No, not on the current federal forecast. The U.S. Department of Agriculture’s Economic Research Service (ERS) outlook released September 18, 2026 projects a 2026 average farm-level milk price of $19.90 per hundredweight, and it expects U.S. milk production to rise, not tighten. Farm-level prices were also down sharply from a year earlier through August. The one part of the picture that looks steadier is retail dairy prices at the grocery store, which are roughly flat. The two measures are easy to confuse, so the rest of this article separates them.
Which “milk price” the question is about
The price that moves in headlines about dairy farmers is the USDA all-milk price. It is a national, farm-level average, quoted in dollars per hundredweight (cwt). One hundredweight is 100 pounds of milk. A $19.90 price works out to roughly 20 cents per pound, or about $1.70 per gallon at the farm (an approximate conversion using the common figure of about 8.6 pounds per gallon). That figure is what the farm receives before processing, transport, packaging, and store margins are added.
The price on your grocery receipt is a separate measure. ERS tracks retail prices for dairy products, and those changes can run on a different timeline and in a different direction from the farm price. A forecast of the farm-level all-milk price is not a forecast of what a gallon will cost in a particular store or month.
What the USDA forecasts say for 2026 and 2027
The table below lists the figures from the ERS September 18, 2026 outlook. Forecasts are revised monthly, so check the ERS release for newer numbers before relying on any single figure.
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| Measure | 2026 forecast | 2027 forecast |
|---|---|---|
| All-milk price, farm level (per cwt) | $19.90 (up $0.05 from the previous monthly projection) | $19.80 |
| U.S. milk production (billion pounds) | 237.2 (raised, citing more cows and higher yields) | 238.6 (raised for the same reasons) |
| Change in farm-level milk prices, annual average | Down 9.4%, forecast interval -14.2% to -3.8% | Not stated in this outlook |
| Change in retail dairy product prices, annual average | Up 0.1%, forecast interval -0.6% to 0.8% | Not stated in this outlook |
Read together, the annual figures describe a farm price that stays low for 2026 as a whole and a retail dairy-products measure that stays close to flat. Neither figure describes a turnaround.
Why the “tightening supply” premise does not match the outlook
Many rebound arguments start from the idea that fewer cows or less milk will push prices up. The current USDA outlook points the other way on production. ERS raised its 2026 and 2027 production forecasts because it expects more cows and better milk yield per cow. It also expects domestic milk use, called disappearance in USDA terms, to be higher in both years.
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So the outlook shows more milk being produced and more being used. That is not the same as a shortage. A rebound in farm prices would need demand to grow faster than supply, and this outlook does not show that.
Why more output can weigh on some dairy prices
ERS says higher milk output should put downward pressure on some key dairy product prices, with cheese specifically named. Cheese is a large user of milk, so cheese prices are often where extra supply shows up first. Demand for dairy products, both domestic and export, is described as strong. That strength offsets some of the pressure, but ERS does not say it is enough to lift the all-milk price in 2026.
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What strong demand does and does not do
Strong demand keeps the market from collapsing and helps explain why retail dairy prices are holding steady. It does not, by itself, establish a 2026 farm-price rebound. A reader who sees headlines about robust exports should still check whether the farm-level all-milk forecast has changed.
Farm-level and retail prices in August 2026
The most recent observed monthly changes in the ERS data point in different directions for the two measures:
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| Measure (August 2026, ERS) | July to August 2026 | August 2026 vs. August 2025 |
|---|---|---|
| Farm-level milk prices | Down 7.5% | Down 10.2% |
| Retail dairy product prices | Up 0.3% | Down 0.3% |
The farm figure has fallen much further than the retail figure. Several factors explain the gap. Farm prices respond quickly to commodity markets for milk and milk components, while retail prices include processing, packaging, distribution, and store margins that adjust more slowly. Retail prices also cover a range of dairy products, not milk alone.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to read the forecast range
ERS’s food price outlooks give an expected value for the calendar year along with a forecast interval. The expected value is the midpoint of that interval. The interval is there to show uncertainty, so the 9.4% farm-price decline for 2026 should be read as “most likely around this level, within a range of -14.2% to -3.8%,” not as a fixed path.
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The interval also tells you what the forecast cannot say. Because the range is a calendar-year average, it does not identify the month a rebound might start. A year-average outlook can still hide a sharp drop followed by recovery, or the reverse.
What this outlook does not cover
- Local or regional farm-gate prices. The national average can differ from the prices a producer in a particular region receives.
- Brand-level or store-level grocery prices. Retail figures here are national dairy-product trends.
- A specific month when prices will rise. The annual forecast does not give timing.
How to check the numbers yourself
- Confirm the release date of the ERS outlook you are reading, and whether a newer monthly edition has been published.
- Check which measure a headline uses: the farm-level all-milk price per cwt, or a retail dairy-product price index.
- Compare the annual forecast with the latest monthly observation, and note whether each is a forecast or an observed figure.
- Look at the forecast interval, not just the midpoint, before describing a trend as certain.
- Be cautious with any claim that supply is tightening until the production forecast itself changes direction.
Under the current USDA outlook, the answer to the headline question is no. Farm milk prices are forecast to average lower in 2026 than in 2025, with more milk produced, while retail dairy prices are expected to hold roughly steady.
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