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
Mexico’s demand for U.S. corn, soybeans, and wheat remained mostly steady during the first quarter, despite higher transportation costs.
The temporary closures come as grain traffic on the Arkansas River continues running ahead of recent years.
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.
USMCA review nears a critical stage as the U.S. and Mexico advance talks while Canada risks being left behind, raising concerns across North American agriculture trade.

LATEST STORIES BY THIS AUTHOR:

USDA approves disaster aid for Pennsylvania orchard and specialty crop growers after April freezes caused major crop damage statewide.
Applications are open through July 27, 2026, on Grants.gov.
Total red meat supplies were up 4 percent from March but down 4 percent from April 2025.
Year-to-date red meat production is down 2 percent, with beef lower and pork higher.
The risk is prolonged crop weakness. Stable farmland values remain critical if losses continue.
For producers, demand is strong, but drought, disease, and costs still shape supply.
Agriculture Shows
From the rapid technological advances in the business of farming to the policy that helps shape the industry, growers get unparalleled perspective from these guys. Max Armstrong, Mike Pearson and Greg Soulje: the names producers have long known and trusted for agriculture news, weather, and commentary.
Watch Rural Evening News on RFD Network to catch up on that day’s news surrounding agriculture and markets from across the world.
Every day on RFD Network, “Market Day Report” delivers LIVE coverage of agribusiness news, weather, and commodity market information from across the world. Our commodity markets coverage is updated every half hour to bringyou the latest agriculture news.
Farm Monitor shines a light on Southeastern agriculture and is the only weekly news and information program dedicated to Georgia’s largest and most important industry: agriculture.