Nonfat Dry Milk Oct '27 (DFV27)

Description

Evidence of human consumption of animal milk was discovered in a temple in the Euphrates Valley near Babylon, dating back to 3,000 BC. Humans drink the milk produced from various domesticated mammals, including cows, goats, sheep, camels, reindeer, buffaloes, and llamas. In India, half of all milk consumed is from water buffalo. Camels' milk spoils more slowly than other types of milk in the hot desert, but virtually all milk used for commercial production and consumption comes from cows.

Milk directly from a cow in its natural form is called raw milk. Raw milk is processed by spinning it in a centrifuge, homogenizing it to create a consistent texture (i.e., forcing hot milk under high pressure through small nozzles), and then pasteurizing it (i.e., heating it to a high temperature for a specified length of time to destroy pathogenic bacteria). Condensed, powdered, and evaporated milk are produced by removing some or all of the water. Whole milk contains 3.5% milk fat. Lower-fat milks include 2% low-fat milk, 1% low-fat milk, and skim milk, which has only 1/2 gram of milk fat per serving.

The CME Group has three different milk futures contracts: Milk Class III, which is milk used in the manufacturing of cheese; Milk Class IV, which is milk used in the production of butter and all dried milk products; and Nonfat Dry Milk, which is used in commercial or consumer cooking or to reconstitute nonfat milk by the consumer. The Milk Class III contract has the largest volume and open interest.

Prices - The average monthly price received by farmers for all milk sold to plants in 2025 fell by -6.2% yr/yr to $21.18 per hundred pounds.

Supply - World milk production in 2025 rose +1.4% to 683.116 million metric tons. The biggest producers were India (31.7% of world production), the European Union (21.9%), and the US (15.4%). US milk production in 2025 rose +2.4% yr/yr to 104.959 million metric tons.

The number of dairy cows on US farms has fallen sharply over the past five decades, from 12 million in 1970. In 2025, there were 9.490 million dairy cows on US farms, up by +1.6% yr/yr. Dairy farmers have been able to increase milk production even with fewer cows because of a dramatic increase in milk yield per cow. In 2024, the average cow produced a record 24,392 pounds of milk per year, a +0.9% yr/yr increase, more than double the 9,751 pounds seen in 1970.

Trade - US imports of milk in 2025 fell -1.2% yr/yr to 8.100 billion pounds, below the record high of 8.200 billion pounds posted in 2024.

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