The May USDA Announcement of Class and Component Prices report is indicative of a milk market the U.S. dairy industry has not seen since 2020 as the gap between Class III and Class IV reached $5.40 per hundredweight (cwt), incentivizing depooling in Federal Milk Marketing Orders (FMMOs).

The price for all key feedstuffs used to calculate the margin rose in April, revealing an income over feed cost of $10.54 per hundredweight (cwt), more than $1 above the highest coverage selection in Tier I and comfortably positioning those enrolled in the program in the clear of indemnity payments.

June marks the halfway mark for 2026, but it is already time to start thinking about risk management coverage for 2027 as the new crop year is on the horizon.

In the news impacting a dairy producer's bottom line the third week of May 2026: June Class I base price reaches $22.18 per cwt, fluid milk sales for March are 2.3% higher than a year earlier, the FARM Environmental Stewardship Program integrates newly updated RuFaS Model, and entries are now open for the 2026 World Forage Analysis Superbowl.

The Federal Milk Marketing Order (FMMO) uniform milk prices rose an average of $1.48 per hundredweight (cwt) from March to April for an average price of $20.03 per cwt across the 11 orders.

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.

At the 2026 Pennsylvania Dairy Summit, Sara Dorland, managing partner at Ceres Dairy Risk Management, shared her insights on the global dairy landscape, dairy markets, the recent Federal Milk Marketing Order (FMMO) price reform and what all of this could mean for dairy producers.

The USDA National Agricultural Statistics Service (NASS) Agricultural Prices report, released April 30, established March’s Dairy Margin Coverage (DMC) program calculations. Both milk prices and feed costs rallied enough in March for the DMC program margin to climb out of the depths of indemnity payments.

The USDA’s Announcement of Class and Component Prices report for April confirmed the good news buzzing throughout the dairy industry, with prices rising in Class II, III and IV for the fourth straight month in 2026.

Milk prices are moving in favorable directions, with May Class IV futures closing at $22.29 per hundredweight (cwt) on April 24 and May Class III futures closing at $17.56 per cwt. But markets can quickly change. Add in the record prices dairy producers are receiving for cull cows and beef-on-dairy animals, and an established risk management plan becomes even more critical.