(Reported by USDA NASS on Jan. 27, 2026)

WASHINGTON — The October 2025 U.S. average mailbox milk price for selected federal order reporting areas averaged $18.70 per cwt., down 85¢ from September and $5.58 lower year-on-year (YoY). Losses were deepest in markets with less Class III cheese and whey production or heavy depooling, which diluted pool revenue with more of the lower-priced Class II and IV milk.

Component levels increased, but net prices decreased. Producer milk pooled on federal orders averaged 4.31% butterfat, 3.38% protein, and 5.77% other solids. Butterfat and protein tests both increased month-to-month and YoY, yet farmers were paid sharply less for their milk.

The Oct. butterfat price fell 36¢ to $1.83/lb, now $1.26 lower YoY. Protein increased 17¢ to $2.88/lb, but was 44¢ below year ago. Protein remained the highest-valued component, but collapsing butterfat values dragged all class prices lower.

The benchmark Class III price was $16.91, running 89¢ above Class II ($16.02) and $2.61 above Class IV ($14.30). With those spreads, depooling continued to shape mailbox outcomes.

California, the Pacific Northwest, and the Southwest again used strategic depooling and swaps, resulting in negative PPDs. The Northeast, Mideast, Central, and Upper Midwest also saw depooling pressure, but not enough to push PPDs into negative territory.

Pennsylvania continues to lag

As Pennsylvania continues to lag its neighbors, the gap demonstrates rising pressure from out-of-state milk movements (tankers and packages) as well as cooperative re-blending of the state-mandated Class I over-order premium.

Western Pennsylvania’s mailbox price of $19.01 trailed Ohio by $1.26 and Indiana by 17¢, despite Pennsylvania’s butterfat percentage being higher. It even trailed the Upper Midwest order by 24¢.

In eastern Pennsylvania, the mailbox price averaged $19.34, which was 12¢ below New York and 44¢ below New England, although the latter had a fat test 0.09 points higher.

The additional hidden loss in all orders is richer milk vs. lower pay prices.

Farmers are delivering more valuable milk per hundredweight, boosting processor product yields per hundredweight, while net mailbox returns on a hundredweight basis declined — compounding real income losses substantially.

DMC disconnect grows

USDA NASS calculates the all-milk price used for Dairy Margin Coverage (DMC). It was $20.00 per cwt for October, down 40¢ from September and $5.10 lower YoY. That compares with an 85¢ monthly drop and a $5.58 YoY decline in the mailbox price. The result: a $1.30 per cwt gap between the statistical all-milk price and what farmers actually received. This erosion is not reflected in the DMC margin.

Mailbox prices calculated by USDA AMS reflect net pay after premiums and deductions on mostly pooled milk. The all-milk prices calculated by USDA NASS reflect gross pay before deductions and include non-pooled and organic milk — a gap that continues to widen via deductions, hauling cost and depooling.

Bottom line: DMC remains cheap catastrophic insurance, but its price and feed-cost formulas no longer reflect today’s on-farm realities, meaning it often doesn’t trigger when legitimately needed. It’s still worthwhile as cash flow protection in catastrophic times, but it was designed to do more than that, originally. The program’s parameters need a hard reset.