U.S. Dairy Cow Numbers Surge as Milk Prices Begin to Fall
According to Southern Ag, the U.S. dairy sector has seen a notable increase in dairy cow numbers since the start of the year. The rise is largely due to profitable milk prices and a decline in feed costs throughout 2024, which encouraged producers to expand their herds.
However, the surge in production is now having a ripple effect across the market. As milk supplies have expanded, prices for dairy products—including cheese, butter, and non-fat dry milk—are beginning to decline sharply.
“Profitable milk prices and fall in feed costs in 2024 have led to a surge of number of dairy cows since the first of the year. Now as the production has increased and surged, prices are beginning to decline sharply for cheese, butter, and non-fat dry milk,” Southern Ag reported.
Consumers may soon notice these changes at the grocery store. Cheddar cheese prices have fluctuated between $1.95 and $1.70 per pound throughout the year, and those savings are expected to reach supermarket shelves just in time for the holidays. Peanut butter prices have also seen a sharp drop, falling from $2.50 per pound to about $1.70, a welcome relief for shoppers during the peak holiday shopping season.
Beyond the dairy case, the report also highlights how the interaction between dairy and beef sectors is shaping market dynamics. The culling of dairy cows—the process of sending older or less productive cows to slaughter—has been increasing. While beef cow slaughter rates remain below last year’s levels, dairy cow culling has now caught up to 2024 figures.
“More dairy cows in the herd is causing falling milk prices and record high culled cow prices will likely cause some more cow culling in the near future,” Southern Ag noted.
This delicate balance between milk production, herd management, and beef supply underscores the complexity of U.S. agricultural markets. Too many dairy cows can lead to oversupply, which pressures milk and dairy product prices downward. Meanwhile, higher cull cow prices may encourage producers to reduce herd sizes in the months ahead—potentially stabilizing the market heading into 2026.
For consumers, that means lower prices for cheese, butter, and peanut butter this holiday season, even as producers work to manage profitability amid shifting supply and demand trends.
Audio Reporting by Tyron Spearman for Southeast AgNet.