WASHINGTON — The U.S. average mailbox milk price for Sept. 2025 was reported on Jan. 2 at $19.55 per cwt, down 48¢ from August and a staggering $5.23 below a year ago. That year-on-year (YoY) gap has widened steadily from June through Sept., coinciding with USDA’s make-allowance increases and the YoY milk production increase compounded by increased pounds of components.

September delivered a sharp blow to butterfat values, down 54¢ per pound to $2.19/lb., which is $1.42/lb. lower YoY. At the same time, according to USDA AMS, milkfat tests continued seasonal recovery, averaging 4.22% nationally, up from 4.12% a year earlier while protein averaged 3.30%, up 0.04 points YoY, while other solids were unchanged at 5.78%.

The September protein price surged to $2.71/lb, up 75¢ per pound from August, though still 21¢ lower YoY. Other solids held steady at 32¢/lb, unchanged month to month and down 2¢ YoY.

September’s fleeting strength in cheese and whey markets alongside collapsing butter prices flipped the pricing hierarchy. With protein up sharply while butterfat plunged, protein became the highest-valued component while the benchmark Class III price was boosted to $17.69/cwt, $1.52 above Class IV at $16.17 and 30¢ above Class II at $17.39. It marked the first time in 2025 that Class III exceeded Class IV, a relationship that persisted through year-end.

September also marked the onset of milk depooling, which intensified through Q4. The return to the “higher-of” method for Class I pricing helped support Producer Price Differentials (PPDs) across multiple-component-priced Federal Orders. However, in California, the Pacific Northwest and the Southwest, and to a reduced degree in the Northeast, Class III milk was depooled in favor of Class II and IV, reflecting those regions’ varied product mix and efforts to manage PPD exposure.

In contrast, the Upper Midwest (FMMO 30), dominated by cheese production, saw Sept. mailbox prices rise 34 to 44¢ per cwt from August as higher-priced Class III milk made up more than three-fourths of the pool despite some depooling. The return to the higher-of helped preserve pooling integrity, maintaining a 35¢ per cwt positive PPD in September even with Class I utilization at just 8%.

As a result, FMMO 30 posted some of the strongest mailbox prices nationally among multiple-component-priced Orders with averages of $19.74 for the Order, $19.71 in Wisconsin, and $19.75 in Minnesota. Southern Missouri was the only other area showing an increase, up 7¢ from August at $20.32. Nearby Illinois and Iowa were down modestly (3¢ and 12¢, respectively), while the rest of Order 32 fell by roughly 40¢.

Elsewhere, Sept. mailbox prices declined 20–40¢ across the Mideast, 30–60¢ in the Southeast’s fat/skim-priced Orders, and 50¢ to nearly $1.00 in the Northeast, Southwest, Pacific Northwest and California.

USDA NASS all-milk prices for September (reported Dec. 15) were lower nearly everywhere except in the cheese-dense Upper Midwest of Wisconsin, Minnesota and South Dakota, while Iowa was unchanged.

At $20.40 per cwt, the all-milk price used for Dairy Margin Coverage calculations was down 50¢ from August and $5.10 lower YoY, according to USDA NASS. The Sept. AMS mailbox milk price came in at 85¢ per cwt below the all-milk price, reflecting a modest deepening of deductions on milk checks.

Mailbox prices represent net pay after deductions on mostly pooled milk, while the all-milk price reflects gross pay before deductions and includes non-pooled and organic milk — a gap that continues to widen as pressure mounts on the deductions side of the ledger.