Weather
Locations
Careers
Login
Dairy updates
Dairy growth continues, but markets show signs of softening.
The U.S. dairy sector continues to expand as producers add cows and increase milk production. Recent USDA cattle inventory and milk production underscore this trend. As of July 1, the U.S. dairy herd totaled 9.65 million head, up 2.1% from a year ago and nearing 30-year highs. The number of replacement heifers also increased to 3.6 million head, compared to 3.5 million head last year, indicating continued herd expansion ahead.
Across AgWest states, Arizona, Idaho, California, and Oregon all posted year-over-year growth in dairy cow numbers. Washington's dairy herd appears to be stabilizing, with losses limited to 2,000 head compared to a year ago. The state has reduced its dairy herd by approximately 20,000 head over the past 18 months.
Milk production growth is being driven by both larger herds and improvements in productivity. In the major dairy-producing states, June milk production reached 18.9 billion pounds, up 2.4% from last year, while milk production per cow increased by 7 pounds year over year. California was a notable exception, as June's extreme heat limited productivity gains and kept milk yields relatively flat compared to last year. Continued growth in milk supplies could pressure milk prices if production outpaces demand growth or if new processing capacity comes online more slowly than expected.
Despite a seasonal rebound in milk prices during the spring, dairy producers face increasing margin pressure as milk supplies continue to grow. The year began with an All-Milk price of $17.50 per cwt, resulting in Dairy Margin Coverage (DMC) payments for the first three months of 2026. Prices strengthened through May, peaking at $21.30 per cwt, before beginning to soften in June. July prices may again be low enough to trigger a DMC payment, signaling renewed pressure on producer profitability. Further price declines are expected during the second half of the year, which could continue to erode dairy margins.
Profitability
June 10, 2026Dairy: Slightly profitable - Neutral 12-month outlook
Improving milk prices and relatively low feed costs, combined with added revenue from elevated beef values, support modest profitability.
The U.S. ranks as the second-largest exporter of dairy products, following the European Union. Over 15% of U.S. dairy production is exported. Mexico and Canada are the top destinations, accounting for more than 40% of total exports. Key U.S. dairy exports include nonfat dried milk, skim milk powder, cheese, whey, lactose, butter and other products. For cheese, major export markets include Mexico, South Korea, Japan and Canada.
The U.S. also imports a significant amount of cheese, primarily from the European Union. Many of these imported cheeses carry geographic indicators, signifying they originate from specific regions and are uniquely tied to those areas. This designation prevents others from replicating such cheeses outside their original region, ensuring their distinctiveness.
Cheese production, exports and imports
Source: USDA National Agriculture Statistics Service. U.S. Census Bureau.
Tariff tracker - Tariff rates applied to U.S. trade partners are consistenly updated to reflect policy changes. The World Trade Organization (WTO) tracks duties and tariffs on dairy products. For your convenience, the following links will take you to tariff data on cheddar cheese (a leading U.S. export for the dairy industry) for top markets including South Korea and Japan. Dairy products are currently exempt from tariffs for Mexico and Canada under the United States-Mexico-Canada Agreement (USMCA), but please refer to the U.S. Trade Representative website for up-to-date information. WTO also tracks rates for dairy imports to the U.S. Please consult with a trade lawyer or professional for detailed and up-to-date insights on tariff rates and their application to dairy products.
For guidance on interpreting duty and tariff rates, please refer to our Tariff Guide.
Dairy updates
Dairy growth continues, but markets show signs of softening.
The U.S. dairy sector continues to expand as producers add cows and increase milk production. Recent USDA cattle inventory and milk production underscore this trend. As of July 1, the U.S. dairy herd totaled 9.65 million head, up 2.1% from a year ago and nearing 30-year highs. The number of replacement heifers also increased to 3.6 million head, compared to 3.5 million head last year, indicating continued herd expansion ahead.
Across AgWest states, Arizona, Idaho, California, and Oregon all posted year-over-year growth in dairy cow numbers. Washington's dairy herd appears to be stabilizing, with losses limited to 2,000 head compared to a year ago. The state has reduced its dairy herd by approximately 20,000 head over the past 18 months.
Milk production growth is being driven by both larger herds and improvements in productivity. In the major dairy-producing states, June milk production reached 18.9 billion pounds, up 2.4% from last year, while milk production per cow increased by 7 pounds year over year. California was a notable exception, as June's extreme heat limited productivity gains and kept milk yields relatively flat compared to last year. Continued growth in milk supplies could pressure milk prices if production outpaces demand growth or if new processing capacity comes online more slowly than expected.
Despite a seasonal rebound in milk prices during the spring, dairy producers face increasing margin pressure as milk supplies continue to grow. The year began with an All-Milk price of $17.50 per cwt, resulting in Dairy Margin Coverage (DMC) payments for the first three months of 2026. Prices strengthened through May, peaking at $21.30 per cwt, before beginning to soften in June. July prices may again be low enough to trigger a DMC payment, signaling renewed pressure on producer profitability. Further price declines are expected during the second half of the year, which could continue to erode dairy margins.
Profitability
June 10, 2026Dairy: Slightly profitable - Neutral 12-month outlook
Improving milk prices and relatively low feed costs, combined with added revenue from elevated beef values, support modest profitability.
The U.S. ranks as the second-largest exporter of dairy products, following the European Union. Over 15% of U.S. dairy production is exported. Mexico and Canada are the top destinations, accounting for more than 40% of total exports. Key U.S. dairy exports include nonfat dried milk, skim milk powder, cheese, whey, lactose, butter and other products. For cheese, major export markets include Mexico, South Korea, Japan and Canada.
The U.S. also imports a significant amount of cheese, primarily from the European Union. Many of these imported cheeses carry geographic indicators, signifying they originate from specific regions and are uniquely tied to those areas. This designation prevents others from replicating such cheeses outside their original region, ensuring their distinctiveness.
Cheese production, exports and imports
Source: USDA National Agriculture Statistics Service. U.S. Census Bureau.
Tariff tracker - Tariff rates applied to U.S. trade partners are consistenly updated to reflect policy changes. The World Trade Organization (WTO) tracks duties and tariffs on dairy products. For your convenience, the following links will take you to tariff data on cheddar cheese (a leading U.S. export for the dairy industry) for top markets including South Korea and Japan. Dairy products are currently exempt from tariffs for Mexico and Canada under the United States-Mexico-Canada Agreement (USMCA), but please refer to the U.S. Trade Representative website for up-to-date information. WTO also tracks rates for dairy imports to the U.S. Please consult with a trade lawyer or professional for detailed and up-to-date insights on tariff rates and their application to dairy products.
For guidance on interpreting duty and tariff rates, please refer to our Tariff Guide.
