Demand has remained weak this fall, regardless of the approaching holidays. Retail and food service demand is behind the usual pace which alone has pressured cash prices. Exports are finding new avenues to ship U.S. Dairy products to despite the absent Chinese demand, but prices are struggling to find support with the growing supply chain.
On the Milk Production Report, the USDA showed a large increase in production from this time last year, up 4.2 percent from September 2024. The 24 major dairy producing states produced 18.3 billion pounds of milk which is a big increase from 2024, however less than August 2025’s revised 18.8 billion pounds.
In 2024, milk production spiked to these levels in the spring and then pulled back for the last seven months of the year, whereas 2025 has remained near the 2024 highs from March through August, having a slight pull back here in the September report data which came in 500 million pounds lighter than the previous month. In fact, the report called out the July-September production data was up 3.8 percent from the same period last year.
Production per cow is still 30 lbs higher than September 2024, but what is concerning from an oversupply standpoint is that the cow numbers are increasing as well. Nearly every month in 2025 the number of cows increased, whereas the number of cows in 2024 only had a slight increase over the course of the twelve months, but remained somewhat steady.
None of this bodes well for the outlook on milk prices without a shift in dairy product demand. But not all is lost. Last week, President Trump and President Xi sat down for a trade agreement discussion with promising remarks of a trade deal and expectations of a signed document as early as this week with detail of what agricultural products will be included. Either way, positive relations with China will help export demand.
Another positive note for commodities and consumer spending, in general, is that it appears a government budget will soon be passed to allow for the U.S. government to reopen. The stock market reacted positively Monday to the news. At the same time, President Trump made comments this weekend about using tariff proceeds to pay a balance to each American. If this should come to fruition, spending money much like the COVID stimulus package brought more consumer buying and increased inflation for prices, especially commodities.
Ag Secretary Rollins met with Mexico last week, keeping agricultural discussions going and brought speculation about timing of opening the border for cattle. This is a positive note as relations are improving with Mexico despite the halted trade discussions for the U.S. and Canada.
In conclusion, high milk production continues to pressure dairy prices but simple changes in consumer or export demand can make all the difference.
Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net.
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