A Market on Borrowed Time

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A Market on Borrowed Time

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Nonfat is sitting north of $2.25 on the CME spot market. But the bigger question is how long it can hold. In the latest episode of The Milk Check, the Jacoby team breaks down a dairy market that feels tight, fragile and increasingly dependent on timing. Here’s what they’re watching: Why nonfat prices surged, and what could break themHow protein demand is pulling milk away from dryersWhy MPC and MPI are outpacing nonfatWhat the inverted futures curve suggests for the second half of the yearHow depooling and Class III–IV dynamics are shifting milk flowsWhy butter feels weaker, even in the middle of flush Plus, the team talks through what happens if the nonfat market doesn’t break soon. There’s still a lot of milk moving. Just not where it used to go. Let the Jacoby team help you get up to speed on the new dairy market dynamics. Click below and listen to The Milk Check episode 98: A Market on Borrowed Time. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check Ted Jacoby III: Coming up on the Milk Check. Jacob Menge: if this doesn’t start falling soon, I think there’s gonna be people that are trying to make money on the short side of this thing because they didn’t make money on the long side. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby & Co., Your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Today is May 1st. It’s a couple of days after the ADPI and a couple of weeks after the Cheese Expo, and it’s usually after those two meetings a really good time to talk markets. So, we’ll go ahead and start with the market that everybody was talking about at the ADPI. Josh, Jake, Joe, what’s going on with our nonfat market? We’re at $2.26 today, I believe. Are we gonna stay up here for a while? Josh White: It’s a more challenging question than just the absolute price today. I think that if I were to summarize the show, there was a recognition across the entire dairy industry that there might be some legitimate reasons for nonfat to be tighter than they have been over the last several years. It feels like a lot of different things have resulted in the current spot price that we’ve seen today. Over the last five years, we globally have made more skim milk powder and nonfat. We’ve consumed more skim milk powder and nonfat, but the real story is in the fact that we’ve also made a whole lot more milk, and that milk doesn’t seem to have found its way to the dryer. Seems to have found its way to a variety of different products. And equally as important during the ADPI was the talk about the protein market, which I think we can likely get to later. But things like RDT products, beverages, protein consumption, cheese consumption, a lot of things have consumed incremental milk growth, particularly in the U.S., and that happened after many years where buyers had very little concerns over access to supply. And as a result, I think in the background we watched global inventories decline, and that all seems to have come to a head here in the early part of 2026. And now as we’re getting into the northern hemisphere flush, and particularly in middle America, yeah, then we have ADPI. And so, what’s interesting about your question is throughout most of the conference people were pretty convinced, “Yeah, we’re in a tighter nonfat market. We’re all buying into that.” Yet, the days following ADPI, we’ve seen futures sell off a bit and we’ve seen a little bit more volume traded at the CME spot call. What’s that mean going forward? Jacob Menge: The most interesting thing going forward is you don’t talk to single person that says these prices are gonna stick around for six months. And so it’s really a matter of timing, how long do we stay up here? I think we’re already up here longer than most anybody thought. And the other thing is, nobody got this market right. Some people got in at a buck 25. Those guys sold at a buck 40. They said, “I’m gonna take my 15, 20 cents and run.” And they felt like a genius for about three days before we were quickly at a buck 60. And we’ve got this really interesting dynamic of no market participant really happy with it being up here because nobody really made money on the way up. And everybody convinced that, okay it’s on the clock for when it comes off. And I’m not even gonna disagree with that, right? I don’t think anybody would argue that long-term we’re gonna have $2.50 nonfat in 2028 or whatever. But this really comes down to a question of timing, and I think that’s where you get mixed opinions. But in general, I think most people are of the opinion that it’s not gonna be that long before this thing does start to fall. I don’t have that strong of an opinion actually, but what I do have an opinion on is if this doesn’t start falling soon, I think there’s gonna be people that ...

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