LUBBOCK, Texas (RFD-TV) — Milk prices are falling rapidly as expanding supplies overwhelm seasonal demand, creating growing financial pressure for U.S. dairy producers. According to Dr. David Anderson, livestock economist with Texas A&M AgriLife Extension, the usual holiday demand boost for butter and cheese failed to materialize this fall as milk production surged to multi-decade highs.
Strong milk prices in 2024 and lower feed costs encouraged herd expansion, while added processing capacity supported higher output. High cattle prices also contributed, boosting dairy revenues through higher cull cow values and record prices for beef-on-dairy calves. By September 2025, the U.S. dairy herd reached 9.581 million head — the largest since the early 1990s — while milk production per cow continued to climb.
Higher cow numbers and improved productivity pushed October milk output up nearly 4 percent from a year earlier. As supplies built, dairy product prices slid sharply. Butter, cheese, and nonfat dry milk prices all dropped well below last year, pulling Class III and Class IV milk prices lower.
Some herd contraction is expected, though strong cull and calf values may slow supply adjustments.
Reviewing risk management now can help dairy and livestock producers enter 2026 with clearer margins and fewer surprises.
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Analysts say that while low-income households are facing financial pressures, other middle- and higher-income consumers are helping fill the gap for retail beef demand.
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Tim and Sharyn Abbott of the Music City Celebration Sale recap the weekend’s premier auction, which drew top dairy breeders and buyers to Nashville again this year from across North America.
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