June is currently projected to be a turning point in the current milk price decline and feed cost decline. With June, all-milk price is projected to rebound to higher levels than May.
Feed cost projects are also currently projected to reach their lowest point for the year in June, with mostly flat feed costs for the remainder of the year. However, weather events play a big role in feed market prices over the growing season.
Milk sold in June will also be the first milk priced under the new federal order reform prices, which will affect your June advance and final milk checks.
The full effects of the changes in the new federal order reform pricing will take months to feel and understand fully. However, about a third of the milk utilized in Federal Order 33 goes into Class I fluid milk.
Changes
For June, Class I milk will be experiencing an increase in price from the new location differential. Which, for Cuyahoga County, under the old location differential, was $2/cwt and will now be $3.80/cwt. The Class I advanced price for June at a processor in Cuyahoga County is $21.26/cwt, up from $20.57/cwt in May. However, the Class IV advanced milk price is almost $0.60/cwt less than May, but Class III is $0.15 higher.
The calculation for Class I milk price also changed in June and is now using the higher of Class III or Class IV skim milk price. For the June advanced and final milk prices, the make allowances for manufactured products have also been updated. This change will lower the Class III and IV prices compared to the old make allowances.
Forecast
The dairy forecast for the remainder of 2025 is positive, with the national all-milk price for the year projected to be $21.60/cwt, which is up from last month’s projection for the year.
Based on the current trade policies and tariffs, in mid-May, exports for the year have also been adjusted upward with higher exports of butter, cheese, dry skim milk products, lactose and day whey products than projected last month during the heated tariff battle.
Imports volume projections remain unchanged, and while cheese import projections are up, the forecast for butter and milk protein concentrates are slightly lower.
Domestic use, unfortunately, is expected to decline slightly as wholesale dairy products strengthen. The stronger exports will balance out the weaker domestic demand, keeping total ending stocks at the end of 2025 unchanged, even with increased cow numbers.
Cow prices
Inspected milk cow slaughter for all weeks but one of 2024 was lower than 2023. This trend continued into 2025 with weekly slaughter all weeks but two so far this year coming in below 2024 slaughter numbers.
Total milking cows during the first quarter of 2025 increased by 58,000 head compared to the first quarter of 2024. This growth may slow for the remainder of 2025 as milk-to-feed margins are now tighter, which usually leads to slower herd expansion.
For the remainder of 2025 and 2026, cull cow prices and along with bull calf prices are expected to remain strong. Tighter beef feeder cattle supplies are anticipated to reduce U.S. beef production in 2026 by 5% year over year.
This is the result of multiple factors currently feeder cattle cannot enter the U.S. from Mexico due to the continued and rapid northward spread of the New World Screwworm which is now about 700 miles away from the southern U.S. border.
The 2025 domestic calf crop is expected to be smaller, with more heifers retained for breeding instead of entering feedlots to be slaughtered in 2026. While the average carcass weight from 2023-2025 increased by 6% compared to 2015-2023, carcass weights are expected to plateau for the next few years.
All of these factors are expected to result in a 5% increase in average cull cow prices for 2025. Beef feeder steer price is also forecasted to increase by 15% over 2024 prices. The increase in feeder steer prices will continue to support calf prices. Current forecasts are projecting increased dairy farm income for the second half of 2025 compared to the second quarter of the year.
Unfortunately, the current projections for 2026 are showing lower milk prices with a 2026 all-milk price forecast of $21.60/cwt.
