USDA Raises 2025, 2026 Milk Production Estimates
Published: Friday, September 26, 2025
As reported last week, the Agriculture Department raised its estimate of 2025 and 2026 milk output in its World Agricultural Supply and Demand Estimates.
2025 production and marketings were projected at 230 and 229 billion pounds, respectively, up 800 million on both from a month ago. If realized, both would be up 4.1 billion pounds, or 1.8%, from 2024.
2026 production and marketings were projected at 231.3 and 230.3 billion pounds, respectively, up 900 million pounds from a month ago. If realized, both would be up 1.3 billion pounds, or .6%, from 2025.
Price forecasts for cheese, butter and nonfat dry milk (NDM) were lowered for 2025 based on recent price declines and increased milk supplies. The whey price forecast was unchanged. Class III and Class IV milk price forecasts were reduced on lower dairy product prices.
Look for the 2025 Class III price to average $18.20 per hundredweight, down 30 cents from last month's estimate, and compares to $18.89 in 2024 and $17.02 in 2023. The 2026 average, at $17.40, is down 45 cents from a month ago.
The Class IV is expected to average $18.15 in 2025, down 80 cents from last month's estimate, and compares to $20.75 in 2024 and $19.12 in 2023. The 2026 average was projected at $17.25, down $1.60 from a month ago.
This month's corn outlook is for greater supplies, larger exports and a slight reduction in ending stocks. Projected beginning stocks are 20 million bushels higher based on a lower use forecast for 2024-25, with reductions in imports and corn used for ethanol partially offset by an increase in exports.
Corn production was forecast at 16.8 billion bushels, up 13% from 2024 and would be the highest on record for the U.S. The forecast was up 72 million from last month as a 2.1-bushel reduction in yield to 186.7 bushels per acre is more than offset by a 1.3 million acre increase in harvested area to 90 million acres. If realized, harvested area would be the highest since 1933 and planted area of 98.7 million acres the highest since 1936.
Total corn use was forecast up 100 million bushels to 16.1 billion. Exports were raised 100 million bushels to a record 3 billion reflecting U.S. competitiveness and robust early-season demand. With rising supply more than offset by greater use, ending stocks are down 7 million bushels to 2.1 billion. The season-average corn price was unchanged at $3.90 per bushel.
The soybean outlook calls for higher production, higher crush, lower exports, and higher ending stocks. Soybean production was forecast at 4.3 billion bushels, down 2% from 2024. Harvested area was raised .2 million acres from the August forecast. The soybean yield of 53.5 bushels per acre is down marginally from last month. The crush forecast was raised 15 million bushels driven by stronger soybean meal exports.
The soybean export forecast was reduced 20 million bushels on increased competition, particularly from Russia, Canada and Argentina. Ending stocks were projected at 300 million bushels, up 10 million from last month. The season-average soybean price was forecast at $10 per bushel, down 10 cents from last month. Soybean meal and soybean oil prices were unchanged at $280 per short ton and 53 cents per pound, respectively. Total planted area, at 81.1 million acres, is up less than 1% from the previous estimate but down 7% from a year ago. Area harvested was forecast at 80.3 million acres, up less than 1% from the previous forecast but down 7% from 2024.
The Sept. 12 Daily Dairy Report stated, "Chinese importers have yet to book any U.S. new-crop soybeans and instead have purchased 95% of their needs, nearly 8 million metric tons (MT) for October-November shipment, from South America. By this time last year, China had already booked more than 12 million MT of U.S. beans for September-November shipment. While U.S. soybeans cost nearly $1 per bushel less than their Brazilian counterparts, tariffs add $2 per bushel to importers' cost."
For U.S. dairy herds, culling remains about 6% behind a year ago. The latest weekly slaughter report shows 47,500 head were culled in the week ending Sept. 6, down 4,700 from the previous week, and 200 head, or .4%, below a year ago. Year to date, 1,785,100 cows had been sent to slaughter, down 109,000 head, or 5.8%, from a year ago.
Nebraska has confirmed its first case of bird flu in a dairy herd. There are now 1,080 confirmed cases in 18 states. The U.S. milk supply remains safe due to steps taken by the industry, including the pasteurization process itself.
The latest U.S. Dairy Supply and Utilization report had some interesting take-aways. HighGround Dairy's Cara Murphy stated in the Sept. 22 Dairy Radio Now broadcast that even though total U.S. dairy exports were the second-highest on record and up over 200% from a year ago, cheese utilization, at 1.2 billion pounds, was off .4%. Domestic usage, which makes up over 90% of cheese usage, was down 2.7% and the lowest since July 2022. She said retail sales were good but food service isn't. Exports were up 29.4% thanks to low U.S. prices.
Butter utilization was up 5.4%, primarily due to all-time high exports which were up 208.3%. Domestic consumption, which also accounts for over 90% of total usage according to Murphy, was off .8%. HighGround said, "Limited domestic demand could help to explain the significant price decline on the CME spot market over the past month as strong production keeps butter volumes plentiful."
