DAIRY MARKET REPORT
VOLUME 28 | ISSUE 10
EDITOR’S NOTE
10/30/2025
Due to the ongoing government shutdown, some of the data normally reported in the Dairy Market Report is not available this month. This issue reports on the dairy data that is available.
OVERVIEW
U.S. milk production grew by 3.6% annually during the June-August period, while total milkfat production increased by 5.3%, as the average component composition of producer milk continues to increase. U.S. fluid milk sales were 1.7% lower than a year earlier during the same 3-month period.
U.S. average milk prices rose moderately in August from a month earlier to $20.90/cwt, while feed costs declined, resulting in a $0.58/cwt higher DMC margin for August of $11.52/cwt. Retail price inflation rose again in September as overall consumer prices increased by 3% from a year earlier. Dairy continued to resist inflationary pressures, with its average retail prices increasing by 0.7% from a year earlier versus 3% for all food and beverages.
COMMERCIAL USE OF DAIRY PRODUCTS
U.S. fluid milk sales in August were 4% lower than a year earlier.
MILK PRODUCTION
After it appeared that USDA/NASS was catching up with rapid U.S. milk production growth, it returned to making large upward revisions to its preliminary reported numbers. Its reports for August upped its preliminary July U.S. milk production number by 140 million pounds and its July preliminary U.S. dairy cow number by 25,000 cows. It now
shows July milk production rose 4.2% from a year earlier, while July cow numbers were up by 2%. The corresponding preliminary numbers for August are 3.2% and 1.9%. During the June-August period, U.S. milk production was up over a year ago by 3.6%, and total milkfat production grew annually by 5.3%.
DAIRY PRODUCT INVENTORIES
Despite the continued fast pace of milk production growth, August-ending stocks of butter and cheese were nevertheless reported as stable to lower compared with
both a month as well as a year earlier, except for a slight uptick in stocks of other than American-type cheese.
DAIRY PRODUCT AND FEDERAL ORDER CLASS PRICES
The NDPSR-reported price of butter dropped by $0.44/lb from August to September; the cheese price rose modestly, the whey price stayed the same, and the nonfat dry milk price dropped modestly. The net result for the manufacturing class prices were relatively large reductions for the month in the Class IV and Class II prices and a smaller increase in the Class III price. Over the six advanced price announcements since the introduction of the new Class I pricing system, the effective Class I base price for ESL milk, at 3.5% fat, has averaged $0.74/cwt higher than the Class I base price.
Retail price inflation, measured by its standard measure of year-over-year change in the Consumer Price Index (CPI) for all items, was 3% in September, up from its recent low of 2.7% annual increases in both June and July. The corresponding annual changes in the September CPIs for all food and beverages and for all dairy products were 3% and 0.7%. For individual dairy product categories, the changes reported for September ranged from 2.6% for lowfat milk to -1.8% for butter.
MILK AND FEED PRICES
The August Dairy Margin Coverage Program margin rose by $0.58/cwt from July to $11.52/cwt, as the DMC feed cost formula decreased by $0.48/cwt, while the all-milk price gained $0.10/cwt to $20.90/cwt. The August DMC feed
cost dropped on relatively large reductions in both corn and premium alfalfa hay prices, while the soybean meal price posted a somewhat smaller monthly gain.
calculations are not
LOOKING AHEAD
The last update of the DMC Decision Tool on the USDA website in mid October showed the margin dropping from August through the remainder of the year, generating small margin payments in November and December and averaging $10.92/ cwt for the year.
Dairy Management Inc.™ and state, regional, and international organizations work together to drive demand for dairy products on behalf of America’s dairy farmers, through the programs of the American Dairy Association®, the National Dairy Council ® , and the U.S. Dairy Export Council ®
The National Milk Producers Federation (NMPF) develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies.