With 10,000 More Cows, Milk Production Increasing
Published: Friday, August 29, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
U.S. dairy farmers continue to fill their bulk tanks. The Agriculture Department's latest data shows July output hit 19.57 billion pounds, up 3.4% from July 2024, which followed a 3.3% increase in June. The 24-state output, at 18.8 billion pounds, was up 3.5%. StoneX says component adjusted growth puts output up 4.7% from last year. June output in the 50 states was revised up 5 million pounds, leaving a 3.3% gain from a year ago. The 24-state total also revised 5 million pounds, up 3.4%.
Cow numbers totaled 9.485 million, up 10,000 head from June, and 159,000, or 1.7%, more than a year ago. The May count was revised up 6,000 head. The 24-state count, at 9.04 million head, was up 8,000 from June and 154,000, or 1.7%, above a year ago. The June count was revised, up 3,000 head.
Output per cow averaged 2,063 pounds, up 34 pounds, or 1.7%, from a year ago in the 50 states and averaged 2081 pounds in the top 24, up 36 pounds, or 1.8%.
California milk production, now with bird flu pretty much in the rear view mirror, was up 125 million pounds, or 3.8%, from a year ago, thanks to 3,000 more cows and a 70-pound increase per cow. Wisconsin was up 25 million pounds, or .9%, on a 25-pound per cow gain, offsetting a loss of 3,000 cows.
Idaho was up 127 million pounds, or 8.7%, thanks to 48,000 more cows and a 30-pound gain per cow. Michigan was up 4.1% on 17,000 more cows and a 5-pound gain per cow.
Culling has slowed some as farmers keep cows in the milking string longer. The latest Livestock Slaughter report showed an estimated 225,800 dairy cows were slaughtered in July, up 37,000 head from June, but 100 head, or .4%, below July 2024. The weekly data showed 51,100 were culled in the week ending Aug. 9, up 900 head, or 1.8%, from a year ago. Year to date, 1,582,500 head had exited the dairy business, down 103,700, or 6.1%, from a year ago.
According to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC dairy margins nationally were flat the first half of August as milk prices were mixed while feed costs diverged, with corn making new contract lows and soybean meal rallying in response to USDA's August World Agricultural Supply and Demand Estimates report.
"The much-anticipated report updated corn and soybean production estimates with the first field surveys for the season that revealed sharply higher yields," the Margin Watch stated. "The corn yield was raised to 188.8 bushels per acre with production up over 1 billion bushels from July and outside the range of pre-report estimates at 16.742 billion, as both planted and harvested acres also increased from the June survey following updated FSA data. Soybean production by contrast was forecast down 43 million bushels from July at 4.292 billion bushels, and while the yield projection was increased to 53.6 bushels per acre, acreage decreased, and production was at the low end of the range of estimates."
"Milk prices have been holding steady as milk production and dairy product output increases with strong demand, particularly in the export market, helping to absorb the additional supply," the MW stated.
Exports are vital to the U.S. dairy industry, and President Trump's upsetting of the tariff apple cart has affected all types of trade, including dairy. Speaking in the Aug. 25 Dairy Radio Now broadcast, Rabobank's Lucas Fuess said the U.S. received in writing last week the verbal trade agreement between the U.S. and EU and called it a "win for both sides." He said there's not a lot of dairy that leaves the U.S. for Europe, but there is a significant amount of high end cheese and butter that comes to the U.S. from Europe. The agreement impacts many other items.
He reported that U.S. China trade negotiations have been extended until November after seeing tariffs in April and into May of up to 145% on U.S. imports of Chinese goods. That also decimated U.S. whey and permeate trade, he said. However, there was a strong recovery in June when those tariffs were rolled back.
The National Milk Producers Federation and U.S. Dairy Export Council welcomed the U.S.-EU trade agreement, stating "America can no longer afford to tolerate Europe's entrenched protectionism, which has cost U.S. dairy farmers billions and stifled real market access. The framework provides an essential opportunity to address those harms to benefit American dairy farmers and manufacturers."
