Source: USDA
Summary
The projection for average dairy herd size in 2025 is increased by 5,000 head to 9.380 million head. However, the 2025 farm milk production forecast is lowered to 226.2 (-0.7) billion pounds due to slower-than-expected growth in output per cow more than offsetting the increase in the number of dairy cows. With lower wholesale price forecasts for the main dairy products, the 2025 milk price forecasts for Class III and Class IV have been revised downward to $17.95 and $18.80 per cwt, respectively. The all-milk price forecast for 2025 is $21.60 per cwt, $1.00 lower than last month’s forecast.
Dairy
Angel Terán and Adriana Valcu-Lisman
Recent Wholesale Dairy Product Prices
Most wholesale dairy product prices reported in the USDA National Dairy Products Sales Report (NDPSR) declined from the week ending February 8 to the week ending March 8, except for an increase in the price of 40-pound blocks of Cheddar cheese.
Spot prices at the Chicago Mercantile Exchange (CME) dropped. For the trading week ending March 14 at the CME, the spot prices for Cheddar cheese 500-pound barrels and 40-pound blocks averaged $1.6680 and $1.6950 per pound, respectively. CME spot prices for NDM, butter, and dry whey averaged $1.1585, $2.3325, and $0.4715 per pound, respectively.
From January to February 2025, the direction of change in both the Oceania and Europe average export prices4 were mixed for products reported by USDA, Agricultural Marketing Service, Dairy Market News (DMN). Oceania butter prices rose on short supply and strong demand from Asia.
Recent Dairy Supply and Use Data
According to the most recent Milk Production report published by the USDA, National Agricultural Statistics Service (NASS), in January 2025, estimated milk production in the United States was 19.1 billion pounds (616 million pounds per day), an increase of 0.1 percent compared to January 2024. USDA, NASS estimated the number of dairy cows in January at 9.365 million head, 41,000 head higher than a year ago. The milk per cow estimate for January 2025 was 2,040 pounds, 7 pounds per cow less than in January 2024.
The all-milk price in January 2025 averaged $24.10 per hundredweight (cwt), up $4.00 from January 2024, while feed costs were level to slightly lower during the same period. In January, the farm milk margin above feed costs reported by the Dairy Margin Coverage (DMC) program was estimated at $13.85 per cwt, $5.37 higher than last year.
As of January 2025, the U.S. dairy herd reached 9.365 million head, marking a year-over-year increase from January 2024, and the fourth consecutive month of year-over-year increase. This expansion reflects the lagged response to improved profitability in 2024, as the milk-to-feed ratio rose from 1.73 in January 2024 to 2.35 in January 2025. The higher ratio suggests better margins for producers, leading to lower culling rates and herd retention. However, low replacement heifer numbers indicate that future expansion may be moderate.
Slaughter of dairy cows has declined substantially since the fourth week of 2025 to levels below 2024 and 2023. Given the relatively limited number of replacement dairy heifers available in the herd and steadily increasing number of cows in milk production, the lower slaughter rate suggests that dairy farmers are holding cows longer in production instead of culling.
Milk solids continue their upward trend; both the milk-fat test and nonfat solids test increased substantially year over year. Higher concentrations of fat, protein, and other solids (lactose and minerals) in milk lead to more efficient dairy processing by reducing the amount of raw milk required.
As of the first week of March, higher butterfat supply has pushed some spot cream multiples below 1.00 as reported by USDA, Agricultural Marketing Service (AMS) Dairy Market News. Cream availability is outpacing demand, compared to last year when multiples were sold at premiums above the spot market. Lower cream prices are likely contributing to higher butter production and furthering downward pressure on butter prices compared to a year ago. In January 2025, production was 218 million pounds, a 0.5 percent increase from a year ago and 9.3 percent from December 2024. Ending stocks for butter in January also rose 9 percent year- over-year and 26 percent from the previous month, according to USDA, NASS.
In January 2025, dairy product exports varied compared to the same month a year ago. On a milk-fat equivalent basis, they totaled 1.118 billion pounds, 303 million higher than January 2024. On a skim-solids milk-equivalent basis, they totaled 3.597 billion pounds, 184 million lower than January 2024. Compared to January 2024, in January 2025 dairy products with a notable increase in export volumes were cheese, dry whey products, and butter, while exports for dry skim milk powder and lactose declined.
In January 2025, dairy product imports totaled 777 million pounds on a milk-fat basis, 118 million higher than January 2024. On a skim-solids basis, January imports totaled 603 million pounds, 2 million below January 2024. Compared to a year ago, in January 2025, dairy products with a notable increase in import volumes were butter-fat products and cheese. In the same period, dairy products with a notable decrease in imports were casein and infant formula.
From November to January, domestic use totaled 55.182 billion pounds on a milk-fat basis, 368 million pounds below the same period a year ago. Meanwhile, on a skim-solids basis, domestic use for November to January totaled 45.637 billion pounds, 248 million lower than the same period a year ago. However, domestic use is expected to increase on both a milk-fat and skim-solids basis throughout 2025, supported by lower prices.
Dairy Forecasts for 2025
Following recent inventory data, the forecast for the average number of cows in the U.S. herd has been raised from the previous forecast by 5,000 head in the first quarter. The national milking herd is projected to average 9.380 million head in 2025. The forecast for milk per cow has been reduced by 80 pounds to 24,120 pounds. These reductions reflect, in part, the retention of the older cow in the production cycle as well as stronger-than-average growth in milk fat. Milk production in 2025 is forecast now at 226.2 billion pounds, a reduction of 0.7 billion pounds from the last forecast as the reduction in milk per cow is expected to offset the slightly higher number of dairy cows.
The dairy import forecast for 2025 was unchanged on a milk-fat basis at 8.9 billion pounds but lowered to 7.0 billion pounds (-0.2 billion) on a skim-solids basis. Lower imports for butter, milk protein concentrate, and condensed and evaporated milk are expected to be partially offset by higher imports of other dairy products.
The 2025 dairy export forecasts were decreased on both bases from last month’s forecast. On a milk-fat basis, 2025 dairy exports are forecast at 11.7 (-0.1) billion pounds, while on a skim-solids basis, the 2025 dairy export forecast was revised downward to 47.5 (-1.2) billion pounds. This forecast adjustment takes into consideration the most recent trade data and the lack of price competitiveness for some dairy products, such as dry whey and uncertainty around export potential to our main markets. Lower shipments are expected across most dairy products.
With lower projected prices for dairy products, the 2025 forecasts for domestic use are adjusted upward relative to last month’s projection as follows: On a skim-solids basis, domestic disappearance is forecast as 184.3 (+0.3) billion pounds, and on a milk-fat basis, it is forecast at 223.1 (+0.1) billion pounds.
Based on recent movements in the wholesale prices for the main dairy products and relatively strong year-over-year increases January ending stocks for butter and dry skim milk products, the 2025 average price forecasts have been adjusted from the last’s month’s projections. Wholesale price forecasts for Cheddar cheese, dry whey, butter, and NDM have been decreased to $1.810 (-7.0 cents), $0.525 (-8.0 cents), $2.515 (-13.0 cents), and $1.255 (-4.0 cents) per pound, respectively.
The lower product price forecasts support downward revisions for milk class prices as follows: for Class III milk to $17.95 (-$1.15) per cwt, and for Class IV to $18.80 (-$0.90) per cwt. The all-milk price for 2025 is now forecast at $21.60, down $1.00 from last month’s forecast.
