DAIRY INDUSTRY REPORT (CONT.)


by cutting out supplemental fats. In the short term, this will slow butterfat component growth, and longer term, will result in lower milk volume. Exports will remain key to clearing some of the surplus fat from the US market in the form of butter, AMF, whole milk powder, and liquid cream. If the Whole Milk for Healthy Kids Act becomes law, that would allow more whole milk in schools, which would be another lever to help balance the fat market.


Mike McCully is the founder of McCully Consulting, a firm specializing in advising companies in the dairy and food sectors and related industries. Mike has provided leadership on dairy industry issues and is an expert on the US dairy pricing system. He has been a member of the IDFA Dairy Ingredients Board of Directors and has served as a board member of the Milk Industry Foundation and the Dairy Institute of California. He also has served on numerous dairy industry task forces involving dairy policy and price volatility and has presented globally on these issues. Prior to forming McCully Consulting, Mike worked at Kraft Foods for over 15 years where he held management roles in dairy, meat, and grain procurement.


Butter futures prices for 2026 dropped from $2.60 in early August to under $2.00 in early November. For the updated forecast, the annual average has been reduced to near $1.75 with prices near $1.40 to start the year. There is potential downside in Q1 given the expectation of burdensome cream supplies across the country. Could $1.25 be possible? Yes, but it would also hasten a reduction in cow numbers and milk supplies, which would then cause a larger recovery in prices later in the year.


WHAT’S IN STORE | 2026 © 2026 International Dairy Deli Bakery Association


Industry Landscape


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