cyclical, which means the supply squeeze could persist even as total milk production grows. ## 6. DMC February Margin Falls to $8.46/cwt, Payments Triggered Again The USDA NASS Agricultural Prices report released March 30 established the February 2026 DMC margin at $8.46/cwt, below the maximum Tier 1 coverage level of $9.50/cwt. Indemnity payments will be issued to participating farms for the second consecutive month. Feed costs climbed 15 cents in February, with soybean meal posting the largest increase at $13.13/ton from the prior month. Despite improvements in class prices, the all-milk price declined more than $4/cwt year over year in every major dairy state, with 19 of 24 states posting declines of $5/cwt or more compared to February 2025. **Why it matters:** Back-to-back DMC payment months underscore how quickly the margin environment has shifted. Farmers who locked in coverage at $9.50/cwt during enrollment are receiving meaningful checks, while those at lower coverage tiers or who skipped enrollment entirely are absorbing the full impact of the margin compression. ## 7. California Clears Last HPAI Quarantines, But Monitoring Continues The California Department of Food and Agriculture officially released all remaining dairies from HPAI H5N1 quarantine as of February 27, a milestone that became effective during this reporting period. In total, 766 California dairies were infected during the outbreak, with 630 now fully recovered. Despite the quarantine milestone, CDFA emphasized that California remains in Stage 3 of its response, meaning testing and monitoring will continue. Low levels of the virus are still occasionally being detected in bulk tank milk samples, and spring migration season raises the risk of new introductions from wild birds. Nationally, HPAI has been confirmed in dairy cattle in 19 states. The virus continues to circulate at low levels, and USDA's National Milk Testing Strategy remains active. **Why it matters:** Clearing all quarantines is symbolically important for California, the nation's largest dairy state. But the shift to monitoring mode means the industry is treating HPAI as an endemic management challenge rather than an acute crisis, which is probably the realistic posture going forward. ## 8. GDT Event 401: Price Index Rises 1.1% as Global Demand Holds The Global Dairy Trade auction held April 1 (Trading Event 401) saw the GDT Price Index rise 1.1%, continuing the upward trend that has characterized the first quarter of 2026. Whole milk powder and butter both firmed, supported by demand from Asian markets. The result extends a strong start to 2026 for international dairy prices, with the GDT index up significantly from its January baseline. However, some product categories showed softness: cheddar declined 1.4%, mozzarella fell 2.3%, and lactose eased 1.8%. **Why it matters:** The modest overall gain masks some product-level divergence. Powder and fat continue to lead, while cheese products are feeling the weight of strong global supply. Rabobank's Q1 2026 Global Dairy Quarterly, published in March, warned of a "wall of milk" from the Big 7 exporting regions, forecasting that 2025's aggressive 2.6% production growth would slow to just 0.2% in 2026 as the market self-corrects. ## Market Snapshot | Indicator | This Week | Prior Week | Change | |-----------|-----------|------------|--------| | CME Cheddar Blocks | $1.6725/lb | $1.5825/lb | +$0.09 | | CME Cheddar Barrels | $1.5925/lb | $1.5650/lb | +$0.0275 | | CME Butter | $1.7900/lb | $1.8250/lb | -$0.035 | | CME NFDM | $1.9725/lb | $1.9225/lb | +$0.05 | | CME Dry Whey | $0.6875/lb | $0.6900/lb | -$0.0025 | | Class III (Mar actual) | $16.16/cwt | - | +$1.22 MoM | | Class IV (Mar actual) | $18.94/cwt | - | +$2.65 MoM | | Class III Futures (Apr) | $17.52/cwt | $17.52/cwt | Flat | | GDT Price Index | +1.1% | - | Steady gains | | DMC Margin (Feb) | $8.46/cwt | $7.81/cwt (Jan) | +$0.65 | | Corn (nearby) | Stable | - | - | | Soybean Meal | Higher (+$13/ton MoM) | - | - | --- *This roundup is compiled from publicly available USDA reports, industry publications, and news sources. For the latest market data, visit the [USDA Dairy Market News portal](https://www.ams.usda.gov/market-news/dairy). For questions or tips on stories we should cover, reach out to our team at hello@therio.ai.*