Dairy Industry News Roundup: Week of May 16 - 22, 2026

# Dairy Industry News Roundup: Week of May 16 - 22, 2026 Based on my research, I'll now write a comprehensive weekly dairy industry news roundup for May 16-22, 2026. The search results provide good information about current dairy market conditions, USDA reports, CME pricing, and H5N1/HPAI developments. The week of May 16-22, 2026 brought mixed signals across U.S. dairy markets as Class III and Class IV milk prices are revised upward to $16.90 and $18.60 per cwt, respectively. The all-milk price is projected to average $20.50 per cwt in 2026, $0.80 higher than the previous forecast. Meanwhile, CME cheese markets saw barrels and 40# blocks converge at $1.5550 per pound as spring milk production surged. June Class I base price reaches $22.18 per cwt, fluid milk sales for March are 2.3% higher than a year earlier, while USDA revised H5N1 testing requirements effective May 1, with 42 states achieving "Unaffected State Status" under the National Milk Testing Strategy. --- --- ## 1. This Week From Therio The team is heads-down building this week. If you missed our recent long-form pieces from co-founder Greg Cochara, both are worth catching up on: - [Herdscripting 101: The Hidden Infrastructure Behind Every Dairy Treatment](/news/herdscripting-101) - [Interstate Movement of Dairy Cattle: The Compliance Maze Nobody Talks About](/news/interstate-movement-101) --- ## Industry News ## 2. CME Spot Markets Converge as Cheese Price Discovery Shifts CME cheese barrels closed at $1.5550 and 40# blocks at $1.5550 during the week ending May 15, marking a continued convergence in the historically volatile spread between the two products. The weekly average for barrels is $1.5850 (-0.0240) and blocks $1.6035, reflecting the broader industry shift toward block-based pricing for barrel contracts. Looking at the cash markets at the Chicago Mercantile Exchange (CME) in the five years 2019 to 2024, those two price series varied by an average of 10.3 cents. Since June 2025, block and barrel prices varied just 0.3 cents. In 2025, and in contracts now being discussed for 2026, buyers and sellers of cheddar barrels have made the seismic shift to pricing barrels based on the cheddar block price announced daily at the CME, rather than the cheddar barrel price. The industry couldn't discuss pricing changes, but the uniform movement to the block price signal was inevitable: now cheddar block prices alone help set the milk price, so all cheddar, even barrels, needs to reflect that block value. | Commodity | Friday Close | Weekly Average | Change | |-----------|--------------|----------------|---------| | Cheese Blocks (40#) | $1.5550 | $1.6035 | -$0.0240 | | Cheese Barrels | $1.5550 | $1.5850 | -$0.0240 | | Butter (Grade AA) | $1.6400 | $1.6385 | +$0.0185 | | NDM (Grade A) | $2.2725 | $2.2810 | -$0.0035 | | Dry Whey | $0.6850 | $0.6870 | -$0.0100 | One seller told WCMA that the barrel price will continue to be watched to see if spots sales discover a rapidly rising or falling barrel price, but others in the barrel market noted that the block price is likely to be permanently used as the base price for negotiations. The future need for a cash barrel market at the CME is in question, based on the swing to block pricing. ## 3. USDA Raises 2026 Milk Production and Price Forecasts USDA's May World Agricultural Supply and Demand Estimates (WASDE) revised milk production for 2026 to 235.3 billion pounds, 0.6 billion pounds higher than last month's projection, as a larger dairy herd offsets lower output per cow. The dairy herd is projected to average 9.610 million head while milk per cow is forecast at 24,485 pounds. The forecasts for Class III and Class IV milk prices are revised upward to $16.90 and $18.60 per cwt, respectively. The all-milk price is projected to average $20.50 per cwt in 2026, $0.80 higher than the previous forecast. The 2026 price forecasts for cheese, nonfat dry milk, and whey are higher compared to April, but butter price projections are lower. The Class III milk price projection for 2026 was raised on increased cheese and whey prices. The Class IV price also went up, as USDA expects higher nonfat dry milk prices will more than offset the effect of lower butter prices. | 2026 Price Forecasts | Current | Previous Month | Change | |----------------------|---------|----------------|--------| | Class III | $16.90/cwt | - | +$0.80 | | Class IV | $18.60/cwt | - | +$0.80 | | All-Milk Price | $20.50/cwt | $19.70/cwt | +$0.80 | The 2026 