Despite dairy margins strengthening – particularly in Class III and Class IV – which offered an increase in the all-milk price and offset sturdy feed costs, it was not enough for February’s margin to sit above the maximum payment threshold of the DMC program.

As we look to the second quarter of 2026, dairy markets have improved and margins are historically strong with forecasts playing in producers’ favors, particularly with incremental improvements in Class III and Class IV.

Twenty states including Kansas, California and Texas boosted milk production a combined 602 million pounds in February.

In the news affecting a dairy farmer's bottom line the third week of March 2026: April Class I base price gets a boost to $18.66 per cwt, the dairy checkoff launches an online database to help farmers find grant opportunities, fluid milk sales start the year lower, and applications are now open for Holstein Foundation memorial scholarships.

Federal Milk Marketing Order (FMMO) uniform milk prices rose 40 cents in February from January’s $17 per hundredweight (cwt) to start the new year. The price improvement is due in part to the USDA’s announcement to purchase dairy products for food banks and nutrition assistance programs across the country.

USDA’s March WASDE raised 2025 milk production to 231.7 billion pounds and forecasts 234.7 billion pounds for 2026. Dairy prices strengthen, beef prices rise and most feed prices remain steady.

After a disappointing start to the new year, the milk markets are starting to look better for February based on a review of Federal Milk Marketing Order (FMMO) milk class prices.

By now, the dust has settled on the Federal Milk Marketing Order (FMMO) changes and it is possible to look back on their direct impacts.

The USDA National Agricultural Statistics Service (NASS) Ag Prices report, released Feb. 27, established January’s Dairy Margin Coverage (DMC) program calculations. Factors contributing to the margin include a milk price $1.50 below December 2025’s price and feed costs 11 cents higher than that of the month prior.

Futures prices are rising with news of competitive international prices and strong U.S. dairy exports coupled with the government’s announcement of dairy product purchases, all making for a bullish outlook for U.S. dairy producers in March.