Each week we focus on the factors that could become a story to support dairy markets to higher prices, highlighting the small wins or the what if stories. When writing articles, it is a lot easier to put a spotlight on the things to look forward to rather than a tough look at the reasons the market has for trading at the lower prices we see today.
The first and most obvious reason for lower prices is the availability of product in the United States. Dairy farmers have done an excellent job of producing not only gallons of milk but a high concentration of cream to produce the products that bring so much value to the dairy industry.
On Monday, the USDA released the monthly Milk Production Report which showed May milk production was up another 2.4 percent from last year in the top 24 major states, totaling 19.8 billion pounds. Per cow, that is an average of 2,143 pounds of milk per cow, 9 pounds more than May 2025. The number of cows has also increased year over year with a total of 9.23 million head, 182,000 head more than May 2025 also for the top 24 major states.
When looking at these numbers, we see cow numbers increased in June through December last year as opposed to the first half of the year. This year, January through May has consistently been nearly 200,000 more head each month than the same month last year, which can be presumed to grow as we head into the last half of the year this year.
In the meantime, we have seen the cost of cattle increase to new heights never seen before. Over the last couple years beef prices have skyrocketed on low herd numbers. Dairy farmers have been along for the ride. Calf prices have been a nice bonus to struggling bottom lines, keeping many farms afloat. Cull prices have also more than tripled in some parts of the country, however replacement values have also skyrocketed making it difficult to cull a cow still able to produce a calf and milk.
We’ve been consistently finding new wins for the U.S. dairy industry with the boom of protein demand, the robust export program, and the new government initiatives surrounding a new food pyramid and allowing whole milk back into schools. However, it is difficult to find any price strength despite new demand with the looming supply numbers that seem to grow month over month.
While we can discuss all the small wins the market conditions have created for the U.S. dairy industry, we cannot truly realize the benefits of the new demand until we see a plateau or decline in milk production, which does not appear to be coming anytime soon.
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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