forecast for dairy exports on both milk-fat and skim-solids bases are revised higher due to strong exports in January and February. Domestic use forecasts are reduced in part due to higher domestic wholesale price projections for Cheddar cheese and nonfat dry milk. ## 4. March Fluid Milk Sales Show Continued Growth USDA's Agricultural Marketing Service reported that 3.6 billion pounds of packaged fluid milk products were shipped by milk handlers in March 2026. This was 2.3 percent higher than a year earlier. Estimated sales of total conventional fluid milk products increased 2.1 percent from March 2025 and estimated sales of total organic fluid milk products increased 5.7 percent from a year earlier. The organic milk sector showed particularly strong momentum. The U.S. sale of total organic milk products was 272 million pounds, up 5.6 percent from the previous year. From the start of the year through March, the U.S. sale of total organic milk products was 774 million pounds, up 0.1 percent. | Milk Category | March 2026 Volume | Year-over-Year Change | |---------------|------------------|----------------------| | Total Fluid Milk | 3.6 billion lbs | +2.3% | | Conventional | - | +2.1% | | Organic | 272 million lbs | +5.7% | The difference in price for organic and conventional milk is increasing, reflecting continued premium positioning for organic dairy products in the marketplace. ## 5. H5N1 Testing Requirements Relaxed for Unaffected States USDA APHIS made a significant policy adjustment effective May 1, 2026, regarding interstate movement of dairy cattle. Lactating dairy cattle may now move interstate without testing for highly pathogenic avian influenza (HPAI, also known as bird flu) H5N1 if they originate from states that are in the National Milk Testing Strategy (NMTS) "Unaffected State Status." As of May 1, 2026, 42 states are listed as achieving this designation. The National Milk Testing Strategy facilitates comprehensive H5N1 surveillance of the US milk supply and dairy herds. It provides a strategy to identify which states and herds within them are affected with H5N1. Specifically, the NMTS gives states a five-stage roadmap to demonstrate the elimination of this virus from their dairy herds. USDA's voluntary Dairy Herd Status Program offers dairy producers the option to monitor their herds via weekly bulk milk samples before moving them across State lines, without having to test each individual animal. We currently have 100 herds across 18 States enrolled in this program. We continue to support the rapid development and timely approval of an H5N1 vaccine for dairy cows, in addition to other species. Several vaccine candidates for use in dairy cows are currently undergoing field trials. ## 6. Nonfat Dry Milk Rally Drives FMMO Depooling Activity Nonfat Dry Milk Rally Leads to Depooling became a headline issue during the May 16-22 period, according to industry reports. NONFAT DRY MILK: Grade A closed at $2.2725. The weekly average for Grade A is $2.2810 (-0.0035), showing relative strength compared to other dairy commodities. The NDM market's resilience has created arbitrage opportunities in Federal Milk Marketing Order (FMMO) pool pricing, leading some handlers to depool milk to capture higher Class IV values. The 2026 price forecasts for cheese, NDM and whey are raised compared to the previous month's forecast, but the butter forecast is lowered to reflect recent prices. The Class III price for 2026 is raised on increased cheese and whey prices. The Class IV price is also raised as higher NDM prices will more than offset the effect of lower butter prices. June Class I base price reaches $22.18 per cwt, reflecting the upward pressure on classified pricing from stronger commodity values. ## 7. Export Momentum Continues Despite Production Surge U.S. dairy exports continue to surge in 2026, with first-quarter volumes climbing 11% year-over-year as record cheese and butterfat demand helps absorb growing milk production. This export strength has been crucial in balancing supply-demand fundamentals despite significant production increases. U.S. cheese production is forecast 3 percent higher in 2026, driven by higher milk availability and growth in manufacturing capacity. Investments in new cheese plants in key dairy states , including Wisconsin, Kansas, Texas, Minnesota, and Idaho , continue to fuel production growth and lower prices will drive higher consumption and exports in 2026. Exports of U.S. cheese are forecast to reach over 620,000 tons in 2026, bolstered by