How US milk is priced
You are a price taker. You ship milk every other day, and weeks later a federal formula tells you what you earned. Below: what milk is worth now, how your check is built, whether it clears your cost, and what you can do about it.
What milk pays right now
- AugClass III, USDA announced: $16.64/cwt, up $1.12 from July. Class IV: $17.36/cwt, down $0.98.
- JulAll-milk price, USDA NASS: $20.30/cwt, down $0.80 from June and $0.50 from a year earlier. It is paid before hauling.
- MarOlder figure (March 2026), not current. Federal-order mailbox average: $18.84/cwt, down $2.62 from a year earlier.
- JanOlder figure (January 2026), not current. DMC margin: $7.81, below the $9.50 trigger.
Announced prices
▼ −$0.50 vs Jul 2025
All-milk price: USDA NASS, Agricultural Prices, released Aug 31, 2026; before hauling, includes quality, quantity and other premiums.
Class III minus Class IV, Aug 2026: −$0.72/cwt. Class III is $0.72 below Class IV. How far apart the two classes sit matters for your check. Why: the trap, when your best milk pays you less
Class III futures (CME market prices)
| Contract month | Price, $/cwt | Change, last session |
|---|
Cash-settled CME Class III futures, delayed about 15 minutes. Each contract settles to the Class III price USDA announces for its month. This is the market’s price, not a forecast the site is making.
Component prices
Aug 2026 · USDA AMS announcement of class and component prices (report CLS-0826). What each is paid per pound in your milk if you are on component pricing.
Nonfat solids: everything left in milk besides fat and water — protein, lactose, and minerals, priced together for the milk that becomes nonfat dry milk. Other solids: the lactose and minerals in milk.
Wholesale product prices
USDA survey averages of what plants sold, Aug 2026. They feed the formulas. They are not CME spot closes.
What farmers were paid, by state
By state, July 2026: United States $20.30/cwt. Highest Georgia $27.70, lowest South Dakota $18.00, gap $9.70.
| State | Jul 2026 $/cwt | vs Jun | vs Jul 2025 |
|---|---|---|---|
| United States | $20.30 | ▼ −$0.80 | ▼ −$0.50 |
| Georgia | $27.70 | ▼ −$0.90 | ▲ +$2.00 |
| Florida | $27.50 | ▼ −$0.50 | ▲ +$2.20 |
| Virginia | $26.80 | ▼ −$0.60 | ▲ +$1.60 |
| Indiana | $22.50 | ▼ −$1.00 | ▲ +$0.50 |
| Ohio | $22.30 | ▼ −$1.00 | ▼ −$0.10 |
| Vermont | $21.90 | ▼ −$1.30 | ▼ −$0.40 |
| New York | $21.70 | ▼ −$1.50 | ▲ +$0.10 |
| Pennsylvania | $21.50 | ▼ −$1.20 | ▲ +$0.20 |
| Texas | $21.40 | – $0.00 | ▲ +$0.20 |
| Washington | $21.20 | ▼ −$0.90 | ▼ −$0.50 |
| California | $21.00 | ▼ −$1.00 | ▲ +$0.40 |
| Michigan | $20.70 | ▼ −$1.50 | ▼ −$0.20 |
| Arizona | $20.40 | ▼ −$0.40 | ▼ −$0.60 |
| Illinois | $20.30 | ▼ −$1.30 | ▼ −$0.70 |
| Oregon | $20.30 | ▼ −$0.30 | ▼ −$1.10 |
| Utah | $20.20 | ▼ −$0.40 | – $0.00 |
| New Mexico | $19.90 | ▲ +$0.30 | ▲ +$0.40 |
| Idaho | $19.20 | ▼ −$0.50 | ▼ −$1.40 |
| Minnesota | $18.70 | – $0.00 | ▼ −$1.50 |
| Colorado | $18.60 | ▼ −$1.00 | ▼ −$1.60 |
| Kansas | $18.30 | ▼ −$1.60 | ▼ −$1.30 |
| Wisconsin | $18.20 | ▼ −$0.40 | ▼ −$1.60 |
| Iowa | $18.10 | ▼ −$0.60 | ▼ −$1.40 |
| South Dakota | $18.00 | ▼ −$0.50 | ▼ −$1.90 |
Before hauling. Includes premiums. Not your mailbox price. USDA NASS, Agricultural Prices, released Aug 31, 2026. Sorted high to low. Only states in the NASS table are shown.
Each block shows its own month. A block that is too old is shown as a dash, not as the market. Class prices and components: USDA AMS. All-milk: USDA NASS.
How your milk check is built
One hundredweight of milk, top to bottom. Cheese and whey are the four commodities that set Class III; butter and nonfat dry milk set Class IV. Green is a credit, red is a deduction. Switch to the sandbox to move the prices yourself.
These drive the Class III formula. Component values and the class price recompute live below, using the current USDA make allowances and yield factors. This is a teaching model — USDA's official monthly price is the authority.
Why your check is not the headline price
The class price is a starting point, not your paycheck. Three more layers sit between it and your account.
The trap: when your best milk pays you less
When cheese (Class III) runs above butter and powder (Class IV), the pooling math turns against the farmers whose milk got more valuable. Toggle a normal month against a divergence month.
