At 9.665 million head, America’s dairy herd is the largest it’s been since 1992. And it’s not growing because milk prices are through the roof.
“The herd is growing not necessarily from returns due to the milk check but growing margins from beef-on-dairy calves and even purebred dairy calves,” said Corey Geiger, lead dairy economist at CoBank. “Given beef demand and flat growth in beef cattle numbers, this new dairy herd size could represent a structural shift, not merely a blip on the radar.”
That creates a challenge: All those cows produce a lot of milk. “The industry must find more homes for this burgeoning milk supply,” Geiger explained.
Where will it go? The answer is overseas.
Export sales are outpacing domestic growth.
Since 2019, total dairy sales have grown 6.3%. But exports moved even higher, up 20.5%, while domestic sales rose only 3.9%. That spread was even greater this year.
From January through April, exports jumped 11.3%, nearly six times the domestic growth rate of 1.9%, according to data from USDA and the National Milk Producers Federation. That growth matters for every dairy farmer watching their milk check.
Geiger said two products are leading the export effort: cheese and butter.
The butterfat boom
Butterfat is the fastest-growing milk component on U.S. farms. And it’s growing so fast that some processors have placed caps on butterfat levels for payment purposes, according to Geiger.
“As an outlet for abundant butterfat supplies, cheese and butter have been extremely valuable export products,” he added.
U.S. cheese exports crossed a milestone in May 2025 when monthly exports topped 110 million pounds for the first time ever. Geiger said that wasn’t a one-time spike — it became the new baseline.
Every month since, exports met or exceeded that mark. By April, cheese exports set a third consecutive monthly record at 141.2 million pounds. Even when sales dipped slightly in May to 135.4 million pounds, Geiger pointed out that it still ranked as the third-highest month in U.S. history.
Year to date, cheese exports totaled 659.4 million pounds, up 23.7% compared to the same period last year.
“While cheese is impressive,” Geiger said, “butter takes it to another level on the growth front.”
Butter doubles down
The butter export story is even more promising.
In May, butterfat exports were 102% larger year-over-year, reaching 33 million pounds. The five-month total hit 168 million pounds — more than double the 2023 total for the same period.
While cheese still absorbs 49% of all U.S. butterfat production, Geiger said, butter holds a firm second.
Export markets remain a bright spot for the dairy industry, but the domestic market is still an economic driver.
Home turf advantage
At 199.9 billion pounds vs. 38.1 billion pounds for exports, the U.S. market still accounts for the bulk of dairy sales. It is also growing, but at a different pace, Geiger noted.
“It stands to reason that the domestic category has grown at a slower percentage pace since it has a larger footprint,” he explained. “From a math standpoint, it’s easier to grow percentages on smaller numbers than on a larger base.”
That growth is driven by consumer choice. Americans are incorporating dairy into their diets in new ways as they look for a quality protein source.
The domestic market provides stability. Exports provide growth. Together, they’re creating opportunities for U.S. dairy farmers.
What it means for milk prices
Both markets play a critical role when it comes to milk checks.
“Continued strength in both categories will be critical if $18 Class III and $18.30 Class IV milk futures on the CME for October through December contracts become reality,” Geiger said.
Those futures prices depend on sustained demand from both domestic and international buyers.
For dairy farmers, new export opportunities represent more than just additional volume — it’s about value. International buyers are paying for U.S. dairy products, and that demand is helping support milk prices.
The challenge ahead is maintaining this momentum. As long as both domestic and international markets remain strong, Geiger said the industry can support its larger herd size and deliver returns to farmers.