Whole Milk Price Analysis - December 2025
Summary
Key Findings: Whole milk prices in December 2025 showed mixed signals with a 1.3% monthly increase to $4.047 per gallon, but remained 1.3% lower than December 2024. The dairy industry faces significant headwinds from oversupply conditions, with global production exceeding demand across all major regions.
- Current Price: $4.047 per gallon (December 2025)
- Monthly Change: +1.3% (+$0.050)
- Annual Change: -1.3% (-$0.054)
- Key Driver: Global oversupply pressuring prices despite seasonal demand
Recent Price Trends
Short-Term Movement (Q4 2025)
The December 2025 price of $4.047 represents a modest recovery from November's $3.997, marking a 1.3% monthly increase. However, this follows a volatile quarter:
- September 2025: $4.129 (peak for recent months)
- November 2025: $3.997 (quarterly low)
- December 2025: $4.047 (modest recovery)
Annual Perspective
Despite the December uptick, whole milk prices declined 1.3% year-over-year, continuing a deflationary trend that began in mid-2024. The retail price for conventional whole milk in 30 selected cities or metro areas in federal milk marketing order markets in 2025 was a record $4.42 per gallon, up 3 cents from 2024's record high.
Key Market Factors
Global Oversupply Crisis
Milk supply continues to exceed demand globally at the end of 2025, putting pressure on prices. Milk production – which has been forecast to remain strong in the second half of 2025 and into 2026 – still exceeds demand, and measures such as reduced farmgate milk prices are not yet drastic enough to reverse the trend.
Production Growth Drivers:
- Milk output is growing in all key exporting regions, which is not common. Now, the US, EU, New Zealand, and South America are all seeing growth – simultaneously.
- The 2026 production forecast is 234.1 billion pounds of milk, up from 231.4 billion pounds expected for 2025's final tally. Milk per cow is predicted at 24,505 pounds on average for 2026, up from an estimated 24,375 pounds in 2025.
International Price Pressures
The Global Dairy Trade price index fell 4.3% at the latest event as bearish sentiment continues to guide market direction. Additionally, The Global Dairy Trade auction, which tracks international dairy prices, dropped another 4.4% in its latest update.
Buyer Behavior
What troubles him most is not just the level of prices but the lack of urgency from buyers. The buyers of cheese, buyers of butter and dairy products are not concerned about supplies. So, they don't have to be aggressive. They can just wait. That's the bottom line.
External Events and Correlations
Trade Dynamics
This has driven global buyers to procure product from the US instead of other regions to recognize the value in US product. US butter exports could see a record year in 2025 once all the data is in, and in some months have been more than double prior year levels.
Disease Impact
HPAI has re-emerged in the turkey industry after a lull in cases over the summer. The first case reported this fall came in August and rose to 18 cases impacting nearly 740 thousand birds by September 2025. HPAI cases peaked in October with 19 flocks impacting 872.4 thousand birds, while an additional 14 flocks and 529 thousand birds were impacted in November.
Beef-on-Dairy Trend
Instead of buying a $4,000 replacement heifer, they could keep a cow that produces less milk, breed her to a beef sire and sell the calf for around $1,000. Plus, that cow will produce another calf down the road. As long as a 3-day-old beef-on-dairy calf can fetch $800 to $1,000, producers have a strong incentive to hang on to older, lower-producing cows.
Regional Price Variations
| City/Region | Average 2025 Price | Notable Features |
|---|---|---|
| Dallas, TX | $3.37/gallon | Lowest conventional price |
| Cincinnati, OH | $3.39/gallon | Second lowest |
| Kansas City | >$6.00/gallon | Only city above $6.00 |
| Chicago, IL | $5.29/gallon | High-cost urban market |
| Philadelphia, PA | $5.29/gallon | High-cost urban market |
2026 Outlook
Price Projections
The all-milk price is predicted to drop from $21 per hundredweight in 2025 to $18.75 for 2026, a decline of roughly 11%.
Supply Expectations
Ample milk supplies and weaker-than-expected demand are expected to lower cheese and butter wholesale prices.
Market Challenges
Milk prices remain flat heading into 2026, with no clear sign of a sustained recovery as strong supplies keep buyers on the sidelines. Milk prices have leveled off, margins remain tight and the outlook offers little sign of quick improvement.
Conclusion
December 2025's $4.047 whole milk price reflects a market caught between seasonal demand recovery and persistent oversupply pressures. While the 1.3% monthly increase suggests some stabilization, the 1.3% annual decline and weak 2026 outlook indicate structural challenges. However, even with these positives, demand isn't strong enough to make a meaningful dent in the large milk surplus. Domestic consumption is steady rather than growing, and while exports help, they can't fully absorb the extra supply that continues to build.
The industry faces a unique period where all major producing regions are simultaneously increasing output, creating unprecedented supply abundance that traditional demand patterns cannot absorb effectively.