Steady Markets, Shaky Ground

With Easter behind us, demand is easing, milk production is climbing, and the spring flush is here. But beneath the surface, the dairy complex is anything but comfortable. In the latest episode of The Milk Check, host Ted Jacoby III and the Jacoby team look at the fault lines hiding beneath today’s seemingly stable dairy market. In this episode, we cover: Why milk is getting longer, but not everywhere How added processing capacity is changing the spring flush Whether butter has found its floor, or is simply stuck Why energy may be the biggest wildcard in dairy right now From regional milk balances to butter’s next move and the growing influence of energy costs, we look at what is really driving the dairy complex right now. To hear what could hold, what could crack and what the next few months may mean for dairy, listen to The Milk Check episode 97: Steady Markets, Shaky Ground. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check Ted Jacoby III: Coming up on the Milk Check. Joe Maixner: It's really watching the energy markets because it's going to affect literally everything. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I'm Ted Jacoby. Let's dive in. Today is April 6th, 2026. It's the day after Easter. it's also the birthday of a few illustrious people like Paul Rudd, Lando Calrissian, or actually Billy D. Williams and our own Joe Maixner, and we're here to talk about dairy markets today. Sorry, Joe, and we're here to talk about dairy markets today, and what we're gonna be talking about is it's the day after Easter and demand for the next oh five months or so tends to slow down a bit, while milk production tends to pick up and it's peaking probably right as we speak, and over the course of the next four to five weeks. So, what does that mean for the dairy landscape? What does that mean for the price landscape? When I started thinking about what we were gonna talk about for this podcast, the market seemed to be in a lull right now. And then I realized it's that time of the year. The question is, are they gonna stay here? Are they gonna go lower? We know that milk production is gonna continue to increase, especially in the Midwest, and we know that the next demand event of any significance is at least five to six months away. But where we'll start is we'll start with milk production. This is the time of year when things tend to get a little bit long. Gus, is milk long right now? Gus Jacoby: Depends what region of the U.S. you wanna talk about. From what I understand, there's some areas of the West that are very long. The upper Midwest, when you have plants go down, it gets a bit ugly. But looking into the mid East, the Northeast, the Southeast, certainly the Southwest, where there's quite a bit of new processing capacity, all these areas, are not all that long. It's certainly the spring flush, but when you look at the Milk Production Report, you would think they would be a lot longer. And I think additional processing capacity in all these regions that we just discussed are where we're a little bit shorter than we anticipated, considering what time of year it is. Ted Jacoby III: Usually, this time of year we're hearing of milk moving at 2, 3, 4, $5 under. Is that happening this April? Gus Jacoby: There's some spots in the upper Midwest where it gets that discounted, yes. But I would say that has more to do with plants being down in addition to the surplus that causes it to get that long. I think if everything is functioning in the region -- in the upper Midwest, Mideast or anywhere on the Eastern corridor -- you're not seeing quite the growth that's shown in the Milk Production Report. Anytime you see north of 2.5% or 3% in a Milk Production Report, usually that means the flush is a really ugly period of time. But in these regions of the country, we've added enough processing capacity to balance things out a bit more and not make it quite as long as you would think. Ted Jacoby III: So we didn't really add any plants west of the Rocky Mountains. And in that case, the flush, especially in California, is probably already in the rear view mirror. Are we seeing milk really long in California and along the west coast right now? Gus Jacoby: I've heard that California, for a while there did get pretty long. That area hasn't had the additional processing capacity outside of the Pasco facility to deal with the level of surplus we have in those regions. Ted Jacoby III: That means it's fair to say that we're in the flush right now, maybe past the flush out West Milk has gotten long, milk is plentiful, but we've added enough milk processing capacity that generally speaking, as long as there in, there are not any plant breakdowns. We seem to be able to handle the additional milk supply and we're getting it all processed. Gus Jacoby: Yes, that's the truth. Joe Maixner: The West has been running full for the past couple of months. But cream has not been super long. It's been getting into the churns, but it's also been finding homes elsewhere and it's had decent demand. It's been a little surprising that we haven't had as excess of cream as we would've anticipated given how long milk has been. Ted Jacoby III: What about on the powder side? I've heard that the plants are not necessarily dumping any milk, but the plants are full enough that they can't run anything specialty. So, all they're running is straight up nonfat dry milk, which these days with protein component values in the milk the way they are, 38% protein, but they're just running 'em flat out to get all that milk processed and dried. Is that a fair way to put it? Josh White: Yeah, I would say so. Ted Jacoby III: Okay. Milk's getting processed. We're making a lot of it, but Easter's now in the rear view mirror. Since our runup, late January, early February, the cheese market seems to have settled into a price somewhere in the $1.60s, the butter market's been $1.70s, $1.80s, it popped up over $2 and it seems to have faded since. Is it in its sweet spot yet, or where do you think the butter market will go over the next three to four months? Joe Maixner: I think there's a lot of factors that go into where the butter market's gonna price over the next few months. Obviously, we've got the macro events going on, the conflict in the Middle East, that's pulled a lot of export opportunity out, as we've talked about at length in the past few podcasts. But there's been a lot of product trading in this 15¢ to 20¢ range that we've been in over the past couple of weeks, and it seems that we've found a good range where buyers and sellers are happy to move product. There's probably not much more downside potential at this price. But it's a very real possibility that we could just stagnate here for the next few months until we see any type of real demand shift and production dies off into the summer. Ted Jacoby III: Are we gonna continue to be exporting butter? Joe Maixner: Yeah, absolutely. We're still seeing exports move. Obviously we've lost some of our largest growth markets with this conflict, at least temporarily. But we're still exporting to other regions, and all of those markets are growing. Will it be enough to offset the losses? I'm not sure, but we're still moving product out of the country. Ted Jacoby III: The cheese export numbers have been phenomenal for about the last six months. We've been up over 30% year over year, almost to the extent of being a little bit surprising. Are we gonna be able to keep that up, do you think? Or is this market going to peter out a little bit ? Jacob Menge: You gotta suspect that you stop getting the blockbuster export numbers before too long because it has been two months now since we've come off of kind of those rock bottom prices that we were at. I think that will certainly take the top off of those export numbers. Cheese in general has probably been one of the quieter of the dairy markets, probably the quietest. It's been sneaky though. There's been these moments where it's been hard to find product. There's been moments where you can find product and I think it definitely is a tale of exactly what cheese you're looking for. I don't think colored cheddar has been particularly hard to come by. Meanwhile, white, for export has been pretty tough. All of that has resulted in this really nice gentle climb higher on cheese prices. We're starting to see some cracks in the floor, especially internationally. We're hearing mozz prices starting to get some pushback outta Europe. Those blockbuster export numbers on the cheese side are probably nearing an end. And if not then I think that's gonna be the only thing that can keep driving the cheese price appreciably higher from where it's at. If we can keep getting these pretty impressive numbers, sure, I don't see why we couldn't keeps stair stepping higher. Ted Jacoby III: Where the export numbers go, the price of cheese goes. Is that a fair way to put it? Jacob Menge: It certainly seems like an export driven market right now. Our opinion kinda long term is that's U.S. cheese. This last year or so, maybe more 18 months, reflecting back on it, been the coming of age era for a serious export driven cheese price in the U.S. Historically, obviously export have played a factor, but it seems like that's going to be the dominant force today and in the future. Ted Jacoby III: Yeah, I think I'd have to agree with that. And then there's nonfat. Josh, this nonfat market, it sure went a lot higher than anybody expected. Even when it started to rally, we thought it could go up into the $1.50s, $1.60s, but I don't think we expected the $1.90s....