According to Rabobank’s North America Agribusiness Review (October 2025), North American milk production continues to expand, supported by the largest herd size seen since the mid-1990s. Despite strong output, the market remains balanced by steady processing demand and robust export activity heading into 2026.
Milk Output Rises with Herd Growth
Rabobank notes that national milk production has climbed year-over-year as larger cow numbers combine with improved productivity. Favourable feed conditions in several key regions have also helped sustain output levels. While herd expansion signals confidence across the sector, it may add mild downward pressure on farmgate prices in the coming months.
Processing and Product Mix
The report highlights stable processor demand, particularly for cheese and higher-value dairy ingredients. Butterfat markets have remained firm, while non-fat dry milk prices have eased slightly amid strong global availability. Producers continue to focus on efficiency and yield improvements to offset tighter margins.
Trade and Global Demand
Exports of U.S. dairy products remain healthy, underpinned by competitive pricing and reliable supply. Global demand for protein ingredients and milk powders continues to support the North American market, although increased global production could temper further price gains.
Farm Economics and Feed Costs
Feed prices have stabilized compared with earlier volatility, helping producers maintain margins despite softening milk prices. Input costs remain a key focus, particularly for operations managing larger herds. Many producers are investing in automation, feed optimization, and manure management to enhance long-term efficiency.
Outlook: Productive but Pressured
Rabobank expects milk production to stay elevated through early 2026, maintaining a well-supplied market. Modest price pressure may persist until export growth or domestic demand absorbs excess volume. Even so, steady global interest and efficient herd management practices suggest a cautiously optimistic outlook for the year ahead.
