US nonfat dry milk markets remain structurally tight, not because milk production has been weak, but because the skim component is increasingly finding other destinations.
The clearest trail leads to milk protein concentrate (MPC). While 2025 MPC production volumes came in 10.7% below 2024, that comparison is distorted by an extraordinary base: 2024 MPC production surged 53.4% year-on-year. Zoom out across five years and the picture changes considerably. Between 2021 and 2023, US MPC production held in a stable 200–220 million lb range. By 2025, that figure reached nearly 300 million lbs, a structural shift, not a temporary spike. Every pound of MPC produced is a pound of skim that didn’t become NFDM.
Butter adds another dimension. US butter production grew over 5% in 2025 while total milk production increased around 2.5%. More milk fat directed to butter means more skim generated as a byproduct, yet even with that additional skim supply, NFDM production still declined.
The result is four consecutive years of falling NFDM output: -4.5% in 2022, -4.4% in 2023, -10.7% in 2024, and -0.86% in 2025.
That said, the export picture partially offsets the tightness narrative. US NFDM and SMP exports fell 11.45% through November 2025, meaning less product left the country. December ending stocks came in at 213.9 million lbs, up from 194.5 million in December 2023, though still well below the 256–288 million lb range of 2020–2022.
According to Vesper’s milk powder report, SMP prices globally are expected to find support as post-squeeze conditions settle. The US has genuine structural tightness, while Europe faces demand-led buying pressure alongside active supply flows. The current price level of approximately €2,350 could persist until flush-season pressure arrives.
On CME as of February 12, butter settled at $1.7350/lb (+1.46% week-on-week), recovering in the second half of the week after earlier softness. NFDM was essentially unchanged at $1.5975/lb. Butter and NFDM prices remain historically close to each other, a dynamic that has drawn market attention this week.
Protein markets: a different story
WPC80 and WPI prices have climbed month after month, and unlike the NFDM situation, the driver appears to be demand-side and structural. Growing evidence points to GLP-1 medications as a factor in rising protein consumption, with research examining how GLP-1 adoption is shifting consumer willingness to pay premiums for high-protein products.
US and EU WPC80 instant prices, after diverging for much of the past three months, have now converged to near-parity at approximately $8.50/lb. Currency plays a significant role in this convergence: the USD/EUR rate moved roughly 3% over the past month alone. At $8.50/lb, a 3% currency swing translates to approximately $0.25/lb, enough to shift sourcing decisions between origins.
This article is part of a more comprehensive US dairy market analysis. For the full analysis, visit: https://app.vespertool.com/market-analysis/2709
