Milk Output Climbs as Prices Slip, Margins Narrow

High milk production and soft retail demand are squeezing prices and margins — making careful feed and risk management essential through year-end.

NASHVILLE, TENN. (RFD-TV) — U.S. milk production surged over the summer, climbing 3.6 percent year-over-year during June through August, while milkfat output jumped 5.3 percent, according to the latest Dairy Market Report from the National Milk Producers Federation.

Dairy cow numbers rose to 9.5 million head, and per-cow output averaged 6,153 pounds for the period — reflecting both strong productivity and rising milkfat composition, now averaging 4.2 percent.

Despite record-high production, fluid milk sales fell by four percent in August from a year earlier and 1.7 percent for the quarter, underscoring weak consumer demand. The all-milk price averaged $20.90 per hundredweight, modestly higher than July, while feed costs dropped enough to lift the Dairy Margin Coverage (DMC) margin to $11.52 per hundredweight. Still, retail dairy inflation remains mild — up just 0.7 percent from last year — compared with three percent overall food inflation.

Butter inventories declined 6 percent year-over-year, while American cheese stocks rose 3 percent. Wholesale butter prices tumbled to $2.04 per pound, down more than a dollar from last August, dragging Class II, III, and IV milk prices lower across the board. Analysts say margins may tighten again into late 2025 as milk output continues to expand faster than consumption, though international demand could lend some support.

Farm-Level Takeaway: High milk production and soft retail demand are squeezing prices and margins — making careful feed and risk management essential through year-end.
Tony St. James, RFD-TV Markets Expert
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Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

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