February 17, 2026
Volatility has become a defining feature of today’s dairy economy, but so has opportunity. As markets shift faster than ever and traditional price drivers evolve, producers are being challenged to rethink where value is created and how risk is managed. In a recent Farm Credit East webinar, CoBank’s Corey Geiger unpacked what this “new normal” means for 2026, highlighting emerging trends in milk components, beef‑on‑dairy revenue and risk management strategies that will shape the year ahead for dairy producers.
Volatility is the New Normal
Markets are shifting faster than previous decades with milk prices, component values, beef markets and exports moving in sharp swings. EU milk production has increased, applying supply pressures and impacting U.S. prices. However, the global dairy trade prices have recently rebounded, indicating that milk prices may have bottomed out.
Milk Component Values are Shifting
U.S. markets are currently facing a butterfat oversupply, driving milk prices down. While butterfat has been driving milk checks for many years, it is expected that protein will be the leading pay driver in 2026. Protein remains extremely valuable as the dairy proteins segment, such as ready-to-drink shakes, is quickly growing due to high consumer demand. Genomics will continue to drive protein gains as it remains the fastest and most reliable route to high components.
Beef-on-Dairy: A Profitable Shift and Its Impact on Herd Dynamics
Calf values for crossbreds are historically high, and beef-on-dairy genetics usage has nearly doubled in the past two years. Beef-on-dairy is now a major revenue stream for producers, adding an estimated $5/cwt. or more to dairy farm revenue. The beef-on-dairy trend will continue to impact replacement heifer numbers as the U.S. will have 438,000 fewer dairy replacements entering the heard in 2026.
Managing Uncertainty: Protecting Dairy and Beef Revenue in 2026
For 2026, producers should not chase high prices and focus on maintaining predictable cash flow by protecting revenue. Risk management tools like Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) can protect against the sharp milk price swings. With the significant income opportunities from beef-on-dairy genetics, it is also important for producers to use risk tools, such as Livestock Risk Protection (LRP), to protect beef revenue just as they would with milk.
For personalized guidance with these tools, reach out to your Farm Credit East or Crop Growers representative. Together, we can help you prepare for the year ahead with a clear strategy and realistic expectations. Stay up to date on markets and current events impacting the dairy and livestock industries by signing up for the Dairy Markets Insights Newsletter.
To dive deeper into the above topics, review the webinar recording along with the presenter’s PowerPoint slides, or read the 2026 Dairy Industry Outlook.
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Livestock Insurance Specialist
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