The prior post showed that the producer price of butterfat is continuing to fall. This post will cover the most recent price trends for milk protein. If both butterfat and milk protein prices are falling, producers will be scrambling for survival. The protein price is dependent on the wholesale cheddar cheese price and the butterfat price. When the cheese price goes down, the price of milk protein goes down. When the butterfat price goes down, the price of milk protein goes up. The formula for the protein price is listed below.
– Butterfat Price × 0.91) × 1.17)
The butterfat declining price improves the milk protein price, however, as shown in Chart I below, the cheese price is also declining which will lower the price of milk protein. The 12-month moving average price for cheese is at the lowest price since mid 2024. In January 2026 the monthly price of cheese was $1.40 per pound, the lowest price for any month in the years covered in Chart I.
The butterfat price is shown in Chart II below. Details were covered in the prior post.
So where does that take the price of milk protein? Through mid 2025 and into 2026, the value of milk protein as shown in Chart III has maintained a price close to $2.40. per pound.
Chart IV shows the recent monthly prices of milk protein. The most recent price of $1.94 per pound is near to the lowest price in five years. If the monthly price for milk protein continues near this price, the 12-month trends in Chart III above will begin to fall.
Charts V and VI cover the production and the domestic disappearance of wholesale cheese. Production is up and domestic disappearance is down. That would lead to bloated inventories and low wholesale cheese prices, but exports (Chart VIII) have helped keep inventories (Chart VII) at reasonable levels
The 2025 inventories of cheese are down by 4% from the 2023 and 2024 levels.
Cheese exports (Chart VIII) have climbed by 74% over the span of this Chart.
Cheese imports (Chart IX) have also grown but the import levels compared to export levels are only 25% of exports levels.
That would leave net exports at 85 million pounds per month, which is 7% of cheese production. Cheese and butterfat exports are currently essential to maintain balance in wholesale inventories.
SUMMARY
The analysis of where butterfat and milk protein prices are going is an ugly picture for producer revenue. Milk production is up and domestic consumption of butter and cheese is down. Both butter and cheese are now dependent on exports to keep inventories at reasonable levels. Currently international issues are volatile and this could put pressure on exports.
The financial impact of this will be covered in the next post.
