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Strong beef returns keep dairy herds growing, pressuring milk prices

The size of the U.S. dairy herd is expected to keep pressure on milk prices in 2027.

CoBank economist Corey Geiger says dairy cow numbers are the highest they’ve been in 34 years.

“Under normal times we would see a contraction in the herd just because of Class III milk prices, cheese and whey. But the issue now is five years ago, 5 percent of dairy farm revenue was cull cows and beef on dairy calves, that’s grown to 20 percent. That’s the driver why the dairy herd has grown.”

Speaking to Brownfield at the World Dairy Expo this week, he said supply is outpacing demand.

“Even though domestic and international demand is growing, we’re making a lot of milk (and) a lot of butterfat. We got a home for every ounce of protein, but we’re making a lot more butterfat. And until we get that part in balance we’re going to have lower Class III milk prices.”

Geiger says the added margin from strong beef prices is keeping most dairy farms profitable and he expects that to continue in the year ahead.