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.
Early Cattle-on-Feed estimates point to slightly tighter cattle supplies, reinforcing the need to monitor prices and timing for winter marketing.
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Cattle and hog supplies continue to tighten while dairy output expands, creating a split outlook in which red-meat prices soften and milk values come under pressure from larger supplies.
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Enjoy special programming as you gather to feast and give thanks with your family, featuring a re-cap of the 98th National FFA Convention, special airings of favorite music programs, and a “Lonesome Dove” marathon.
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With feed supplies running tight, producers can tap into some creative options, according to University of Pennsylvania Veterinarian and Professor Dr. Joe Bender.
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Firm live cow prices and shifting dairy-side culling suggest cull cow values may stay stronger than usual this winter despite weaker cow beef cutout trends.
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