USDA Lowers Meat Output as Dairy Supplies Grow

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.

Holstein dairy cows

Getty Images

WASHINGTON, D.C. (RFD-TV) — The latest World Agricultural Supply and Demand Estimate (WASDE) Report from the U.S. Department of Agriculture (USDA) shows livestock markets experiencing mixed momentum, as cattle and hog production move lower while dairy output continues to grow.

The update gives producers an early view of how slaughter trends, disease pressures, and product prices may shape margins over the next year. Beef and cattle markets see the most signs of tightening, hog supplies are slipping as slaughter slows, and dairy faces downward pressure from larger milk volumes.

For cattle, the USDA lowered 2025 beef production on reduced steer and heifer slaughter and lighter weights, even though cow and bull slaughter is expected to rise. Prices for the fourth quarter of 2025 were revised down and are forecast to remain soft into early 2026. The agency also lowered 2026 beef output as the slower fed-cattle marketings are expected to extend into next year.

Hog markets show similar signs of tightening: USDA reduced 2025 pork production due to a slower slaughter pace that outweighs heavier carcass weights. Updated inventory data also point to smaller hog supplies in 2026, prompting the USDA to raise its 2026 hog price outlook even as late-2025 prices ease.

Dairy markets are moving in the opposite direction. USDA raised milk production forecasts for both 2025 and 2026 on higher cow inventories and stronger productivity. Larger milk supplies are pushing product prices lower — particularly butter, cheese, and nonfat dry milk — leading to reduced Class III and Class IV values. The all-milk price is now forecast at $21.05/cwt for 2025 and $19.25/cwt for 2026. Dairy exports, however, were increased due to competitive butter, cheese, and whey markets.

Farm-Level Takeaway: 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.
Tony St. James, RFD-TV Markets Specialist
Related Stories
Livestock strength is carrying the farm economy, while crop margins remain tight and increasingly dependent on risk management and financial discipline.
Strong balance sheets still matter, but liquidity, planning, and lender relationships are critical as ag credit tightens, according to analysis from AgAmerica Lending.
Protein-driven dairy growth is boosting beef supply potential, creating an opening to support rural jobs and ground beef availability.
New Resource Makes It Easier for People to Access Data on Rural Development funded Projects in Rural Communities
U.S. agriculture entered the week with mixed signals as weather, logistics, and markets shaped early-year decisions. Here is a regional breakdown of domestic crop and livestock production for the week of Monday, Jan. 19, 2026.
While short-term volatility remains a risk, softer ocean freight rates in 2026 could improve export margins.

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:

China’s beef policy risk stems from domestic volatility, making export demand inherently unstable. Jake Charleston with Specialty Risk Insurance offers his perspective on cattle markets, risk management, and producer sentiment.
Larger grain stocks increase supply pressure, but strong fall disappearance — especially for corn and sorghum — suggests demand remains an important offset.
Record corn and sorghum crops boost feed grain supplies, while reduced soybean and cotton production tighten outlooks for oilseeds and fiber markets.
Lewis Williamson with HTS Commodities joined us to provide analysis on the January WASDE report and expectations for grain markets going forward.
Structural efficiency supports cattle prices and resilience — breaking it risks higher costs and greater volatility.
Strong pork demand and improving beef exports outside China support protein markets despite ongoing trade barriers.
Agriculture Shows
Special 3-part series tells the story of the Claas family’s legacy, which changed agriculture forever.
From soil to harvest. Top Crop is an all-new series about four of the best farmers in the world—Dan Luepkes, of Oregan, Illinois; Cory Atley, of Cedarville, Ohio; Shelby Fite, of Jackson Center, Ohio; Russell Hedrick, of Hickory, North Carolina—reveals what it takes for them to make a profitable crop. It all starts with good soil, patience, and a strong planter setup.
Champions of Rural America is a half-hour dive into the legislative priorities for Rural America. Join us as we interview members of the Congressional Western Caucus to learn about efforts in Washington to preserve agriculture and tackles the most important topics in the ag industry on Champions of Rural America!
Featuring members of Congress, federal and state officials, ag and food leaders, farmers, and roundtable panelists for debates and discussions.