Market Intel
More Squeeze Ahead…
Fewer Cows but More Milk per Cow
In December, USDA estimated 2025 U.S. milk production at 231.4 billion pounds and lowered its 2026 forecast only fractionally, given lower cow inventory but higher milk yield per cow.
However, while the agency’s all-milk price estimate for 2025 was $21.00 per hundredweight (cwt), it forecasted $18.75 cwt for 2026. USDA also projected lower Class III and IV milk prices, expecting lower prices for Cheddar cheese and butter.
So despite overall favorable feed costs and continuously improving production efficiency with high-producing cows, we’re looking forward to another big turn of the vice.
Soybean meal: Following a brief run up last month, board prices softened into a sideways trend with basis trading steady in a narrow range. The soy and grain markets await updated USDA data due out Jan. 12. Meanwhile, questions remain about the schedule of shipments of U.S. beans that China was supposed to buy before year end 2025 — but now by March 2026 or even later?
Nonetheless, branded soy protein products have seen a large jump in basis on news that processing plants are running at capacity. Canola meal basis and board prices remain steady.
Palm & bypass fat products: Market Intel sources note that quotes for palm products are steady going into Q2, based on good supply and no major changes ahead among Indonesian and Malaysian suppliers. As yet, the roll-out of Indonesia’s national biodiesel pilot project is not a major factor affecting supplies.
Even with stable palm and calcium salt prices — and favorable ocean freight rates with baked-in tariff costs — palm products are a premium choice given other high cost dairy inputs and low milk prices.
Amino acids: Finally there are “whispers in the wind” about resolution to the European Union’s lysine dispute with China. Sources expect details of a countervailing decision early in January and the final anti-dumping ruling in March. Meanwhile, lysine is moving up in price into Q1. For tryptophan and threonine, there’s a lot of supply with prices continuing to trend down. DL methionine supplies are tight but prices remain stable. However, additional domestic production is coming early in 2026, which should soften prices overall.
Vitamins: Most vitamins remain in good supply. Sources anticipate vitamin A prices bottoming out with even lower prices of vitamin E and vitamin D3 ahead. Lower ocean freight rates are helping, although there’s always micro ingredient price uncertainty in the run-up to Chinese New Year celebrations in mid-February.
Trace minerals: After a brief lull, prices are volatile again for copper sulfate and tribasic copper chloride (TBCC), thanks to other industry demand. Zinc sulfate prices are up too with the approach of fertilizer season. Â
Blood products: Prices are steady to slightly higher — maybe inching up, sources say — but nothing like the usual holiday season spike. Low cost SBM and lower milk prices continue to keep the lid on. Meat processors are under pressure to scale back, which would affect supplies and prices in the year ahead.
P & K: Prices for phosphates are up strongly. Not so for potassium chloride (KCl). Magnesium oxide (MgO) prices are steady to slightly higher.
Distillers: DDGS prices are up a bit with greater use in dairy rations. And now there’s much closer attention to the risk of VOM mycotoxin contamination in late-harvested corn, particularly in Indiana.
Wheat midds: November’s price collapse is in the rear view now with wheat midds prices “shooting through the roof” in December. Prices are likely to soften, sources say, but remain higher than the pre-holiday period.
Soy hulls: Prices bounced up with the holidays, but supply is plentiful and prices are likely to soften into Q1.Â
Over the horizon… Chinese New Year begins about the middle of February, generating the world’s largest annual human migration, which can affect supplies and prices of a wide range of micro ingredients. It’s going to be the year of the Horse, signifying energy, freedom, and determination.