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| Best of NAMA 2025 |
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FARM BUREAU FORECASTS MILK REPLACEMENT HEIFERS AT LOWEST LEVEL SINCE 1978
Feb. 3, 2026
By Danny Munch, Economist, American Farm Bureau Federation
Washington, DC -- U.S. milk production is setting records, but those volumes are sending increasingly misleading signals about the health of the dairy sector. Milk cow inventories are at their highest level since 1993, even as replacement heifer numbers have fallen to their lowest point since 1978 -- a divergence driven by short-term herd management decisions rather than true expansion.
Strong beef prices and elevated beef-on-dairy premiums have encouraged farmers to keep cows in production longer and shift breeding toward beef genetics. While that strategy has provided an important income offset through calf sales, it has also inflated milk supply and dampened farm-level milk prices, worsening returns on the milk side of the business even as total farm revenue appears more resilient.
Lower milk prices have improved U.S. competitiveness abroad, supporting record cheese and butter exports in 2025. But this export-driven relief masks a growing imbalance at home: today's production gains rely on older cows and a shrinking replacement pipeline. This Market Intel examines how current supply strength is amplifying price pressure, distorting market signals and setting the stage for tighter and potentially more volatile milk markets ahead.
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