Dairy Output Rises While Prices And Margins Weaken

Dairy farmers are expected to face strong output and export gains, but lower prices and tighter margins will persist into next year.

WASHINGTON (RFD-TV) — The U.S. Department of Agriculture (USDA) Dairy Market Report for September (PDF version) shows U.S. milk production climbed three percent year-over-year this summer, with milk solids up nearly four percent.

Strong cow numbers and per-cow yields boosted supplies, while butter output rose eight percent and cheddar production increased more than eight percent.

Despite growth, prices slipped as July’s all-milk average fell to $20.80 per hundredweight, down $2.00 from a year earlier. Feed costs also eased, but the Dairy Margin Coverage margin narrowed to $10.94.

On the demand side, domestic commercial use of all dairy products rose 2.2 percent, driven by yogurt and skim milk powders, though cheese use dropped two percent. Exports accounted for 17.8 percent of milk solids, the highest share since 2023, with butter shipments up 144 percent and cheddar exports up 83 percent. Imports remained below four percent, with butter and cheese both down sharply.

Looking forward, USDA raised milk production forecasts through 2026 but trimmed Class III, Class IV, and all-milk price projections, citing continued heavy supply pressure.

Tony’s Farm-Level Takeaway: Dairy farmers are expected to face strong output and export gains, but lower prices and tighter margins will persist into next year.

Related Stories
Surging energy markets are quickly becoming a cost story for U.S. agriculture as crude oil climbs on supply fears tied to the Middle East conflict.
Logistics remain firm, but freight costs continue to rise.
Strong corn demand and cotton shipments support export outlook.
Fertilizer investigation may impact input costs and margins.

LATEST STORIES BY THIS AUTHOR:

RealAg Radio host Shaun Haney shares insight into Canada’s trade push in Mexico and what it could signal for agriculture and the USMCA moving forward.
Lawmakers request information from CEO Scott Stump over sponsorship concerns and potential implications for the organization’s nonprofit status.
Roger McEowen with the Washburn School of Law reviews key highlights from the House Agriculture Committee’s latest farm bill proposal.
Adequate transportation capacity exists, but fuel costs and soft river demand could widen basis risk.
Slightly higher sales amid shrinking acreage and inventories point to tighter supplies supporting catfish prices.
Winter Weather Shapes Markets and Early Fieldwork Nationwide
Agriculture Shows
Hosted by Scott “The Cow Guy” Shellady and RFD News Markets Specialist Tony St. James, Commodity Talk delivers expert insight into the day’s ag commodity markets just before the CME opens. Only on RFD-TV and Rural Radio SiriusXM Channel 147.
A look at the news, weather and commodities headlines that drove agriculture markets in the past week.
Everything profits from prairie. Soil, air, water — and all kinds of life! Learn how you can improve your land with prairie restoration, cover crops and prairie strips, while growing your bottom line.
From soil to harvest. Top Crop is an all-new series about four of the best farmers in the world—Dan Luepkes, of Oregan, Illinois; Cory Atley, of Cedarville, Ohio; Shelby Fite, of Jackson Center, Ohio; Russell Hedrick, of Hickory, North Carolina—reveals what it takes for them to make a profitable crop. It all starts with good soil, patience, and a strong planter setup.