2025 Milk Outlook Raised on Higher Herds, But Prices Weaken Across Dairy Products

According to the USDA’s April 2024 update, the 2025 milk production outlook has been revised upward due to an increase in cow numbers and slightly improved productivity per cow. However, a more robust supply and shifting trade dynamics are placing downward pressure on dairy product prices across the board.

• 2025 U.S. milk production is up due to larger herds and slightly improved yield.

• Imports fall due to new tariffs, while fat-based exports rise and skim-based exports drop.

• The all milk price is projected lower at $21.10 per cwt as dairy product prices weaken.

Milk production for 2025 is forecast higher, supported by growth in cow inventories and a modest rise in milk yield per animal. The increased production reflects improving herd sizes, signaling strong domestic output. Imports are forecast lower on both fat and skim-solids bases, as new tariffs, particularly on butter fats and milk protein products, curb incoming shipments.

U.S. dairy exports present a mixed picture: exports on a skim-solid basis are lowered, mainly due to declining overseas demand for skim milk powder and whey. In contrast, fat-based exports are revised upward due to stronger expected butter shipments. The export-import gap reflects changing international competitiveness and trade barriers influencing dairy product flows.

Despite higher milk output, dairy markets are experiencing widespread pricing pressure. Butter, cheese, nonfat dry milk, and whey prices are all downgraded due to current trends and the anticipated increase in supply. Consequently, Class III and IV milk prices are revised downward, aligning with falling product values. The all milk price is now projected at $21.10 per hundredweight (cwt), signaling lower returns for producers in 2025.

As dairy price pressures mount amid robust production and evolving trade conditions, strategic hedging solutions can help mitigate volatility and safeguard profit margins.

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