From calf barn revenues to retail grocery aisles, Wisconsin dairy producers are navigating a rapidly shifting market landscape that can impact their milk check. Unseasonable cheese inventory build ups and shifting consumer dining habits are impacting farmgate margins. Pam Jahnke listens to the thoughts of Matt Tranel, Ever.Ag dairy analyst. Tranel says operators need to know about current market forces, beef-on-dairy trends, and where supply and demand are headed next.
Cheese Inventories Buck Seasonal Trends
While cow numbers continue to steadily grow and maintain a solid nationwide milk supply, cold storage reports reveal an unexpected shift in dairy inventories.
Typically, the period between May and June experiences a drawdown in cheese inventories of around 5 million pounds as seasonal consumption picks up. However, recent USDA data showed a 16 million pound build in cheese inventories. That’s the largest June inventory addition since 2015.
Tranel sees a couple influences on consumer trends that contribute to that build up pressure:
Gasoline and Travel Strain: Elevated national gas prices—which peaked around $4.50 per gallon during geopolitical tensions involving Iran—put a visible strain on family budgets.
Reduced Dining Out: High fuel costs led to less travel and fewer visits to fast-food restaurants, a primary driver of cheese demand.
Retail Belt-Tightening: Consumers trimmed grocery budgets, slowing cheese movement across both foodservice and retail sectors.
Shifting Consumer Grocery Preferences
Despite consumer cutbacks in traditional cheese demand, other dairy product categories are showing strong momentum:
1. Ice Cream Demand Heatwave
Summer heatwaves, combined with ice cream’s status as an affordable household luxury, have kept retail sales strong.
2. Economic Comfort Foods: Frozen Pizza
When household cash flows tighten, frozen pizza sales typically surge. It remains one of the most economical meal choices for young families looking to manage weekly grocery budgets.
3. Processing Expansion for Cottage Cheese
Cottage cheese continues to enjoy a strong demand resurgence. Processing capacity is currently being expanded across the industry to keep pace with sustained consumer interest.
4. High-Protein Beverages
Protein-heavy dairy drinks continue their upward trajectory. Driven by changing dietary habits and the growing popularity of GLP-1 weight-loss medications, demand for convenient protein sources remains resilient.
Mexican Cattle Border Reopening: Impact on Dairy and Beef Markets
The USDA’s announcement of a phased reopening of the U.S. southern border to Mexican feeder cattle—starting August 24 at the Douglas, Arizona port of entry—means there’s a shift coming for livestock markets, Tranel says.
Border Reopening Timeline & Historical Scope
Arizona Port First: The Douglas, Arizona crossing historically accounts for roughly 15% of Mexican feeder cattle imports.
Follow-up Ports: Operational steps are underway to open additional ports in New Mexico (accounting for ~50% of historical imports) and Texas.
Supply Volume Shift: Combined imports through Arizona, New Mexico, and Texas averaged nearly 1.2 million head in 2023 and 2024. In 2025, that figure fell to just 228,000 head.
What This Means for Dairy Producers
Tranel says for dairy farmers, tight beef supply over the past two years created a great market for crossbred beef-on-dairy calves. Strong feeder prices meant an estimated $4.00 per hundredweight boost to class 3 milk checks through calf sales alone, with day-old calves fetching anywhere from $1,200 up to $2,000 per head.
While news of the border reopening caused newborn calf prices to pull back slightly (settling between $1,200 and $1,500 per head), industry analysts do not expect an overwhelming influx of cattle to flood the market:
“Mexico adapted while the border was closed by expanding its domestic processing infrastructure,” Tranel explained. “Because of that increased local processing capacity, fewer cattle will likely cross into the U.S. compared to historic levels, keeping beef-on-dairy calves a vital, long-term revenue stream for dairy producers.”
Key Takeaways for Agricultural Producers
Monitor Cold Storage: Track inventory trends to gauge whether consumer demand is regaining momentum in retail and foodservice.
Capitalize on High-Protein Trends: Growing consumer appetite for protein drinks and cottage cheese offers long-term growth opportunities for milk processors.
Maintain Beef-on-Dairy Value: High calf values remain an important contributor to farm profitability, even as southern feeder cattle flows gradually resume.
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