Normal month. The classes are close. Cheese plants stay in the pool because their milk is worth about the blend price. The PPD is a small positive number added to your check. Everyone shares the pool as designed.
This isn't hypothetical. When Class III and IV blew apart in 2020, cheese handlers pulled their milk out of the pool — 8.1 billion pounds depooled in two months, and by one industry tally over 70 billion pounds from 2019 through early 2021. Farmers whose milk made cheese saw negative PPDs claw money back off their checks, while the risk-management tools they'd paid for paid out against a price they never received.
Is milk above the cost to make it?
A price only matters against what it costs to produce. Milk prices fell hard into 2026 while the federal safety net mostly stayed quiet, because of how its trigger is built.
— below the $9.50 trigger
— down $6.60 from a year earlier
— invisible to the DMC formula
Illustrative, using the most current published price with a public number behind it (USDA NASS's July 2026 all-milk price, before hauling and co-op deductions) and ERS's average cost of production. The mailbox price itself isn't published in real time (see above), so the true net figure, after hauling and PPD, sits lower than this. Beef and cull-cow income and each farm's own cost structure move the real number — which is exactly why the only cost that matters is your own.
In late 2025 a Rabobank dairy analyst put the Class IV futures curve "in the $13s" and called it "well below cost of production" — a market signal that there's simply too much milk. Class IV drives butter and powder.
The only cost of production that matters is yours. Put your real feed, labor, and overhead against the current milk price in the break-even calculator, not a national average.
What you can actually do about it
You can't set the price, but you can manage the risk around it. Each tool has a catch, and none raises the price. A plain-language map, not advice: run your own numbers and talk to your advisor. AGSIST sells none of these; see USDA RMA and your cooperative.
Quarterly revenue insurance you buy through a licensed crop-insurance agent. You pick a coverage level off the Class III/IV (or component) futures curve; if the actual price lands below it, the policy pays the difference. No brokerage account, no margin calls — you pay a premium and you're covered.
The catch — DRP locks a floor off the futures curve as it stands today. If that curve is already below your cost of production, you're insuring a loss. It protects you from things getting worse, not from a market that's already underwater.
The federal margin backstop: it pays when the national milk-minus-feed margin falls below the level you elected. For 2026 the first tier was raised to 6 million pounds and the program reauthorized through 2031. It's cheap for smaller herds and it did pay out as margins fell into 2026.
The catch — it only counts milk price minus national feed cost. Your labor, fuel, vet, and interest — the ~21% non-feed rise since 2021 — are invisible to it, so the margin can read "fine" while your farm loses money. And 2026 enrollment already closed (Feb 26); it's an every-year decision, not a today one.
Lock a Class III price for future months — either through a forward contract your cooperative offers, or by hedging directly on the CME through a broker. You fix the price now instead of taking whatever the auction prints later.
The catch — a CME milk contract is 200,000 lb (about 90 cows' monthly output), so it's coarse for small herds; hedging means a margin account and margin calls if the market rises; and if you lock and the market climbs, you gave up that gain. Extension guidance is blunt: don't lock it all in at once.
What changed in 2025
The formulas were rewritten in 2025 — the biggest overhaul of federal milk pricing since 2000, approved by producer vote in all eleven marketing orders. Five changes, each moving your price in a specific direction.
Background: who sets the price, and where the dollar goes
Who actually sets the price
The commodity prices at the top of the waterfall are USDA survey averages of what plants actually sold. The CME spot market is the public daily auction for the same four products — four short daily auctions where processors buy and sell physical loads of cheese, butter, powder, and whey.
Each product trades in its own window, Central time: dry whey 10:45–10:55, cheese 11:00–11:10, butter 11:15–11:25, nonfat dry milk 11:30–11:40. Some days only a handful of loads change hands. That thin trade sets the number.
The bids, offers, sale prices, and number of trades are published every day. The identity of who bought or sold is not — traders act on behalf of dairy companies managing inventory, not for themselves.
For positioning, the CFTC Commitments of Traders report shows commercial vs. managed-money holdings in Class III futures.
Every spot trade ends in physical delivery of a rail-car load meeting USDA grade. It's an inventory tool for processors — yet its prices flow straight through to what a farmer 1,500 miles away is paid for milk.
Why the system lands on the farmer
The processing credit subtracted inside every formula is a single assumed cost agreed through USDA hearings — not the actual cost of your buyer's plant. When it's raised, as in 2025, your price falls whether or not that plant's costs changed.
Class I is the only class required to stay in the federal pool. When manufacturing milk is worth more, its handlers can depool and keep the premium — leaving the farmers who stayed to absorb a smaller blend. The system was built around fluid milk as the cash cow; that era is gone, but the plumbing remains.
Where your milk dollar goes
Fluid milk is the farmer's best case. Across the whole dairy basket — where shoppers now spend on cheese, yogurt, and other processed products — the farm's share of the retail dollar has fallen to about 25¢. The extra processing value in those products accrues downstream and mostly never comes back up the lane.
Farm share of each retail dollar spent across the dairy basket. Over the same span, a gallon of whole milk held near $4.05 while grocery prices rose sharply — the shelf price stayed stable and the farm end absorbed the squeeze. Milk is a bargain at the store; you are the one subsidizing it.