While the market for Class IV milk is still strong, the markets are signaling a retreat is near. The June USDA Announcement of Class and Component Prices report indicated the Class IV milk price falling more than $2 from the month prior, and while the Class III price also fell, the gap between the two is closing as the markets search for balance.

The USDA National Agricultural Statistics Service (NASS) Agricultural Prices report, released June 29, established May’s Dairy Margin Coverage (DMC) program calculations. As the all-milk price rose 50 cents, the total feed costs rose 42 cents, boosting the DMC margin 8 cents to $10.62 per hundredweight (cwt) for the month.

Milk production across the U.S. has been rampant in 2026 with both processing capacity and global demand pressuring dairy farms to produce more, and a larger national dairy herd is helping keep the pace. Despite all the dynamics working in favor for U.S. dairy farmers, milk margins remain tight and risk management strategies remain critical.

Nineteen states including Kansas, Wisconsin and Texas boosted milk production a combined 494 million pounds in May.

In the news affecting a dairy producer's bottom line the third week of June 2026: Class I base milk price dips after up-and-up run, fluid milk sales shift higher again, CoBank reports on dairy heifer inventories, and DFA announces idling of plant and closure of store in Vermont.

The average Federal Milk Marketing Order (FMMO) uniform milk price climbed 85 cents in May for an average price of $20.87 per hundredweight (cwt) across all 11 orders. Both May’s uniform milk price and producer price differentials (PPDs) edged upward, a reflection of the current market dynamics facing dairy producers, but at a much slower pace than what was realized in March and April.

USDA’s June WASDE raised 2026 milk production to 236.4 billion pounds on expectations of a larger cow herd and an increase in milk output per cow.

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.