Rising Milk Supplies Push Dairy Prices Sharply Lower

Lower milk prices may pressure margins, but strong cattle values could soften near-term financial impacts.

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.

Related Stories
A look at the legislative year ahead as lawmakers return to Washington with a slate of trade concerns to tackle in 2026—from new Chinese tariffs on beef imports to the USMCA review this summer.
Shaun Haney, Host of RealAg Radio on Rural Radio SiriusXM Channel 147, joined us with his 2026 cattle market outlook and insights on beef prices.
The New Year is here, but in Oregon, some ranchers and livestock producers are still trying to recover from record wildfires back in 2024.
As markets anticipate a return to normal trading following the New Year’s holiday, the possibility of the southern border re-opening to cattle is capturing much attention.
Expanding cheese exports are strengthening U.S. milk demand and reinforcing global competitiveness.
Strong global demand and falling stocks suggest continued price volatility for U.S. coffee buyers despite record world production.

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.

LATEST STORIES BY THIS AUTHOR:

Smaller cow numbers and a declining calf crop point to prolonged tight cattle supplies, limiting near-term herd rebuilding potential.
Strong rail demand and higher fuel costs raise transportation risk even as barge and export flows stabilize.
Record milk output looks strong today, but shrinking replacement numbers mean future supply adjustments could be faster and more volatile.
Often overlooked, cotton wholesalers act as stabilizers during market stress, translating fragmented retail demand into workable production programs for mills and manufacturers.
Strong blending demand continues to support ethanol use even as production and exports fluctuate.
Farm CPA Paul Neiffer helps producers navigate farm program payments and understand the key details farmers need to know.