US milk supply in May to be highest yet in 2025

For the period January through May 2025, total U.S. milk production was 41,85 million tons, a modest increase of 0,58% from 41,61 million tons in the same period in 2024. This slight increase is primarily due to steady growth in the national dairy herd and improved profitability for dairy farmers. The U.S. dairy herd grew by 0,4% to approximately 9,38 million cows, driven by expansions in key dairy states such as Texas, South Dakota and Idaho.

Although milk production fell by around 1,05% in March due to cow declines, heat stress and lower profitability in parts of the South and Southwest, production recovered in April and May. This resulted in modest production growth over the first five months, underlining the resilience of the sector.

As of mid-June, the five largest dairy producing states—California, Wisconsin, Idaho, Texas and New York—accounted for about 55 percent of the nation’s milk production, maintaining their leading positions. Among these states, Texas and Idaho saw robust growth of 3,5 percent and 2,8 percent, respectively. California and Wisconsin saw modest increases of 0,9 percent and 1,1 percent, while New York’s production remained largely flat.

Favorable temperatures in late spring and early summer positively impacted pasture and animal health, leading to higher milk production per cow in the Midwest and Northeast, such as Wisconsin and New York. In Wisconsin, average milk production per cow exceeded 2.100 pounds in May, up 1,2 percent from a year earlier. Despite early signs of heat stress in parts of the South and West, such as Texas and California, large-scale operations were able to maintain production through good management and adequate feed supplies.

Structural challenges in the second half of 2025
The USDA expects the U.S. dairy industry to remain resilient and have moderate growth potential in the second half of this year. However, the industry is facing a number of structural challenges. Climate change is increasing high temperatures and extreme weather, particularly in the South and West of the country. Large-scale operations are increasingly able to cope with heat stress through technological solutions, but smaller and mid-sized operations often lack this capacity. This increases the risk of regional production fluctuations, according to the Department of Agriculture.

In addition, stricter environmental regulations are leading to higher compliance costs, including in the areas of manure and emissions. This can lead to financial pressure and to more consolidation.

On the market side, domestic consumption of fluid milk continues to decline, while plant-based alternatives are gaining ground, the USDA said. Dairy exports are expected to remain relatively strong, but rising global trade risks pose an additional threat.

In addition, a structural shortage of labor and rising operational costs remain limiting factors. The degree of automation varies widely between companies. Finally, according to the USDA, limited investments in premium dairy products and brand development are inhibiting value creation, leading to limited growth in the higher segment.