
The Latest: June - 2025
Milk Flows Again as Herds Grow
The heifer shortage and avian influenza reined in U.S. milk output in 2024, fostering lofty milk and dairy product prices in the second half of last year. But after nearly two years of low cull rates and sheer grit, the parlors are full, and so are the milk tanks. In the first 24 weeks of 2025, dairy cow slaughter was 7.7% behind the 2024 pace and 15.6% slower than historic average cull rates. Dairy producers added 122,000 cows over the past 11 months. From coast to coast, but especially in the center of the country, producers are looking to expand their facilities and add significantly more cows over the next 18 months.
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Concerns about demand have been simmering near the surface for several months. This week, rising interest rates and a plummeting stock market brought the anxiety up to a full boil.
View reportThe butter market illustrates the conundrum that besets much of the dairy complex. Stocks are relatively low and production is falling seasonally. Milk and butter output are not rising anywhere that matters. U.S. butter is much cheaper than foreign product, so trade is further eroding supplies.
View reportIn Europe the high costs of physical expansions, additional labor, replacement heifers, and feed costs, when coupled with market uncertainty, creates a risk level that prevents widespread expansion. The same factors are hampering milk output on this side of the Atlantic as well.
View reportIt’s unusual to see premiums at this time of year, and it’s raising concerns about summer supplies. If driers and cheese vats aren’t full to the brim amid mild May temperatures, how much will output slow in the July and August heat?
View reportAs indications of slower milk output came to the fore, milk futures climbed. Dairy producers will cash some record-shattering milk checks next month, as May Class III and IV contracts are both a little above $25 and the Class I base price is $25.45.
View reportThe dairy markets are still concerned about demand. Global milk output is growing slowly and dairy product inventories are not burdensome. But tight supplies are not enough to lift the market when prices are already quite lofty. Consumption must be healthy too.
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