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
Farmers will soon be asked to help shape some of USDA’s most closely watched crop and inventory reports.
RealAg Radio Host Shaun Haney joins us to discuss the latest U.S.-China ag trade agreements, market reaction, and what producers should watch moving forward.
For farm country, that caution can mean higher costs, slower service, and less local investment.
Dr. Derrell Peel says long-term price relief will depend more on rebuilding the U.S. cattle herd than increasing imports.

LATEST STORIES BY THIS AUTHOR:

Trucking industry expert Lewie Pugh joins us to discuss rising diesel costs, challenges facing independent truckers, and the broader impact on agriculture and rural transportation.
The White House is reportedly moving forward with beef import tariff reductions as officials look to lower food costs for consumers.
RealAg Radio host Shaun Haney joins us to discuss the latest developments surrounding the Trump/Xi summit, what the negotiations could mean for U.S. agriculture, and
trade enforcement concerns.
Huma Chief Sales and Marketing Officer Fred Nichols joins us to discuss rising interest in carbon-based products, soil health strategies, and fertilizer cost concerns.
The lower outlook follows months of drought stress across major winter wheat regions, where some producers have abandoned fields or shifted acres to grazing instead of harvest.
Current estimates indicate the federal government could be forced to return more than $150 billion to importers.
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.