Prime Pizza Years, 2026 Milk Checks and More

Terrain’s senior dairy economist, Ben Laine, joined CoBank’s lead dairy economist, Corey Geiger, for a 2026 market outlook discussion on the Hoard’s Podcast on January 29, 2026. Key Findings: Higher international prices and a supply rebalancing are key to lifting U.S. milk prices, which have the most potential for improvement in the second half of 2026. Risk management will help make this a more manageable downturn for U.S. producers. As the population ages — and we transition away from an overall younger demographic that eats more pizza — the dairy industry needs to reimagine how it serves consumers. Dietary changes associated with the use of GLP-1 drugs are a big win for the dairy industry. Beef-on-dairy is a critical tool to help dairy producers weather milk price downturns. (The following is an excerpt of their conversation.) 2026 Milk Price Outlook Corey: Ben, when we look at the dairy landscape out to start the new year, the milk checks that dairy farmers are going to receive are quite a bit lower than they were in the past, especially these last three months of the year. What are you seeing in the countryside? Ben: It’s definitely a difficult start to the year in terms of milk prices. … This is a dramatic change to what we had started to get comfortable with last year. If we wrap up where we were for a good chunk of last year, it was a situation where we had reasonably high milk prices and feed was relatively affordable, and then we had this nice bonus of the beef-on-dairy crosses and that extra stream of revenue. We’ve seen supply pick up pretty dramatically and we saw that through the summer. … We’ve seen the herd growing. We’ve seen cow numbers increasing. You’ve been highlighting that components have been increasing. Now, we’re increasing both components and milk. So, it’s tough to avoid that downturn in prices when you’re in that kind of situation. I’m relatively optimistic that we could turn around. I think it’s a matter of when we see supply sort of rebalance and if we’re able to see prices internationally pick up a little bit. … We could potentially see some improvement in the back half of the year. Dairy’s Pizza Puzzle Corey: So, the thing we certainly keep our eyes on is cheese demand — cheese being 40% of the market. But the pizza situation is one to kind of keep our eyes wide open on. Ben: I’ve certainly heard a lot of conversations about whether we’re at peak pizza, or peak cheese. I don’t know for sure that we are, but to me, I think there’s a lot of moving pieces. GLP-1s is a big piece of it that potentially is very good for protein but potentially not as favorable to things like pizza. … I want to stress, to your point, demand has been good. Our domestic demand has been good; exports have been really strong … We just can’t keep up with plus-4% growth that we are seeing on the production side. Our median age as a population is shifting up, and we’re kind of shifting out of the pizza years. I did a piece a couple years ago looking at the aging population in the U.S. (Read that report here.) We have to realize that as we’re seeing the population age in the United States, we’re approaching the point where we’re going to have more people over 65 than under 18 for the first time. Our median age as a population is shifting up, and we’re kind of shifting out of the pizza years. … We need to reimagine how we serve those different customer groups as the demographic profile of the population changes, and I think that’s a little bit of what’s driving the slowdown in pizza. The GLP-1s have been a huge point of optimism, I think, for dairy markets. GLP-1s Are a Win Corey: There’s a lot of work underway that moves GLP-1s to the pill form, and that is where dairy can largely win because of our high-quality protein that is booming right now. Ben, I know you’ve studied this quite a while. What’s your viewpoint? Ben: The GLP-1s have been a huge point of optimism, I think, for dairy markets. Anytime you see something come along that’s going to make consumers suddenly shift their demand in a way that the dairy industry is pretty well-positioned to be able to meet, I think that’s a positive story. Also just societally, as you’re seeing more of these high-protein offerings and new exciting products coming out, other people are going to try that. And I think that people have been shifting towards wanting to consume more protein for some time, so we’re all of a sudden having several new options for them — and a lot of those are tapping into dairy as their source of protein. Whey Prices in Relation to Milk Checks Corey: There’s a lot of these new cheese plants running at capacity. But the high-end protein is in such demand. Whey protein isolate — which is 90% or higher protein, the top end of the powder category — is selling in the $12.50-ish range [per pound] which is pushing record highs. So, there’s some good news in this story, but there’s going to be some downward pressure on milk prices in this first and second quarter of the new year. And that will put some pressure on dairy farmers across the United States. Ben, what are you seeing? Ben: There’s definitely the decrease in prices as we saw. I think the other story is this reversal in protein and butterfat values. For the most part, producers aren’t paid for milk per se. They’re paid for their components. And those component values are reversing. In terms of components on the milk check, the protein value is going to remain higher than the butterfat value going through this year at least. My expectation, in terms of components on the milk check, the protein value is going to remain higher than the butterfat value going through this year at least. And, potentially, part of that might be the norm going forward. The thing that I would caution against is that we’ve got sort of these two stories, both positive. One is we’ve talked about how strong demand for protein is right now, and that’s happening largely in the form of whey protein concentrates. The other piece of it is we’ve got high protein values on milk checks. The thing that I think is important to dig into in terms of how the federal orders value protein, it’s not connected to the whey price. The thing that drives the protein values are cheese and butter. … Whey protein prices could go through the roof and it wouldn’t impact the protein value on milk checks in terms of the way the federal orders value those components. A lot of the protein price strength that we’re seeing on milk checks right now is actually driven by the fact that butter prices are so low. What does impact it is the cheese price. If cheese prices go up, protein prices go up. Unfortunately, they’re going down, and maybe partially even because we’re trying to produce so much whey, we could be making a little heavier cheese supplies. But butter, interestingly, is inversely related. If the butter price goes down, which it has, that just kind of mathematically raises the protein value. So, a lot of the protein price strength that we’re seeing on milk checks right now is actually driven by the fact that butter prices are so low. Understanding how that value is moving back to your milk check is always important. But I think we’ve got to be careful of tying the high protein values we’re seeing on milk checks to the high demand for proteins in the marketplace, for two reasons. If we’re doing risk management in terms of managing components, you don’t want to hinge that strategy on strong consumer protein demand going forward (which I think there will be). You want to be aware of what drivers, what movements, in some of these product demands could change that risk management outlook. … As we’re seeing big shifts in consumer demand for protein and fat and all these other components, understanding how that value is moving back to your milk check is always important. Part Risk Management, Part New Revenue Streams Corey: Bringing this home, what does this all mean to the dairy farmer? Ben: The margin story is important, and the milk piece of that margin is what’s coming down and starting the year in a challenging situation. … It’s hopefully going to be isolated to the first half and then we’ll see some improvement. Largely what will make this a manageable downturn is the fact that a reasonably good percentage of folks have managed their risk in one form or another moving into this. I expect we’re near the bottom of where prices are going to head, but that’s not a great time to be locking in new risk management positions. … The more we rely on global markets, we’re going to continue to have this kind of volatility. And we’ve got to look for as many opportunities as we can to manage through that. That’s partially risk management. It’s partially looking for other revenue streams like beef-on-dairy.