The agricultural landscape is bracing for a complex year ahead, as insights from University of Illinois Professor Emeritus Mike Hutjens, shared during a recent Hoard's Dairyman webinar, paint a nuanced picture for the 2026 feed and forage outlook. With the webinar occurring on November 10, 2025, and a summary published on November 18, 2025, the dairy and broader agricultural sectors are already processing the immediate implications: a scenario marked by sustained low milk prices, surprisingly low commodity feed costs, and a critical, deepening dairy heifer shortage. This outlook is poised to redefine profitability strategies for dairy farmers and ripple through the entire agricultural supply chain, from feed manufacturers to equipment providers.
Hutjens' analysis underscores a pivotal moment for dairy farming. While low feed and hay prices offer a much-needed reprieve on the input side, the persistent drag of dwindling milk checks, alongside the structural challenge of a dwindling dairy heifer population, demands strategic adaptation. The confluence of these factors creates an environment where efficiency, genetic optimization, and diversified revenue streams, such as the booming beef-on-dairy calf market, will be paramount for survival and success in the coming year.
A Deep Dive into the 2025 Growing Season and 2026 Projections
The Hoard's Dairyman webinar, "A feed and forage outlook for the year ahead," held on Monday, November 10, 2025, at noon Central time, featured Mike Hutjens alongside Amber Friedrichsen of Hay & Forage Grower. The session provided a comprehensive review of the 2025 growing season, which was significantly impacted by adverse weather conditions. Early 2025 saw abundant rainfall delaying the first hay cutting in many dairy regions, but this quickly transitioned to widespread heat and drought stress from midsummer through harvest. This led to issues like tight tassel wrap, reduced cob tip fill, and poor stalk integrity in corn, compounded by high rates of diseases such as southern leaf rust and tar spot, particularly in the Midwest.
Despite these challenges, average forage quality for corn silage, alfalfa haylage, and mixed haylage in 2025 remained largely consistent with the previous three years in terms of starch, fiber, and crude protein, though moisture levels showed notable variations. Crucially, May 1st hay stocks in 2025 surged by 15% year-over-year, marking the highest reported levels since 2017. This abundance, coupled with weak export demand, has driven hay prices down from their historic highs, contributing to the overall low commodity feed prices. The webinar also highlighted the historic highs in market prices for cull cows and beef-on-dairy calves, which are providing a vital financial cushion for dairy producers facing "dwindling milk checks."
Initial reactions from the dairy farming community, while not explicitly documented as formal responses, are evident in prevailing market conditions. Farmers are grappling with financial pressures, with income over feed costs often barely covering other essential expenses. A significant concern is the severe dairy heifer shortage, with inventories at their lowest since 1978 and projected to decline further. This scarcity, largely attributed to the surge in beef-on-dairy breeding (now accounting for about one-third of the Holstein and Jersey calf crop), has sent heifer prices soaring. In response, Hutjens emphasized systematic optimization as a key strategy, with operations demonstrating significant profit increases through component optimization, reproductive efficiency, and extended lactation periods.
Public Companies Eye Opportunities and Headwinds
The intricate dynamics of the 2026 feed and forage outlook present a mixed bag for publicly traded companies across the agricultural spectrum. From dairy processors to feed manufacturers and equipment suppliers, each sector will experience unique pressures and opportunities.
Dairy Production Companies will directly feel the squeeze of low milk prices but benefit from lower feed costs. Companies like The Kraft Heinz Company (NASDAQ: KHC), known for its cheese and butter, and specialty dairy producers such as Lifeway Foods, Inc. (NASDAQ: LWAY), could see improved margins on the processing side if raw milk costs remain low. However, their ultimate profitability will depend on consumer demand, which Hutjens noted is sensitive to inflation, especially for products like cheese. The high prices for cull cows and beef-on-dairy calves offer an alternative revenue stream that could bolster the bottom line for diversified agricultural holdings like Adecoagro S.A. (NYSE: AGRO) and Cresud (NASDAQ: CRESY), which have significant cattle and milk production interests. Yet, the long-term dairy heifer shortage poses a challenge for future herd expansion, potentially limiting growth.
