Key Takeaways:
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Global milk supplies continue to run ahead of demand. In the US, robust milk and component production have weighed on cheese and butter prices, as consumption has been unable to absorb the current volume of output. Dry whey remains a notable bright spot, with strong consumer demand for high-protein products shifting more milk into higher-value whey streams, tightening commodity-style dry whey supplies, and providing relative support to Class III prices. Even so, broader supply pressures have kept both Class III and Class IV prices trending lower.
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Corn and soybean meal prices have edged modestly lower. The December WASDE report featured few changes overall, though USDA raised corn export projections, tightening ending stocks. The market is now turning its attention to potential adjustments to 2025/26 crop supplies in the January report. Meanwhile, trade negotiations with China remain top of mind for farmers, as uncertainty persists around both the timing and volume of Chinese purchases this season and into future crop years.
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Beef values fell sharply following the Trump administration’s mid-October announcement aimed at lowering consumer beef prices but have since rebounded, recovering a portion of those losses since late November. With stronger beef prices and lower feed costs offset by lower milk prices, the overall margin outlook remains largely unchanged from last month. HighGround’s projections show margins staying depressed but positive in Q1 2026, with improved profitability expected in the second half of 2026, if current futures prices hold. That said, opportunities remain, particularly in deferred months, to lock in profitability further out. HighGround continues to encourage producers to actively monitor and manage margins to stay ahead in the new year.
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