As feed prices for essentials like corn and soybean meal decline, farm margins have seen substantial growth, with July recording a high of $12.33 per hundredweight—the highest in 2024.
The expected continuation of reduced milk production through 2025 suggests that prices could climb even higher, reaching an anticipated $23.45 per hundredweight.
Despite these gains, the reduced herd growth due to a limited supply of heifers might slow down potential expansions. The rising dairy costs are also likely to impact the competitive edge of US dairy products both domestically and abroad as food service sectors grapple with their own rising costs.
On the consumer front, there is a noticeable increase in dairy spending within the grocery sector, driven by a general downturn in out-of-home food expenses. This shift could potentially prompt farmers to increase herd sizes or invest more heavily in their dairy operations, focusing on sustainable practices and premium product offerings despite the historical challenges posed by fluctuating feed and operational expenses.