Milk production in America up more than 4 percent

According to the latest report from the U.S. Department of Agriculture (USDA), milk production in the 24 major dairy states totaled 8,29 million tons in September. This is 4,2% higher than the same month a year earlier. The August figures have also been revised slightly upward: from 8,51 to 8,53 million tons, a 3,6% increase year-over-year. Due to the shutdown, the figures were released later than usual. 

The growth came from almost all states, with outliers in Idaho (+9,1%), Texas (+7,4%), New York (+6%), and California (+2,4%). This is due to both a larger herd size and higher productivity per cow. Production declined slightly in only four states, including New Mexico (-1,3%), Illinois (-1,5%), and Ohio (-0,4%). Only Washington experienced a substantial decline of 8,5%, caused by a sharp decrease in the number of dairy cows.

Production continues to grow year-round. Only February showed a slight deviation, though this is largely due to the leap year. Cumulative milk production through September amounted to 75,7 million tons, a 2,1% increase compared to the same period last year.

Prices and margins under pressure
The ample milk supply, both domestically and internationally, is putting further pressure on prices. In August, the average milk price in the US was $20,9 per hundredweight (cwt), equivalent to approximately €39,55 per 100 kilograms. This is 11,4% lower than a year earlier, further accelerating the decline compared to the 8,8% price drop in July.

Lower milk prices are putting pressure on dairy farmers' profitability, which is reflected in the so-called milk-to-feed ratio, the ratio of milk price to feed price. This fell by 10% to 2,51, meaning farmers are left with less margin per kilo of milk. Nevertheless, the ratio remains at a reasonable level, partly because feed prices have fallen slightly.

Rabobank expects margin pressure to increase further towards the end of the year and persist into 2026. According to the bank, current production growth will only be sustainable as long as feed costs remain low and export demand remains stable.

Larger, but aging livestock population
The growth in milk production is not only due to higher milk production per cow, but also to an increase in the number of animals. In September, the US dairy herd numbered 9,15 million cows, a 2,6% increase compared to a year earlier.

However, this growth has a downside. The number of replacement heifers has fallen to its lowest level in twenty years. According to CoBank, this is partly due to the increasing use of beef breeds, which farmers use to breed calves that yield higher returns for the meat market. This provides additional income in the short term, but limits the availability of female successors. As a result, farmers are keeping older cows longer, which can reduce productivity in the long run and hinder future herd growth.

Outlook
In the short term, US dairy production is expected to continue growing, supported by a larger herd, higher milk production per cow, and more efficient feed use. The outlook for the medium term is less positive. Lower prices and a shortage of replacement cattle could slow production in the coming years.