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
U.S. Senator Joni Ernst (R-IA) joined us on Wednesday’s Market Day Report to share why Ames is uniquely positioned to support expanded USDA operations.
Prepare for tighter cash flow, delayed capital buys, and policy-driven risk management this fall.
Jed Bower, the incoming president of the National Corn Growers Association, joined us for his sector’s perspective on the ongoing government shutdown.
Plan for a cooler global trade market in 2026 with tighter margins on exports, potential rate shifts, and premiums for reliable deliveries into Asian and African growth markets.

LATEST STORIES BY THIS AUTHOR:

Delaware FarmHER Katie Evans turns “ugly” produce into delicious treats through her nationally recognized brand, The Frozen Farmer
George Baird, with the American Society of Farm Managers and Rural Appraisers (ASFMRA), joins us with updates on how this year’s rice harvest is shaping up.
Crop insurance remains a vital tool for managing climate-driven risk.
Expect firm demand for dependable HRS and SW, steady movement in HRW, more sorting on SRW, and selective bids on durum until full milling results are released.
Reversion would sharply increase dairy prices and raise crop supports, driving up government costs and consumer prices while unsettling markets—even as crop insurance remains in place.
Dr. Todd Davis, Chief Economist with the Indiana Farm Bureau, shares a snapshot of his state’s harvest conditions and insights from producers.
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.