higher supplies and strong price competitiveness. Lower U.S. prices relative to competitors will boost demand for food service use, especially in Asia and Western Hemisphere markets. | Key Export Metrics | 2026 Forecast | 2025 Actual | Change | |-------------------|---------------|-------------|---------| | Total Dairy Exports | +11% (Q1) | - | Strong growth | | Cheese Exports | 620,000+ tons | 602,000 tons | +18% | Exports for 2025 are revised up to 602,000 tons, 18 percent higher year over year, indicating the momentum carried into 2026. ## 8. Spring Flush Tests Processing Capacity Production was up 3.4% year-over-year, fueled by a national herd that had expanded by 189,000 head. As the spring flush approached , that annual period where cows reach peak production , the sheer volume of milk began to test the physical limits of the supply chain. In California, the nation's dairy powerhouse, the system began to buckle. Reports of milk being dumped due to capacity constraints sent a chill through the industry. Idaho Dairymen's Association CEO Rick Naerebout noted that "That 7.5% is on a very big base. It equates to roughly 3.5 million lb. of milk a day more this year than we had last year. We've definitely turned on the milk production." The industry was coming off a 2025 campaign that saw U.S. production grow at a pace rarely seen in recent history. For the full year of 2025, production had climbed 2.8% over the previous year. However, it was the second half of 2025 that truly signaled the coming tidal wave, with production up nearly 4% compared to the same period in 2024. ## 9. Protein Demand Drives Market Rebalancing The savior of the 2026 balance sheet was not a shortage of milk, but a fundamental shift in what the world wanted from that milk. "Consumers want more protein. There has been a convergence of GLP-1s, new Dietary Guidelines and marketing dollars aimed at developing new products that have accelerated the demand shift. And high-protein dairy products are well-positioned to meet that need," explains senior dairy analyst Ben Laine. Terrain's most recent quarterly outlook forecast Class III milk prices to average $17.00/cwt, while Class IV is forecast to reach a robust $19.50/cwt. As we move into the second half of the year, the forecast remains resilient, with Class III averaging $16.75 and Class IV holding strong at $19.20. | Terrain Forecasts | H2 2026 | H1 2027 | |------------------|---------|---------| | Class III | $16.75/cwt | $16.60/cwt | | Class IV | $19.20/cwt | $17.80/cwt | ## Quick Hits • IDFA CEO Michael Dykes announces retirement plans for 2026 after a decade at the helm • Milk cow, heifer and beef-on-dairy calf prices are all holding at historically strong levels as tight replacement supplies keep values elevated • Feed cost outlook shows corn anticipated to climb to $4.43 per bushel, soybean meal at $330.28 per ton, but alfalfa hay forecast falls $6 to $224 per ton • Forecasted DMC margin should be $10.40 per cwt with no indemnity payments issued, with margins mostly remaining in the $10 to $11 per cwt range for the remainder of the year • Wisconsin reports 9,461 raw milk samples tested for inter- and intrastate animal movement since April 2024, with zero positives • Conventional cheese advertising decreased 43 ads this week despite remaining the most advertised commodity, while organic milk ads decreased 65 percent • Organic feed corn sold 72 cents higher delivered with forward contracts for Q2 2026 through Q3 2027 delivery ## What to Watch Next Week Monitor the late-May USDA Agricultural Prices report scheduled for May 29, which will announce the actual April DMC margin calculation. The actual April DMC margin will be announced May 29 following the release of the USDA Agricultural Prices report. Watch for continued CME price action as the cheese block-barrel convergence becomes more permanent in contract negotiations. Keep tracking H5N1 developments as more states work toward achieving Unaffected State Status under NMTS protocols. Export data for April should provide insight into whether the strong Q1 momentum is continuing through spring flush season. Class price announcements for June will reflect the strengthening commodity values seen in mid-May. *The Therio Dairy Newsdesk provides comprehensive coverage of dairy markets, policy, and industry developments. Our analysis draws from USDA reports, CME data, industry sources, and field intelligence to deliver actionable insights for dairy professionals navigating today's complex marketplace.*