LUBBOCK, TX – U.S. dairy farmers are producing more milk as herds expand, but the added supply is pressuring prices despite stronger exports and domestic demand. USDA now expects the 2026 all-milk price to average $20 per hundredweight, down 70 cents from last month.
May milk production reached 20.565 billion pounds, up 2.3 percent from a year earlier. Cow numbers increased by 184,000 head, while milk per cow rose to 2,128 pounds.
Strong beef-on-dairy calf values and tight replacement supplies are encouraging producers to retain cows longer. More milk is therefore moving into manufacturing as wholesale cheese, butter, and nonfat dry milk prices weaken.
Exports remain a bright spot. May dairy exports increased on both milk-fat and skim-solids bases, while dry whey shipments more than doubled, led by China and Canada. Domestic protein demand also strengthened.
USDA expects herd growth to continue into 2027, with production reaching 238.1 billion pounds. Producers will watch whether exports and protein demand absorb supplies fast enough to prevent further price pressure.
Farm-Level Takeaway: Expanding herds and stronger milk output are increasing supply faster than prices can recover.