NFDM Rallies Over $0.40/lb: CME spot nonfat dry milk (NFDM) has made a MOVE, up nearly 30% (+$0.40/lb.) since its nearby low of $1.40 less than four weeks ago. Thursday, August 20’s settlement of $1.82/lb. was its highest price since June 10. The market has surpassed the 20-, 50- and 200-day moving averages, suggesting that fundamentals may have shifted again. Various factors are at play in the current price run-up, including stronger export deals completed when the price was at its lows, rumored product on hold by the Food and Drug Administration, the school milk draw beginning again, and strong demand for skim solids for ultrafiltered milk, cottage cheese, and yogurt, each of which has the ability to tighten up supplies to the NFDM dryers. Nearby futures continue to carry a premium over those further out, at a $0.14/lb. increase from August 2026 to September 2026 futures, highlighting the market’s bullish sentiment.
Flip Side of Class IV, Butter, Struggles: Butter has been struggling to find its footing, and CME spot prices have fallen back into the $1.40s, historically very low. So far, August 2026’s average price of $1.4775/lb. is the lowest for the month since 2013 and ranks 18th over the past 20 years, highlighting just how inexpensive butter is. It is hard to believe it is August and no seasonal rally is in sight; just more of the same. The futures curve through next year is below $2.00/lb. and October 2026’s contract, typically the month with the highest-priced butter of the year, is at $1.5818/lb. as of August 21.
US Herd Largest in Nearly 35 Years!: The US milking herd reached 9.71 million head in June and July 2026, their highest level since Q4 1991. USDA made a huge revision to June’s herd size, increasing it by 33,000 in its latest report. This means the total herd grew (report to report) by 52,000 cows from May to June, the largest monthly gain in over 40 years. Milk per cow was also taken higher in June, and adding these items together resulted in 3.0% year-on-year growth that month, up from the initial print of 2.3%. July’s milk collections grew by 2.2% versus July 2025. Milk per cow gained in July, up 0.1%, against a very tough comparison in July 2025. USDA did not report that heat and smoke slowed down yields in the Upper Midwest or Great Lakes states; only California and Washington saw declines in milk per cow in July.
USDA publishes the July Cold Storage report later today (Monday), with updated ending stock data for both cheese and butter.
A Whole Lotta Red in Chinese Import Data: Chinese dairy imports slowed in July. For example, skim milk powder (SMP) dropped by 19% against July 2025, totaling 11,189MT, while whole milk powder (WMP) was nearly halved, falling 48% YoY to 19,489MT. Cheese imports, which had mostly increased over the past year and been a bastion of growth in the data, dropped by 30% versus the prior year. Higher prices are likely the culprit for the depressed cheese and SMP imports. A challenged economy, particularly in the restaurant channel, may explain the demand downturn although it certainly does not seem to be a long-term trend, but rather a function of consumers being choosier with their dollars.
Sans Fats and Butter Milk Powder, GDT Results Positive: Powders climbed at last week’s full Global Dairy Trade auction. The C2 WMP contract rose 3.3%, settling at $3,586/MT. SGX traders were expecting an increase, so the move was neutral to expectations. Similarly, C2 SMP was up 7.3% to $3,492/MT, also expected, yet impressive given the rallying US NFDM market. North Asia was the primary buyer of both items as its coffers were refilled. Weather concerns, i.e., El Niño, are influencing these markets, as buyers scramble to buy now, rather than wait to see how much this weather system may impact Kiwi and South American milk production. Buyers seem content to pay a little more now, ahead of the Southern Hemisphere summer, to avoid potentially paying for a huge run-up in prices. Butter and anhydrous milkfat (AMF) continue to melt, with AMF at its lowest price since the start of 2026 and C2 butter down for its fourth auction in a row, at its lowest price since December 2025.
Beef Imports Not Subject to Out-of-Quota Tariffs: On Friday, President Trump announced that up to 300,000MT (~664 million pounds) of ground beef could be imported into the US over the next 90 days and had secured a commitment that the beef would be sold in at a 25% discount to current market prices. This is about 7% of the annual total eaten by American consumers, so it is not insignificant. While the measure should take some pressure off consumers, it seems like prices will drift higher again as this beef is imported, purchased, and eaten. US beef producers have expressed dissatisfaction with the policy and concern that it will do little to rebuild the beef herd while also limiting their income after years of drought and negative margins.Live and feeder cattle futures plummeted on Friday morning after the announcement was made but both commodities rallied to setting on their daily highs by Friday afternoon, suggesting a lot of confusion about the impact of this short-term policy move.
Last Week’s Reports & Analysis
July 2026 US Milk Production Report Analysis – 24 August 2026
Milk production was bearish to our expectations, surpassing 2% annual growth for the 15th month in a row. The team anticipated a larger slowdown in milk flows due to the hot temperatures, but this report held some surprises, and the unprecedented increases just kept coming… Full Report
July 2026 China Dairy Import Volume Analysis – 21 August 2026
Import demand pulled back across nearly all key dairy commodities, reflecting a combination of purchases being brought forward earlier in the year and elevated global prices that increasingly tested buyers’ willingness and ability to absorb additional increases… Full Report
Weekly EU Dairy Commodity Prices – 19 August 2026
The Euro is up to its highest level against the US Dollar in two months. The major bump higher came after the US Federal Reserve elected to hold interest rates, while the US stepped in to help Japan push up the falling Yen… Full Report
Reports/Events This Week
- July ’26 US Cold Storage Report – Monday, Aug 24
- USDA Weekly Crop Progress – Monday, Aug 24
- GDT Pulse Auction – Tuesday, Aug 25
- National Dairy Products Sales Report (NDPSR) – Wednesday, Aug 26
- Weekly EU Dairy Commodity Prices – Wednesday, Aug 26
- USDA Weekly Dairy Market News Data – Thursday, Aug 27
- Dry Commodity Midpoint Prices (AOM)
- Upper Midwest Spot Milk Basis
- Cream Multiples
- US Dairy Cow Slaughter
- Pre-GDT Offer Volume Estimates – Thursday, Aug 27
