Class III milk prices through September reached $23.34 per hundredweight. That is the highest since June 2022. This comes at a time when producers are also experiencing lower feed costs.

A weaker milk supply due to lower U.S. milk output for 14 consecutive months has strengthened the price of select dairy products. Milk output has also struggled on the global level.

A shortage of replacement heifers will make it difficult for farmers to increase milk output quickly. Producers are likely to keep older, lower-producing cows in the herd longer. This means milk per cow production isn’t expected to show much improvement.

High butter prices have kept production up year over year and overall cheese production has been up as well. Combine nonfat dry milk and skim milk has trended down more than 10% year-over-year. While the outlook for Class III in 2025 projects prices slipping back below $20 per hundredweight in the first quarter, low feed costs should help profitability.

Read more on Class III milk pricing here.