Dairy Industry News Roundup: Week of May 9 - 15, 2026

# Dairy Industry News Roundup: Week of May 9 - 15, 2026 The U.S. dairy industry navigated through another week of market volatility and regulatory developments during May 9-15, 2026. USDA raised 2026 milk production estimates to 235.4 billion pounds while boosting the all-milk price forecast by 75 cents to $21.25 per hundredweight. Class III milk prices held firm at $17.81 per hundredweight while Class IV struggled at $13.75, creating a historic $4 gap between cheese and powder pricing that translates to $3,800 monthly differences per 100 cows. H5N1 surveillance expanded with new California research revealing infectious virus in dairy parlor air and wastewater on 14 affected farms, while University of Nebraska researchers advanced a promising dual-route vaccine platform. --- --- ## 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. USDA Lifts 2026 Milk Production 600 Million Pounds on Larger Herd USDA's May WASDE report raised 2026 milk production to 235.4 billion pounds on expectations of a larger cow herd but a slower growth rate in output per cow. The milk production forecast for 2027 is projected to increase from 2026, driven by higher milk per cow and a stable milk cow herd, with the USDA estimating milk production at 236 billion pounds. The production increase reflects the dairy herd projected to average 9.610 million head while milk per cow is forecast at 24,485 pounds. The report released Tuesday says the U.S. dairy herd is stable, even though it is around 200-thousand more cows than a year ago. Production per cow is also expected to rise. Feed costs continue pressuring margins despite production gains. Feed costs keep climbing with corn hitting $4.35/bu and soybean meal at $308/ton, squeezing everyone's margins. At $4.40 per bushel, the projected season-average corn price received by producers is raised a quarter from the previous report and up a quarter from the 2024-25 average of $4.15 per bushel. | Metric | 2026 Forecast | Previous | Change | |--------|---------------|-----------|---------| | Milk Production (billion lbs) | 235.4 | 235.3 | +0.6 | | Dairy Herd (million head) | 9.610 | - | - | | Milk per Cow (lbs) | 24,485 | - | - | | All-Milk Price ($/cwt) | $21.25 | - | +$0.75 | ## 3. Historic Class III-IV Price Gap Widens to $4 per Hundredweight Class III milk paid $17.81/cwt while Class IV paid $13.75, creating a historic $4 gap that means identical farms are now separated by $3,800 per 100 cows per month. While cheese held firm above $1.82, powder crashed by 2.25 cents amid intensifying European competition and weakening global demand. Cheese, nonfat dry milk (NDM) and whey prices for 2026 are raised compared to the previous month's forecast, but butter is lowered to reflect recent prices. As a result, the Class III milk price forecast is raised on increased cheese and whey prices to $17 per hundredweight. NDM's zero-bid disaster with seven sellers vs zero buyers signals something darker - U.S. powder can't compete with Europe's $1.00/lb pricing, and the gap's widening. The industry's geographic revolution accelerates as Texas adds 50,000 cows and builds massive new plants while California and Wisconsin struggle with regulations and aging infrastructure. | Class | Current Price ($/cwt) | Trend | Impact | |-------|----------------------|-------|---------| | Class III | $17.81 | Stable | Cheese plants profitable | | Class IV | $13.75 | Declining | Powder plants struggling | | Price Gap | $4.06 | Widening | Geographic shifts accelerating | ## 4. CME Dairy Markets Show Mixed Performance with Cheese Strength CME Class III milk futures for July 2026 closed at $18.14/cwt, while Class IV futures reached $21.42/cwt. Base Case projections show cheese consolidating between $1.80 and $1.85, NDM continuing its slide toward $1.10, and butter staying range-bound at $1.55-1.60. Spot market prices for May 2, 2026 showed butter at $1.7152/lb, cheese blocks at $1.6452/lb, dry whey at $0.6353/lb, and NDM at $2.0222/lb. Today was a pause day after cheese's weeklong rally. That's normal, healthy even. The stability above $1.82 suggests these levels are sustainable through holiday demand. Trading activity remains constrained by the widening basis between U.S. and international pricing. European values have stayed relatively steady, supported by strong seasonal milk output and consistent cream availability, with increased competition from US CME butter. ## 5. H5N1 Research Reveals Airborne Transmission Risk in Dairy Parlors A study published May 12, 2026 in PLOS Biology revealed sampling on 14 California dairy farms positive for H5N1 avian influenza uncovered infectious virus in the air of milking parlors and wastewater, viral RNA in cows' exhaled breath and milk. Dairy parlors pose the greatest threat from inhalation of the virus to dairy farm workers, with particle-size analysis showing both submicron and larger aerosols in milking-parlor air, with four samples containing infectious virus. Researchers from Emory University School of Medicine and Colorado State University found infectious virus detectable in the exhaled breath of infected cows and in dairy parlor air, as well as in farm wastewater. H5N1 viral RNA was detected throughout the wastewater stream, including in manure lagoons used by migratory birds and in fields with grazing cows, with two samples containing detectable infectious virus. Meanwhile, researchers at the University of Nebraska-Lincoln published results describing a vaccine platform designed to generate both systemic and mucosal immunity against H5N1, administered via a combination of intramuscular and intranasal delivery to prevent systemic viral spread within animals and reduce animal-to-animal transmission. | Research Finding | Location | Significance | |------------------|----------|--------------| | Infectious virus in air | Dairy parlors | Worker exposure risk | | Virus in exhaled breath | Infected cows | Animal-to-animal spread | | RNA in wastewater | Manure lagoons | Environmental contamination | | Dual-route vaccine | Nebraska lab | Prevention breakthrough | ## 6. California Releases All Dairies from H5N1 Quarantine On February 27, 2026, the California Department of Food and Agriculture (CDFA) released all dairies under quarantine for H5N1 (Bird Flu), marking an important step forward for California's dairy industry. However, California remains in Stage 3, which means testing and monitoring will continue, with low levels of the virus still occasionally found in some animals and wildlife, so the risk is currently not zero. CDFA will continue testing milk from dairy herds across the state for the next several months, when wild birds can spread the virus during spring migration. Since April 2024, there have been 9,461 raw milk samples tested for inter- and intrastate animal movement in Wisconsin, with zero positives. The USDA voluntary Dairy Herd Status Program currently has 100 herds across 18 States enrolled, offering dairy producers the option to monitor their herds via weekly HPAI testing of bulk tank milk samples. USDA continues to support the rapid development and timely approval of an H5N1 vaccine for dairy cows, with several vaccine candidates currently undergoing field trials. ## 7. Federal Milk Marketing Order Prices Show Seasonal Adjustment Base Class I Price was $20.15 per hundredweight for May 2026, while the Base Skim Milk Price for Class I was $14.12 per hundredweight. The price per hundredweight increased $2.12 from the previous month, reflecting tighter supplies and seasonal demand patterns. Total cheese output (excluding cottage cheese) was 1.26 billion pounds, 1.2 percent above March 2025 and 8.1 percent above February 2026. Nonfat dry milk production totaled 175 million pounds, 9.9 percent above March 2025 and 15.4 percent above February 2026. Dry whey production was 78.7 million pounds, 3.6 percent above March 2025 and 16.5 percent above February 2026. Processing capacity continues expanding despite market challenges. The industry is investing over $11 billion in new capacity through 2026, according to the International Dairy Foods Association. ## 8. Global Dairy Trade Shows Mixed Signals in Early 2026 Global dairy markets continued their strong start to 2026 as prices rose 1.5% on average at the latest Global Dairy Trade (GDT) auction, following a sharp 6.3% gain in the first auction of the year. Whole milk powder climbed 1% to US$3,449/MT, while skim milk powder strengthened further, up 2.2% to US$2,615/MT. Fat-based products continued to outperform, with butter rising 2.1% to US$5,314/MT and anhydrous milk fat increasing 3.0% to US$6,191/MT. However, several cheese and specialty products softened, with cheddar declining 1.4%, mozzarella recording the largest fall at -2.3%, and lactose easing 1.8%. The auction results support improved farmgate pricing. The sustained rally aligns with Fonterra's evolving 2025/26 milk price forecast, narrowed to a range of $8.50-$9.50 per kgMS, with a midpoint of $9/kgMS. | Product | Current Price (US$/MT) | Change | Trend | |---------|------------------------|--------|-------| | Whole Milk Powder | $3,449 | +1.0% | Consolidating | | Skim Milk Powder | $2,615 | +2.2% | Strengthening | | Butter | $5,314 | +2.1% | Rising | | Cheddar | - | -1.4% | Softening | ## 9. Export Performance Reaches Four-Year High Despite Challenges In March, not only were U.S. dairy product exports up 8% from the same month a year ago, but it was the highest milk solid equivalent volume in four years. Commercial milk exports and imports in 2027 are forecast to be higher than in 2026 on both a fat basis and a skim-solids basis, with exports benefiting from additional overseas cheese and whey sales. Prices continue to support the ample flow of milk in the U.S. as the global marketplace wants more. However, competitive pressures from Europe remain intense, particularly in powder markets where pricing advantages favor European suppliers. The export surge comes despite transportation and logistical challenges that continue to impact delivery schedules and customer relationships in key markets. ## Quick Hits • HPAI H5N1 RNA was detected in an asymptomatic bull's semen during a California outbreak, though infectious virus was not isolated • Robotic milking systems are expanding to 1,000+ cow operations, with one Wisconsin producer reporting payback under five years at current milk prices • FDA's nationally representative commercial milk sampling study shows about 1 in 5 retail samples tested positive for HPAI viral fragments via qRT-PCR • Dairy-quality alfalfa hay prices averaged $230 per ton in March, while alfalfa hay prices averaged $166 per ton • Wisconsin began testing milk samples from milk quality laboratories for HPAI in May 2025 under the federal USDA National Milk Testing Strategy • FDA has sampled a total of 464 pasteurized dairy products, including milk, cheese, butter, and ice cream, all testing negative for viable H5N1 ## What to Watch Next Week Monitor CME futures action following the volatile cheese-powder divergence and whether institutional buyers step back into powder markets. Track any additional H5N1 research publications and their impact on operational protocols. Watch for USDA's monthly Dairy Products report scheduled for release and its production data validation. Global Dairy Trade auction results will provide critical price signals for international competitiveness. Federal Milk Marketing Order administrators may address the widening Class III-IV gap and its geographic implications. Feed markets require close attention as corn and soybean meal prices continue pressuring dairy margins. *The Therio Dairy Newsdesk provides comprehensive weekly analysis of U.S. dairy markets, policy developments, and industry trends. Our data-driven approach delivers the essential intelligence dairy professionals need to navigate an increasingly complex marketplace.*