U.S. dairy markets are seeing major softening in domestic prices even as dairy output and some export categories swell, dealers and analysts reported Wednesday. Butter prices dropped nearly $1 per pound compared with a year ago, while cheddar cheese and other block-cheese prices declined by roughly 40–50 cents. These shifts reflect both abundant domestic supply and weaker demand for standard dairy products. At the same time, U.S. exports of value-added dairy — including certain cheeses and butter — surged: butter exports jumped 162 percent, American-type cheese exports rose 129 percent, and cheddar exports climbed 131 percent compared with last year. Still, trends look mixed: while cheese plants maintained throughput, powder-milk and whey production slowed. Stocks of key dairy ingredients tightened, especially in dry-milk and whey inventories, even as overall milk production remains high. Analysts warn these market swings — high supply, shifting demand and falling wholesale prices — could squeeze farm margins heading into 2026, especially if global export demand softens.
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