Sudden jump in cow numbers seen for N.Y., Wis., Minn.; butter biz is bizarre

WASHINGTON — After an 18-day delay due to the government shutdown, the long-awaited USDA September Milk Production report arrived on Nov. 10 — and it was a doozy.

U.S. milk output in September totaled 18.99 billion pounds, up 4.0% from a year earlier. The milking herd reached 9.581 million cows, up 238,000 head from last year and the largest since 1993. In revisions, NASS “found” 21,000 more cows and 0.2% more milk for August, then added another 40,000 cows for September. Altogether, cow numbers jumped 71,000 head from July to September.

Of the 24 major milk producing states, all but four milked more cows than a year ago in September. This includes Pennsylvania, down 5000 cows year-on-year (YoY) but up in milk production by 0.4%. The other three were down in both: Ohio (–1000 cows, –0.4% milk), New Mexico (–3000 cows, –1.3% milk), and Washington (–23,000 cows, –8.5% milk).

The big story is the sharp single-month rebounds in traditional dairy states New York, Wisconsin, and Minnesota. Wisconsin flipped from 3000 fewer cows YoY in July to running 14,000 head above year ago in September. That’s a 17,000-head net swing.

The September report also included quarterly state data, showing July through Sept. production totaled 58.2 billion pounds, up 3.8% from third quarter 2024. The average number of milk cows in the U.S. during third-quarter 2025 was reported at 9.54 million head, up 82,000 head above the second-quarter 2025 average, up nearly 199,000 head vs. year ago, and the highest since 1993.

USDA confirmed it will release the October milk production report as scheduled on Nov. 21, whether the government is re-opened or not.

Regional surges tied to new processing

The Empire State led the comeback aligned to major processing capacity investments there. New York’s herd grew by 16,000 head from July to September, putting it 25,000 cows above year ago, producing 6% more milk. Neighboring Vermont also rebounded (+3000 cows, +4.5% milk). Maine’s quarterly number held steady on cows (+1.5% milk). USDA has discontinued reporting the quarterly data it collects for the other New England states.

In the Mid-Atlantic, Pennsylvania remains 5000 cows below year-ago levels but produced 0.4% more milk on 25 extra pounds per cow — slightly under the national per-cow gain of 30 pounds. Virginia added 1000 cows and 2.8% more milk.

In the Southeast, Georgia and Florida posted some of the nation’s largest percentage gains. Georgia was up 9% and Florida 7.4% — achieved mostly through huge output gains per cow (+85 and +110 pounds YoY, respectively), far above the national average. Cow numbers were steady in Florida and up 4000 head in Georgia.

By contrast, the quarterly tallies elsewhere in the Southeast were lower for Kentucky (–3,000 cows, –7.1% milk), Tennessee (–2000 cows, –11% milk), and North Carolina (–2000 cows, –2% milk). USDA has discontinued reporting the quarterly data it collects for other southeastern states.

The Upper Midwest is another major story. Wisconsin (+14,000 cows, +3.8% milk) and Minnesota (+14,000, +4.5%) together saw a net swing of 29,000 more cows from July to September. Combined with steady expansion in Iowa and South Dakota, the region’s herd is up 50,000 head YoY alongside major cheese and ingredient plant growth.

That tally doesn’t include Riverview LLC’s reported 12,000- and 25,000-cow dairies underway in North Dakota, nor the reported growth in Wyoming. USDA no longer reports the quarterly data for these states, citing confidentiality to “avoid disclosing information about individual operations.”

Another standout is Arizona, where cow numbers grew by 10,000 head with 5.9% more milk amid ongoing plant expansion.

Across the Southwest, Texas added 36,000 cows YoY (+7.4% milk); Oklahoma added 3000 in the quarterly numbers; Kansas was up 38,000 for a whopping +21.1% milk increase; and Colorado milked 9000 more cows with 4.2% more milk YoY. Growth there aligns with massive new cheese, drying, and ESL fluid projects.

In the West, compared with year-ago, California added 5000 cows (+2.4% milk), Oregon +5000 (+5.9% milk), and Idaho added 53,000 (+9% milk), all supported by dryer, whey, aseptic milk, and yogurt capacity growth in the Magic Valley. Neighboring Utah added 7000 cows and Nevada 3000, while Washington’s decline continued at 23,000 fewer cows making 8.5% less milk.

