The USDA maintained its record milk production forecast for 2025 at 231.4 billion pounds, according to the agency’s December WASDE report on Tuesday. The forecast was left unchanged from the previous month based on the most recent milk production data.

The production forecast for 2026 was reduced slightly due to lower cow inventories more than offsetting a higher rate of growth in milk per cow.

The 2025 export forecast on a fat basis was raised due to U.S. butter continuing to be competitive in the global market. However, the 2026 forecast was reduced on expectations of lower demand for imported butter products.

Class III dairy milk futures continued to trade near multi-year lows this week amid large domestic supplies.

The USDA expects the current production growth to continue over the next 10 years based on the U.S. Dairy Projections to 2035 released last week. Milking efficiencies are expected to continue increasing, along with the milk cow herd.

Meanwhile, prices received by dairy farmers are expected to increase as well, largely due to demand growth, particularly from milk fat.
—

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.