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
National Corn Growers First VP Matt Frostic joins us to discuss their 62nd annual yield contest, the new short-season corn pilot class, and what farmers can expect as the season gets underway.
Industry leaders gather in Mexico City to strengthen trade and showcase product quality.
USDA Chief Economist Justin Benavidez says the cattle industry may be nearing a turning point that could gradually reshape supply, prices, and profitability in the years ahead.
Purdue University’s Dr. Michael Langemeier joins us to break down the latest read on farmer sentiment in the April Ag Economy Barometer, and growing concerns about the impact of global conflict on farm inputs and income.

LATEST STORIES BY THIS AUTHOR:

Lower slaughter numbers reduced 2025 red meat output even with heavier cattle and hogs.
Diversified risk tools help protect farm income.
Grain movement stayed active, with barges showing the strongest weekly gain while rail and ocean signals remained mixed.
The Supreme Court’s ruling could affect pesticide warning claims well beyond Roundup. Richard Gupton with the Ag Retailers Association joins us to explain the importance of federal pesticide labeling standards and discuss the potential impact on the ag industry and supply chain.
Rural population growth supports long-term stability of the ag workforce.
Farm Credit’s Christy Seyfert joined us to discuss the ag industry’s push for swift Farm Bill action as it heads toward a House vote.
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.