Prior posts covered the low prices for producer milk. The value of commodities is priced on formulas developed by the USDA and implemented in 2025. The details on how a producer is paid will be covered in this post. There are 12 charts in this blog to cover the details. Most data is displayed in monthly increments. The purpose is to highlight the important elements to increase revenue.
The value of components is mostly low. A milk producer does not have control on component prices. The most important elements that a producers can control are the percent of components in milk and milk per cow.
While the price of components is based on a 4-4-5 weekly basis, milk production follows the calendar days. Component level and milk per cow are based on 12-month moving averages to eliminate volatility in weekly data.
THE FACTS – COMPONENT PRICES
The protein pricing formula is linked to the price of cheese and the price of butterfat. Cheese prices are low but have gained 19% in 2026 (Chart III). The cheese price is determined by the wholesale price of Cheddar cheese.
The USDA formulas are configured so that the decreases in butterfat prices increase the value of protein, but the relatively low cheese prices offset some of the gains (Chart II).
Cheese production is currently higher than domestic consumption, increasing inventories and esports. But the price of cheese is trending upward and therefore the price of protein has increased and should continue to increase.
Other Solids are priced on the value of dry whey. The current price of other solids is $.38 per pound, a decent price, but a small contributor to overall producer revenue (Chart IV).
THE FACTS – COMPONENTS AND MILK VOLUME
The increase in protein percent (Chart VI) has continued to grow at a steady increase. Any changes to further increase the protein percent would increase revenue.
The increases in milk per cow will increase margins with fewer cows. The increases in 2025 and 2026 YTD have accelerated. While more milk might not be needed, fewer cows to deliver the same amount of milk will increase financial margins (Chart VII).
Chart VIII below shows the monthly revenue per cow for butterfat. This is influenced by the price of butterfat, the percent of components and the amount of milk per cow. With the declining prices of butterfat, revenue per cow has decreased.
The value of protein per cow is making a significant 40% increase in 2026 YTD. As covered in Chart II above, it is because of the higher price of protein, and from the increases in component levels and more milk per cow (Chart VIII).
Other solids contribution to revenue is small and is currently at a midpoint price.
Chart XI shows the increases and decreases of revenue for all three components. Other solids provide the least revenue, and the amount does not increase. Revenue from butterfat and protein are currently near the same value per pound with a slight lead from protein revenue.
Chart XI shows the combined monthly revenue of butterfat, protein and other solids per cow. The monthly per cow revenue has increased by nearly 20% in 2026 YTD. However, the current total monthly revenue per cow is below the average of the months in this chart.
The monthly revenue for Class III milk, the largest Class, is now at a reasonable level. From a producers’ perspective, increasing the component levels and milk per cow is key. When prices of commodities are low, it is tempting to reduce effort to increase components and milk per cow. But they are the keys to increasing revenue and margins.
