For the first time in over a decade, the U.S. spot price for nonfat dry milk has rung the bell at $2.02. Dairy analyst Cody Koster explains that this signals a significant shift in the dairy sector.
Koster, a dairy agent with Ever.Ag, highlights the milestone during a recent interview with Mid-West Farm Report, noting that the last time prices reached this level was in 2014. The surge comes at a time of notable divergence between domestic and international prices. While U.S. nonfat dry milk sits above $2, overseas whole milk powder is trading at roughly $1.67.
“There is quite a discrepancy in these prices,” Koster says. “We’re talking 35 plus cents discrepancy from us to them… hitting $2 made people a little bit nervous.”
The price spike is already causing ripples across other dairy commodities. Koster suggests that the high cost of powder might force the cheese market to rethink its downward fall, as traders question if current cheese prices, which have dropped nearly 20 cents in just three days, are undervalued relative to nonfat dry milk.
Despite the current highs, Koster warns producers that this is likely not a “new norm,” but rather a symptom of market volatility fueled by global export dependencies. He emphasizes that international buyers are currently hesitant, waiting to see how global unrest settles before returning to the American buying table.
“The volatility in the dairy market as we go along is going to get worse and worse, meaning we’re going to see some higher highs, probably some lower lows,” Koster warns.
With cheese and powder markets swinging rapidly, Koster urges dairy operations to prioritize risk management. As the industry becomes more export-dependent, he says having a trusted advisor to navigate these 15 to 20-cent weekly swings is no longer optional for those looking to maintain a stable bottom line.
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