A pair of two red maple trees sit across the lane from our house. They sit against the landscape of the valley below the farm in a way that displays the passing of the seasons like no other. In the spring, the red buds burst against the dark bark, changing to a cascade of green with sunlight beaming through in the summer months. This time of year, it’s a display of red and orange shades, bright and vivid against a deep blue sky. But in just a few weeks, the leaves will start to fall, and the branches will stand stoic in the brittle cold winter months.
I always think of how fortunate we are on the farm to get to experience the changing of the seasons. Most people in this country get up, go to a desk or factory somewhere, and spend much of their day under roof. They only get to witness the beauty of the seasons on their commute or maybe on the deck in the early morning hours or during an evening walk.
On the farm we get to see, smell, and feel the seasons in a way that few other occupations allow. That also means we must constantly adapt and prepare for each season in a way that most others do not. We are always shifting to what’s next. In the winter, we repair equipment and get ready for the planting season. In the spring, we are adjusting curtains, cleaning dirt from fans, and making sure everything works. In the summer, we are side dressing, troubleshooting disease issues, and getting bunkers ready for the harvest. And, along with the harvest in the fall, we are planting cover crops and making sure animals are vaccinated to protect against the cold winter months.
A Transition Coming
This idea of looking ahead is also critical in our ability to navigate the ever-changing dynamics of our industry. Historically, dairy markets have been cyclical. A year of high milk prices and higher profitability would transition to a lower priced year and tighter margins, followed by a transition back up. Those periods of ups and downs have been more extended in the past decade, as export dynamics and base excess plans have impacted how supply and demand shifts affect the market. However, there’s no doubt that right now we are seeing a transition from higher prices and margins to lower milk prices and tighter margins. Preparing in this shifting season will be critical to navigating the next 6 – 12 months in the dairy industry.
The downward pressure on milk prices right now is coming from a growing milk supply. After more than 12 months of decreasing supply, USDA has reported increases in milk production from March through August in 2025. The last production report shows milk production up 3.2 percent in August, with the nation’s dairy herd now at its largest in more than a decade. Milk production per cow is also shifting upward, with the latest report showing a 27-pound increase in per-cow milk production. Any increases in domestic demand or export growth are not significant enough to absorb that much production growth. As a result, prices have fallen dramatically in the past couple of months.
Looking ahead, Class III milk price futures on the CME are now sitting at $16.60 per hundredweight for the next six months. That is down about $2 – $3 from where they were earlier this year. Class IV prices have fallen even more dramatically. Currently, Class IV milk futures are sitting at $14.40 for the next six months, which is a low not seen since January 2024. Lower commodity feed prices and higher cull cattle prices could provide a cushion against the lower milk prices. However, the lower feed prices will also prevent the USDA Dairy Margin Coverage Program from kicking in with any indemnity. You can learn more about that issue in my last Markets & Management Column.
Get Prepared
Just like fall can be a period of preparation against the winter to come, now is a good time to think about how you can prepare against the lower prices to come. While shifts in commodity prices are outside of our control, there may be areas within your control where you can increase profits or reduce costs to protect your dairy against the lower milk prices. That strategy will be different for each farm. The point is to be prepared and have a strategy.
January is not the time to vaccinate your cows or fix the loose tin on the roof. Now is. In the same way, now is the time to get prepared with a strategy to work through the lower milk prices. While the Center’s on-farm grant programs are currently closed due to the delay in the state budget, we still have ways to offer support and guidance. If you’re looking for ideas, call Melissa Anderson at 717-788-0296 or Valerie Mason at 717-550-8720 to find out how we can help.
Editor’s Note: This column is written by Jayne Sebright, executive director for the Center for Dairy Excellence.