Animal Feed Manufacturing Companies stand to gain from lower raw material costs. Global agribusiness giants like Archer-Daniels-Midland Company (NYSE: ADM) and Bunge Global SA (NYSE: BG), which process oilseeds and grains into animal feed, will benefit from the projected record-breaking corn and strong soybean production in 2025. Lower commodity prices translate to reduced input costs for these manufacturers, potentially boosting their profit margins if they can maintain stable finished feed prices. However, they may face pressure from dairy farmers to lower feed prices, which could squeeze margins if not managed effectively.
Agricultural Equipment Companies such as Deere & Company (NYSE: DE), AGCO Corporation (NYSE: AGCO), CNH Industrial N.V. (NYSE: CNHI), and Alamo Group Inc. (NYSE: ALG) will likely see a shift in demand. With dairy farmers prioritizing efficiency amidst low milk prices, there could be increased interest in precision agriculture equipment that optimizes feed use, improves forage quality, and enhances overall farm productivity. This includes advanced hay and forage harvesting equipment. Conversely, dwindling milk prices and overall economic uncertainty might lead farmers to delay large capital expenditures on new equipment for herd expansion, posing a challenge for sales growth in certain segments.
Agricultural Commodity Trading Companies like Archer-Daniels-Midland Company (NYSE: ADM), Bunge Global SA (NYSE: BG), and The Andersons Inc. (NASDAQ: ANDE) are positioned to handle high volumes of commodities due to strong 2025 production. Low and fluctuating commodity prices can create opportunities for skilled traders to profit from price discrepancies. However, persistently low prices can lead to thinner margins per unit, requiring adept risk management. Weak export demand, particularly for hay, could also limit trading opportunities in specific commodities.
Broader Trends and Lasting Implications
Mike Hutjens' 2026 outlook resonates with several broader, transformative trends sweeping across the dairy and agricultural sectors. The emphasis on maximizing value from existing animals, particularly through the high prices of cull cows and beef-on-dairy calves, reflects a growing trend towards diversification and value maximization within dairy operations. This strategic pivot aims to mitigate the impact of volatile milk prices and highlights the interconnectedness of the beef and dairy markets.
The challenges of heat and drought stress in 2025 underscore the increasing impact of climate volatility on forage production. This trend is driving greater investment in drought-resistant crop varieties, improved irrigation techniques, and alternative forage options to enhance agricultural resilience. Simultaneously, the focus on precision nutrition, improving reproductive efficiency, and extending lactation periods signals a broader industry shift towards precision nutrition and feed efficiency, driven by both economic viability and environmental sustainability goals. The severe dairy heifer shortage, at its lowest level since 1978, is a critical demographic shift that necessitates strategic herd management and genetic selection to ensure future production capacity.
These trends have significant ripple effects on partners and competitors. Seed and forage suppliers, particularly those offering specialized or drought-tolerant varieties, could see increased demand. Feed additive and animal health companies will benefit from the push for precision nutrition and improved animal health. Genetics companies will experience a reshaping of their market, with increased demand for beef semen for dairy herds and a premium placed on high-quality dairy heifer genetics. Meat processors will benefit from a consistent supply of beef-on-dairy calves and cull cows. Dairy processors, while enjoying lower raw milk costs, will need to innovate with value-added products, especially cheese, which is sensitive to inflation.
From a regulatory and policy standpoint, the focus on feed efficiency and extended lactations aligns with growing environmental concerns, potentially influencing future regulations aimed at reducing livestock emissions. Trade policies, particularly those impacting dairy exports to China and grains to Mexico, will continue to play a crucial role in market dynamics, highlighting the vulnerability of the sector to international relations. Sustained low milk prices could also place increased pressure on existing farm support programs, such as the Dairy Margin Coverage (DMC) program. Historically, the industry has faced recurring forage shortages and price squeezes, with past strategies like alternative forages and strategic culling offering valuable lessons for the current environment.
