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
North Dakota State University’s Dr. Shawn Arita joins us to break down new research on U.S. ag export losses tied to retaliatory tariffs and what they signal for trade moving forward.
NPPC President Rob Brenneman says rising fuel and input costs are creating pressure across pork production despite steady trade.
USDA Secretary Brooke Rollins visits Arizona cotton producers as rising fuel, fertilizer, and fuel and fertilizer costs continue to pressure farm margins.
ISA says Southeast Asia continues driving demand for soy-based feed products through expanding livestock and seafood industries.
With U.S. cattle supplies already tight, drought response remains a long-term supply issue.
Several counties are reviewing disaster declarations. Crop insurance may help growers cover some costs.

LATEST STORIES BY THIS AUTHOR:

Shrinking Select beef supplies are continuing to reshape cattle pricing and beef demand trends.
Fred Nichols with Huma joins us to break down “just in time” fertilizer applications, a growing trend in modern nutrient management as input costs continue to pressure farmers.
RealAg Radio host Shaun Haney says producers should continue to watch tariff negotiations, market access, and the possibility of a more transactional trade relationship with China.
RFD News Farm Legal Expert Roger McEowen discussed red flags landowners should watch for during property transactions.
ASFMRA’s Howard Halderman says several economic and policy issues are continuing to influence the farmland market.
Lewis Williamson with HTS Commodities joined us to discuss spring planting progress and the outlook for trade and demand as the season continues.
Agriculture Shows
How Farms Work is a family-friendly YouTube channel that showcases beef and crop farms located in Southwestern Wisconsin. Equipment operation, techniques, and farming strategies are all first-hand accounts given by Ryan, an Agriculture Business major whose family runs these farms.
Misilla is the host of Learn to Grow and The Crafty Mom on YouTube. A Pacific Northwest mother of four who is passionate about organic gardening, sustainable living, homesteading, and education, her videos and social media posts consist of gardening, outdoor recreation, healthy living, crafts, science experiments, DIY projects, and delicious recipes.
In the first week of each month, “Down Home Virginia,” produced by the Virginia Farm Bureau, airs its half-hour program. Other states’ Farm Bureaus featured on different weeks include Texas, Arkansas, Indiana, Illinois, Tennessee, Idaho, and New York, and news from the American Farm Bureau from Washington, D.C.
Created by former Louisiana Farm Bureau PR Director and former host Regnal Wallace, “This Week in Louisiana Agriculture,” is one of the state’s longest-running TV programs.