Dairy product prices and milk prices usually get a demand bump leading into the holidays due to baking ingredients and cheese. That bump never materialized this Fall as rapidly rising milk supplies swamped any demand led increase in prices.
Profitable milk prices in 2024 and lower feed prices started herd expansion. Milk processing capacity has expanded, as well, supporting the increase in production. Record high cattle prices have played an important role in dairy herd expansion through cull cow revenues and much higher prices for crossbred calves from dairy cows and beef bulls, often referred to as “beefxdairy” or “beef on dairy” calves.
Starting with the dairy herd, the number of dairy cows hit 9.581 million head in September 2025. That was 228,000 head more than in September 2024 and the most since the early 1990s. While the number of dairy cows did decline by 6,000 head in October, the herd remains large.
Like the rest of livestock agriculture, productivity has been increasing for many years. Pounds of milk per cow totaled 2,033 in October, up 1.5 percent from October 2024. More milk per cow, combined with the most cows since the early 1990s, produced 19.5 billion pounds in October, a 3.7 percent increase over October 2024.
Milk and dairy product prices began to decline under the weight of record large milk production. By early December, butter prices averaged $1.60 per pound, down from $2.59 per pound last year at this time. Cheddar cheese, reported in 40 pound blocks, dropped to $160 per pound in early December compared to $1.78 last year. Non-fat dry milk prices are about 18 percent lower than last year. These product prices are used to calculate Class III and Class IV milk prices under federal milk marketing orders. Class IV milk prices declined to under $14.00 per cwt in November, with Class III prices at $17.18 per cwt.
These milk prices are very low and will lead to financial losses for many producers. Losses should lead to some supply response, reducing milk production. But, the impact of low milk prices will be offset somewhat by continued high cull cow and calf returns. Dairy cow culling has increased late this year, slightly surpassing dairy cow slaughter in the second part of 2024.
Article courtesy of Southern Ag Today: Anderson, David. “Milk Prices Falling Fast.” Southern Ag Today 5(51.2). December 16, 2025. Permalink