What Comes Next: Strategic Pivots and Emerging Realities
The path forward for the dairy and agricultural sectors will be defined by strategic adaptation and a keen eye on evolving market dynamics. In the short term (2026-2027), dairy farmers will continue to navigate low milk prices, with forecasts indicating an all-milk price around $20.40 per hundredweight in 2026. The critical heifer shortage is expected to persist, with replacement heifer inventories projected to shrink further before a potential rebound in 2027. Farmers are already "hoarding" older cows and adopting gender-sorted semen to maintain herd sizes.
Long-term (beyond 2027), a recovery in heifer numbers is anticipated, which is crucial given the over $10 billion investment in new dairy processing facilities by 2027, demanding higher milk volumes. The broader agricultural sector will continue its transformation, driven by climate conditions, technological advancements, and evolving consumer demands. Precision agriculture, automation, and biotechnology are expected to become even more integral for efficiency and resilience.
Strategic pivots for farmers will include dual-purpose breeding strategies to capitalize on profitable beef-on-dairy calves, while also using gender-sorted semen to produce dairy heifers. Optimizing feed and forage, focusing on quality and cost-effectiveness, will be crucial. Technology adoption, from automated milking systems to AI-based monitoring, will be key to managing labor shortages and enhancing productivity. Furthermore, a shift towards sustainability and regenerative practices is expected, aligning with consumer demand and environmental goals.
Emerging market opportunities include growing demand for value-added and functional dairy products, as well as the plant-based and hybrid dairy markets. Exports of fat-basis and skim-solid basis dairy products also show promise. However, significant challenges persist, including competition for resources from increasing biofuel production, the ongoing threat of climate change, persistent labor shortages, and increasing regulatory pressures related to food safety and environmental impact.
Potential scenarios for commodity prices suggest broad stability or slight declines in 2026, assuming supply keeps pace with demand, though risks from extreme weather and input costs remain. Milk production is projected to increase slightly in 2025 and 2026, driven by per-cow yields and extended cow lifespans, but the heifer shortage means a delayed rebound in heifer numbers post-2027, potentially leading to tighter milk supplies later. Farm profitability will hinge on strategic adaptation; while low feed costs offer relief, persistent low milk prices necessitate a focus on efficiency and alternative revenue streams like beef-on-dairy sales.
Wrap-Up: A Call for Strategic Resilience
Mike Hutjens' 2026 Feed and Forage Outlook serves as a critical roadmap for the dairy and agricultural sectors. The key takeaways are clear: low milk prices will continue to challenge profitability, necessitating a relentless focus on efficiency and cost management. The silver lining comes in the form of low commodity feed prices, which provide a vital buffer. However, the structural issue of the severe dairy heifer shortage looms large, posing a multi-year challenge that will redefine herd management and impact the long-term milk supply. The evolving role of biofuel production, as both a source of feed co-products and a competitor for commodity crops, will add another layer of complexity to feed market dynamics.
Moving forward, the market is at an inflection point where significant investments in dairy processing capacity will collide with a tightening supply of future milk-producing cows. This dynamic could lead to firmer milk prices in late 2026 or early 2027 if demand outpaces constrained supply. Farmers are advised to prioritize operational efficiencies, genetic improvements, and strategic investments in technology and sustainable practices to optimize output from existing herds without incurring excessive debt.
The lasting impact of these trends will be a more resilient, efficient, and diversified dairy industry, one that is better equipped to handle climate volatility and market fluctuations. The growing interplay between the beef and dairy sectors, driven by the profitability of beef-on-dairy calves, will continue to reshape breeding strategies and revenue streams.
What Investors Should Watch For: Investors eyeing the dairy and broader agricultural sectors should closely monitor USDA and CoBank reports on dairy heifer inventories and prices, as these will signal long-term milk supply stability. Track milk and feed price dynamics, as a sudden increase in commodity prices (e.g., due to weather events or increased biofuel demand) could quickly erode profitability in a low milk price environment. Observe dairy processing capacity utilization; an imbalance between processing capacity and milk supply could create significant market shifts. Furthermore, keep an eye on companies offering solutions that enhance farm efficiency, such as precision nutrition technologies, reproductive management tools, animal health products, and farm automation, as these are likely to see increased demand. Finally, stay informed on biofuel policy decisions, as changes can directly impact corn and soybean prices, affecting feed costs for the dairy industry.
This content is intended for informational purposes only and is not financial advice