June 2025 Dairy Market Outlook: Prices Rise, Milk Production Expands

Overview:
The USDA’s June 2025 report points to a strengthening dairy market, with rising wholesale prices and ongoing herd expansion. Updates to Federal Milk Marketing Orders (FMMOs) and shifting global trends are playing a key role in shaping this year’s outlook.

🔧 1. Policy Changes Now in Effect

New FMMO rules introduced in June include:

• Increased make allowances for manufacturers

• Removal of 500-lb barrel cheese from price surveys

• Revised Class I differentials

• Class I skim milk base price now calculated using the higher of advanced Class III or IV values

• Some formula updates for skim milk pricing delayed until December

💲 2. Wholesale Dairy Prices Climb

Week ending June 7:

• Cheddar blocks: ▲ 5.18¢/lb

• Butter: ▲ 5.66¢/lb

• Nonfat Dry Milk (NDM): ▲ 2.40¢/lb

• Dry Whey: ▲ 1.61¢/lb

Chicago Mercantile Exchange – Week ending June 13:

• Cheddar (blocks): $1.86/lb

• Butter: $2.54/lb

• NDM: $1.27/lb

• Dry Whey: $0.56/lb

🐄 3. Herd Expansion & Milk Output

• April all-milk price: $21.00/cwt (up 60¢ year-over-year)

• DMC margins: Strengthened due to lower feed costs

• Herd size: 9.425 million cows in April (+89,000 YOY)

• Milk per cow: 2,055 lbs (+0.5%)

• Total production: 19.37 billion lbs in April (+1.5% YOY)

🌍 4. Trade Trends – Exports & Imports

Exports (April 2025):

• Milk-fat basis: 1.31 billion lbs (+280 million YOY)

• Skim-solids basis: 3.77 billion lbs (–379 million YOY)

• Butter and cheese exports up; skim milk and whey exports down

Imports (April 2025):

• Butter imports steady, driven by specialty demand (e.g., grass-fed)

• Cheese and butter imports expected to rise through 2025

• Ireland remains top butter supplier

📊 5. Updated Forecast – 2025

• Milk production: Revised up to 227.8 billion lbs

• All-milk price: Now forecast at $21.95/cwt (+35¢)

• Class III milk: $18.65/cwt (slight decrease)

• Class IV milk: $18.85/cwt (+40¢)

Trade Forecasts:

• Fat basis: Export volumes projected higher

• Skim basis: Lowest since 2019

Domestic Use:

• Fat basis: Slightly down

• Skim basis: Trending upward

🔮 6. Looking Ahead to 2026

• Milk production: Forecast at 228.2 billion lbs (up from prior estimate)

• All-milk price: Projected at $21.30/cwt

• Most wholesale prices: Expected to rise modestly

• Exports: Stronger on fat basis; skim-solids remain subdued

✅ Conclusion

The June 2025 market outlook reflects cautious optimism. Strong milk production, competitive export pricing, and steady domestic demand are driving growth. However, global market pressures and regulatory changes remain important factors to watch.

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