With strong dairy margins in 2014, U.S. milk production continues to increase, with 16.5 billion pounds produced in November, according to the USDA’s most recent data. This represents a 3.4 percent increase over the prior year.

With only two exceptions, milk production was at or above last year’s level in most of the 23 states surveyed. New York’s production was 3.8 percent higher.

This significant increase in milk production was caused by a 0.9 percent increase in herd numbers and a 2.4 percent increase in milk per cow.

The USDA estimates the national herd at 9.3 million milking cows, 4,000 head greater than in October and 82,000 head greater than last year. This puts the national dairy herd at its greatest number since the spring of 2009. With higher cow numbers and production per cow, the 12-month rolling average of milk production (17.12 billion pounds) is at a new high.

This growth in production comes at a time of falling prices for the industry.


Export markets continue to soften amidst increasing supply from global competitors and falling international prices. The strengthening U.S. dollar is combining with strong U.S. dairy prices to make American product less competitive abroad.

Exports were down 6.4 percent in the third quarter of 2014 compared to the year before. Sales to important markets such as Mexico, Southeast Asia and most notably, China, have fallen significantly from 2013. With exports still running at over 14 percent of U.S. production, this has a significant bearish influence on farm prices.

Total milk production in the U.S. is projected to set a new record next year, at 211.7 billion pounds, 5.7 billion higher than 2014’s estimated 206.0 billion, and well above 2013’s 201.2 billion pounds.

With overseas markets weakening, that additional milk will result in falling prices during the first half of 2015. PD

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—Excerpt from Farm Credit East's Knowledge Exchange Partner newsletter