Fewer dairy cows going to beef

Alongside expanded milk output, USDA’s Livestock Slaughter report showed fewer cull cows went to market. January through August dairy cow slaughter totaled just shy of 1.72 million head, down 6.8% from last year’s 1.85 million — representing a national cull rate of 18% compared with a 20% national cull rate a year earlier.

Calf value is changing the math on cull cows. Those poorer performing candidates, if otherwise healthy, now deliver dual income: marginal milk plus very high-value calves. Beef-on-dairy newborn calves are fetching $1200 to $1500 per head, while straight Holstein calves are at $700 to $900 per head, up $500 to $700 above year ago, and much higher than the $75 to $100 bull calves dairy farmers sold just a few years ago.

Will the replacement pipeline tighten?

That is the big question. If USDA’s Cattle Inventory data are accurate, the dairy replacement pool is historically tight. On Jan. 1, 2025, replacement heifers totaled 3.91 million, the lowest in 47 years, with 2.92 million expected to calve within the year. The July 1 update showed 3.50 million, essentially flat but still near record lows.

This implies the production surge isn’t coming from fresh heifers but from keeping older cows longer, a pattern that may not last as the national herd is aging.

Still, questions arise: Has USDA updated survey methods to reflect rapid industry consolidation and the rise of corporate modular dairies? Are there parallel, uncounted replacement streams feeding 10,000- to 25,000-cow operations, tied to the current $11 billion expansion wave of new cheese/whey and aseptic beverage plants?

Trade flows beg big questions

According to USDEC’s most recent report, dairy exports rose 7% above year ago in July on a milk-solids basis, driven by volume growth in every category, especially for cheese and butterfat. Total cheese volume exported grew 14% YoY while cheddar as a subset saw export volume jump 143%. It’s no wonder as U.S. cheddar blocks traded on the CME here ($1.63/lb) at a 20 to 25% discount to the global market clearing index for bulk industrial cheddar ($2.09/lb).

USDEC reports butter exports are up 206% “driven by affordability and availability as compared to alternate global suppliers.” No kidding! U.S. spot CME butter price ($1.50/lb) is running fully 40 to 45% below the global market-clearing index ($2.89/lb), and that is feeding right into the Federal Milk Marketing Order formulas plus the additional 6 cents per pound increase in the butter ‘take allowance’ that now totals just shy of 23 cents/lb off the butter price to pay back the processors for their ‘make’ costs.

At the same time, U.S. dairy imports increased 4 to 5%, mainly on butterfat and cheese, offsetting part of domestic demand growth even as domestic milk output accelerates.

Does this make sense? We are cranking out cheese to sell at a discount so dairies can grow as the price falls to below breakeven. Meanwhile, we are importing more butterfat while dairy farmers are being penalized by a sharply declining butterfat price as the industry discounts rising offshore butter sales at huge discounts, saying dairies are making ‘too much butterfat!’ (While children are still prevented from having butterfat left in their school milk so it tastes good and they drink it.)

What a web to be woven.

With October’s key WASDE report skipped during the government shutdown, the anticipated Nov. 15 release that USDA has promised will be the first to factor in the dairy herd surge and changing import / export balances. Analysts expect 2025 milk output to be revised upward by 0.8–1.0 billion pounds, putting some additional downward pressure on price forecasts, particularly for butterfat, as CME spot butter continues to test new lows.

The bottom line is: more cows, more milk, and higher butterfat yields are flowing into the market. October blend prices announced this week are much lower, with November gunning to be lower yet.

Dairy farmers are increasingly reliant on high beef-on-dairy calf values and strong cull-cow prices to pay bills as the Dairy Margin Coverage (DMC) and other risk management scenarios do not account for the fact that dairy farmers tend to grow their own feed and face all of the same high input costs their crop-growing brethren face.

If USDA’s replacement heifer data hold true, this herd-surge may be temporary. But if uncounted large-scale dairies have their own uncounted heifer pipelines waiting in the wings, the wave could keep rolling longer before it crests.