Nonfat dry milk and skim milk power utilization was down 1.3%, thanks to exports being down 15.7%. Domestic demand was up 83.1% and has supported CME prices, said HGD, "holding above $1.20 per pound since early May, but this dynamic has recently shifted following the decline of global skim milk powder prices as well as rising U.S. milk supplies."
Tariffs have influenced this market, and Murphy said they are paying attention to them, but she cited Oceania pricing being a bigger factor, as well as the strong milk output we're seeing in the U.S., Europe, South America and New Zealand. If powder prices fall globally, she said, the U.S. may recover some market share.
Dry whey usage was up 12.5% but was against an extremely weak July 2024 number, according to HGD. Murphy said China stepped back into the market after some trade issues were settled, but pointed to the high protein products, whole protein concentrates and isolates, and said they are what's holding up the whey market as "people just can't get enough protein in their foods."
As expected, the Fed lowered its benchmark interest rate a quarter point this week, first reduction in nine months, and indicated there'll be additional cuts ahead. CME block Cheddar climbed to $1.6850 per pound last Wednesday, but it closed the third Friday of September at $1.65, as traders anticipated last Monday's August Milk Production report. That's up 3.50 cents on the week, but 58.75 cents below a year ago. The barrels ended at $1.64, 2.75 cents higher, but 95 cents below a year ago. Sales totaled 22 loads of block, with no barrel sold.
Contacts in the Central region tell Dairy Market News that mild temperatures are contributing to increasing milk production. Demand from Class I processors is taking up much of the additional production, keeping spot availability somewhat limited. Mid-week prices were trading flat to $2-over class. Cheese production is steady in the Central region. Demand from food service and retail customers is steady. Export interest is strong, though some contacts said export demand was softer this week but remains above a year ago.
Cheesemakers in the West indicate ease in securing milk. Production is steady. Domestic retail cheese demand is steady. Food service demand continues to be weaker. Export demand is mixed as U.S. prices remain competitive but those prices are generally weakening for cheese produced outside of U.S., says DMN.
Butter's meltdown continued, though it did climb to $1.81 per pound last Wednesday. It relapsed and closed last Friday at $1.75, lowest CME price since Oct. 11, 2021, 11 cents lower on the week and $1.2225 below a year ago, on 39 sales.
Central milk production and component levels were strong throughout the summer months, keeping churns active, says DMN, and that has contributed to the current bearishness. Cream is plentiful in the Central region and demand is softening as declining prices were causing some bulk purchasers to hold off.
Cream is also widely available in the West and demand from butter producers is somewhat stronger as cream has become more affordable. Butter output is stronger but remains below 100% capacity. Churn equipment projects are closer to completion and expected to bring more churning back online in the fourth quarter. Demand from domestic and international buyers is steady to stronger says DMN.
Grade A nonfat dry milk fell to $1.14 per pound last Wednesday, lowest since March 25, but it closed last Friday at $1.1475, down 1.75 cents on the week, and 23.25 cents below a year ago. There were 33 sales on the week.
Dry whey closed last Friday at 64 cents per pound, up 4.75 cents on the week, highest since Jan. 30, and 5.25 cents above a year ago, with eight sales.
The October federal order Class I base milk price was announced by the USDA at $18.04 per hundredweight, down 66 cents from September, $5.13 below a year ago, and the lowest Class I since June. It equates to $1.55 per gallon, down from $1.99 a year ago. The Class I average stands at $19.24, down from $20.02 a year ago, and compares to $19.09 in 2023.
Dairy Margins Weaken
Dairy margins continued to weaken the first half of September as milk prices succumbed to further losses while feed costs remained steady, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC. "A sharp drop in both butter and cheese has pressured milk futures as growing supplies begin to overcome strong demand," the MW stated.
"The combination of increasing milk output and rising component levels, with the July fat test of 4.13% up .06 points from last year has caused butter production to rise 9.8% from July 2024 to 180.1 million pounds, highest volume since 1942. Year-to-date butter production through July is up 6% from last year," the MW stated. "While domestic disappearance of butter is up 4.8% from 2024 through the first half of the year and soaring export demand with decade-high shipment volumes have helped to absorb the increase."
"Output is quickly outpacing demand and international prices have eased recently which has removed much of the competitive price advantage the U.S. has enjoyed."
"July cheese production set a record for the month at 1.21 billion pounds, up 2.1% from 2024. Cheddar and Mozzarella production were up 6.7% and 3.1%, respectively. CME Cheddar block prices have dropped more than 14% since mid-August and European Cheddar prices are down 18% since July. The latest Global Dairy Trade auction showed a sharp 9.6% drop in Mozzarella to $1.75 per pound with the Southern Hemisphere approaching peak production heading into their spring flush," the MW concluded.
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