China's dairy imports showed a lot of negatives in July, but one of the positives was whey. Whey imports hit 151.4 million pounds, up 17% from a year ago, highest volume since May 2021 on a 30-day adjusted basis, according to HighGround Dairy. Fuess said whey sailings from the U.S. were up 22%, as China and the U.S. came to a trade "truce" on May 13. HGD said, "It is likely buyers piled on additional shipments following the reduced tariff announcement. However, trade relations between the two nations remain strained, driving China to seek alternative origins like Belarus and Turkey."
Lactose imports marked a new-all time high, adds HGD, and the U.S. remained the top origin nation, accounting for 60% of total market share. Following the trade truce, sailings of lactose jumped 36%. China continued to diversify their lactose purchasing, also buying product from Germany, Denmark and Italy.
Cheese imports hit 42.1 million pounds, up 20.8%, highest level on a 30-day adjusted basis since March 2021, according to HGD. New Zealand accounted for 65% of those imports. More cheese also came from Australia and the United Kingdom, while imports from the U.S. were down 44%. Combined whole milk and skim milk powder imports were down 19%, and butter was down 6.3%.
The September federal order Class I base milk price was announced at $18.70 per hundredweight, down 23 cents from August and $2.90 below September 2024. It equates to $1.61 per gallon, down from $1.86 a year ago. The average stands at $19.37, down from $19.67 a year ago, and compares to $19.05 in 2023.
CME block Cheddar closed the fourth Friday of August at $1.75 per pound, down 2.50 cents on the week, as traders anticipated the afternoon's July Cold Storage report. The blocks were down 28.75 cents from a year ago. The barrels closed at $1.76, 2 cents lower on the week, and 34 cents below a year ago. There were 18 loads of block sold on the week and four of barrel.
StoneX Aug. 19 Early Morning Update said, "There appears to be a seasonal uptick in U.S. cheese demand underway. And while there is reportedly a good deal of Cheddar in the country today, less of it seems to fit the spec of what can be brought to the CME spot market than a month or so ago."
"There is some concern that firming prices (north of $1.90) will shut off the much-needed export market the U.S. has enjoyed this year. We agree with this in theory, but upside risks remain as we enter the time of year in which U.S. demand even for just a few weeks drives cheese price action. If, and this is a big if, U.S. domestic demand heats up more, spot cheese can exit the pricing zone needed to export as the market rations demand. We're not there yet, but it's on our radar."
Dairy Market News reports, "Milk output in the Central region is mostly steady but still trending lower, as variable heat and stormy weather continue to influence conditions. Cheese production is steady to lighter. Domestic cheese demand from retail and foodservice is steady, while export interest remains solid."
Contractual milk volumes are being met for cheese manufacturers in the West despite some lighter milk output, says DMN, and is likely ample, with bottling seasonally lighter for a couple more weeks. Cheese output is steady. Sellers describe domestic demand as moderate, steady, or somewhat stronger, and U.S. prices keep it attractive to international buying which is steady to stronger.
Cash butter continued to fall, closing last Friday at $2.2350 per pound, down 6.50 cents on the week, lowest CME price since Dec. 22, 2021 and 89.50 cents below a year ago. There were 16 loads that found new homes on the week.
Cream is ample in the Midwest. Milk production is seasonally low, but components are comparatively higher than in recent years. Softening demand of cream for ice cream is leaving cream available for churns. International demand remains strong for 82% butterfat butter, leaving inventory very tight, says DMN.
Spot cream is tighter in the West due to lighter milk production. Some butter producers churning at less than full capacity were choosing to pass up available loads. Many of those actively churning were more focused on retail production and building inventories for fourth quarter. Sellers reported light, steady and strong retail sales and strong export demand, in some cases outpacing output.
Grade A nonfat dry milk saw its Friday close at $1.26 per pound, a penny lower on the week and 2.25 cents below a year ago, on 28 sales.
Dry whey made it to 60.50 cents per pound last Monday but closed last Friday at 55.50 cents per pound, down 4.50 cents, and a penny below a year ago on 15 sales.
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