Archive for USDA Dairy Production Report

USDA Slashes 2025 Milk Price to $21.60, Raising Red Flags for Producers

USDA claims more cows but less milk in latest forecast bombshell, slashing milk price to $21.60. Is Washington playing games with your dairy business?

EXECUTIVE SUMMARY: The USDA’s March WASDE report has reduced the 2025 all-milk price forecast by a full dollar to $21.60 per cwt, creating significant financial implications for dairy operations nationwide while raising serious questions about forecasting methodology. The report contains a puzzling contradiction—predicting higher cow numbers but lower productivity per cow—leading industry experts from the National Milk Producers Federation and CoBank to question the underlying assumptions. With cheese, butter, nonfat dry milk, and whey prices all facing downward revisions, producers now confront a challenging economic environment requiring immediate strategic responses. The upcoming April 10th WASDE report will prove critical in determining whether these reduced projections represent a new baseline or if further adjustments are forthcoming. Successful producers will need to implement targeted component optimization strategies based on their specific milk utilization patterns while closely monitoring market signals beyond government forecasts.

KEY TAKEAWAYS

  • USDA has cut the 2025 all-milk price forecast to $21.60 per cwt, down $1.00 from February, with reductions across cheese, butter, nonfat dry milk, and whey prices.
  • The contradiction between expanded cow numbers and lower productivity per cow raises significant questions about USDA’s forecasting methodology and reliability.
  • Different operation types require specific strategies: smaller farms should focus on feed efficiency and component optimization, while larger operations should leverage economies of scale and advanced analytics.
  • Component optimization is increasingly crucial, with butterfat focus recommended for Class IV utilization and protein enhancement for Class III utilization.
  • Mark April 10th at 12:00 PM ET on your calendar for the next WASDE report, which will indicate whether March’s downward adjustments represent a new baseline or a temporary shift.
WASDE report, dairy forecast, milk prices, component optimization, dairy market outlook

The USDA delivered concerning news for dairy producers in its March 2025 World Agricultural Supply and Demand Estimates (WASDE) report released on March 11. The all-milk price forecast for 2025 has been slashed by a whole dollar to $21.60 per hundredweight (cwt), signaling potentially tighter margins for dairy operations nationwide.

This substantial reduction comes alongside lowered projections for cheese, butter, nonfat dry milk, and whey prices, creating ripple effects throughout the dairy supply chain. While cow numbers are slightly higher than previously estimated, the USDA claims productivity per cow has declined enough to more than offset this increase—a contradiction raising questions about the agency’s forecasting approach.

“The all-milk price forecast for 2025 has been slashed by a full dollar to $21.60 per cwt, creating tangible economic consequences for dairy operations nationwide.”

Production Puzzle: More Cows but Less Milk?

According to the March WASDE report, the 2025 milk production forecast now stands at 226.2 billion pounds, representing a substantial 700 million-pound reduction from February’s estimate. The USDA explicitly attributes this significant adjustment to “lower expected milk output per cow more than offsetting slightly higher cow inventories.”

This creates a puzzling situation where producers are maintaining or slightly expanding herd sizes—investing capital based partly on earlier projections—only to be told expected returns will be lower than previously forecast. Why would milk per cow suddenly decline when producers invest in genetic improvements and management strategies designed to increase efficiency?

“The milk production forecast for 2025 is reduced on lower expected milk output per cow more than offsetting slightly higher cow inventories.”

YearAnnual Production (Billion Pounds)Notes
2023226.3Actual production
2024225.9Current estimate (unchanged)
2025226.2March 2025 forecast (Down 700 million from February)

For context, the 2024 production estimate remains unchanged at 225.9 billion pounds, which would be 400 million pounds less than the 2023 total of 226.3 billion pounds. Despite the reduction in the 2025 forecast, production is projected to increase slightly from 2024.

However, the substantial downward revision raises essential questions about the reliability of these projections for farm planning purposes.

The production forecast reduction will likely create tighter supply conditions than anticipated, particularly for processors dependent on specific volumes to fulfill commitments. This adjustment represents approximately 0.3% of expected annual production—enough to potentially alter market dynamics and pricing structures throughout the supply chain.

Your 2025 Milk Check: Lower Prices Across All Classes

The price forecasts in the March WASDE report directly impact dairy farm profitability. The all-milk price is now projected at just $21.60 per hundredweight (cwt), a dollar below February’s estimate.

For perspective, the 2024 all-milk price estimate stands at $22.61 per cwt according to the USDA’s latest figures—meaning 2025 is now projected to deliver lower returns than the current year. Is this the beginning of a longer downward trend or a temporary adjustment?

CategoryFebruary 2025March 2025Change
All-Milk (per cwt)$22.60$21.60-$1.00
Class III (per cwt)N/A$17.95N/A
Class IV (per cwt)N/A$18.80N/A

“USDA has lowered cheese, butter, nonfat dry milk, and whey price forecasts based on recent market trends, with direct implications for Class III and Class IV milk values.”

The Class III price has been reduced to $17.95 per hundredweight, down from the 2024 estimate of $18.89. The Class IV price is now expected to average just $18.80, compared to the 2024 estimate of $20.75. These aren’t minor adjustments—they represent substantial reductions directly impacting producer revenues.

Dr. Peter Vitaliano, Chief Economist at the National Milk Producers Federation, has expressed concern about the continuous forecast adjustments: “These significant downward revisions create planning challenges for dairy producers who rely on consistent projections for business decisions. The contradiction between expanding cow numbers and reduced productivity expectations raises questions about underlying methodological assumptions.”

The USDA attributes these price reductions to “recent prices” for cheese, butter, nonfat dry milk, and whey—all of which have been lowered in the forecast. However, the report provides minimal explanation for why these commodity prices have weakened significantly in recent weeks, leaving producers to speculate about underlying market dynamics.

Michael Johnson, Vice President of Supply Chain at Great Lakes Dairy Processing, notes: “These forecast changes create significant planning challenges for processors as well. We base capacity planning and inventory decisions on USDA projections, so frequent revisions force us to readjust our operations constantly. The mixed signals about production volume and component values make it exceptionally difficult to optimize our product mix.”

WASDE 101: Why These Reports Matter To Your Bottom Line

For dairy producers who may be new to government reporting, the World Agricultural Supply and Demand Estimates (WASDE) are released monthly by the World Agricultural Outlook Board (WAOB). These reports provide annual forecasts for agricultural commodities, including U.S. supply and use of milk and dairy products.

The reports are developed by Interagency Commodity Estimates Committees (ICECs), which include analysts from multiple USDA agencies who compile and interpret information from domestic and foreign sources. This makes WASDE reports particularly influential in markets and pricing decisions throughout the supply chain.

When a WASDE report adjusts price projections, as the March report has done for dairy, these changes often influence processor behavior, futures markets, and, ultimately, the prices farmers receive. The hundredweight (cwt) measure—equal to 100 pounds of milk—is the standard pricing unit, making the $1 reduction in the all-milk price equivalent to a penny per pound reduction in expected milk value.

What’s Really Behind the Numbers?

The March WASDE report raises fundamental questions about how USDA forecasts are developed and what factors drive their frequent revisions. While official explanations focus on productivity adjustments, several market analysts suggest other factors may be at play.

Tanner Ehmke, lead economist at CoBank’s Knowledge Exchange division, notes a pattern in government forecasting: “We often see a tendency toward optimism in early forecasts that gets tempered by market realities as the year progresses. The key question is whether these adjustments reflect genuine changes in market dynamics or simply correcting initially overstated projections.”

Particularly striking is the timing of these downward revisions, coming amid heightened concerns about agricultural sector profitability in general. Are these forecast changes connected to broader economic policy considerations beyond dairy-specific factors? The USDA provides little transparency into the specific data points driving each month’s adjustments.

Sarah Williams, dairy futures analyst at Central States Commodities, observes: “The futures markets have reacted strongly to this forecast revision. We’re seeing significant repositioning in Class III and Class IV contracts, with traders pricing for further downward revisions in the coming months. The lack of clarity around what’s driving these changes creates additional market volatility.”

Furthermore, the methodology behind per-cow productivity projections deserves scrutiny. The contradiction between expanding herd sizes and reduced output expectations suggests either a significant shift in herd demographics or potential flaws in assessing productivity trends. Either way, producers deserve a more precise explanation of these consistent downward adjustments.

Mark Your Calendar: Critical Upcoming WASDE Dates

The following WASDE report is scheduled for release on April 10, 2025, at noon ET. For dairy producers navigating these uncertain projections, this upcoming report will provide critical insights into whether March’s downward adjustments represent a new baseline or if further revisions are forthcoming.

MonthRelease DateTime
AprilApril 1012:00 PM ET
MayMay 1212:00 PM ET
JuneJune 1212:00 PM ET
JulyJuly 1112:00 PM ET

Source: USDA Office of Chief Economist, 2025

The consistent schedule of these reports—released between the 10th and 12th of each month—provides a predictable timeline for market information. Innovative producers integrate these release dates into their business planning calendars, recognizing how these projections influence short-term cash flow and longer-term investment decisions.

Survival Strategy: Navigating Lower Price Projections

The March WASDE report necessitates strategic reassessment for dairy producers. With the all-milk price now projected at $21.60 per cwt—substantially below earlier expectations—profit margins face increased pressure across many operations.

This environment elevates the importance of component-focused production strategies, as price trends across dairy commodities may create opportunities for farms that can optimize butterfat and protein levels.

“With the all-milk price now projected at $21.60 per cwt, dairy producers face a critical need to reassess operational efficiency and component optimization strategies.”

The reduced price projections demand a renewed focus on operational efficiency and cost management strategies. Farms operating on slim margins based on more optimistic price forecasts must now evaluate their cost structures and identify potential efficiencies.

Strategies for Different Operation Types

Small to mid-sized operations (under 500 cows) should prioritize these actions:

  • Evaluate feed efficiency programs with greater urgency, as feed costs typically represent 50-70% of production expenses
  • Consider component optimization through strategic breeding and nutrition adjustments
  • Explore direct marketing or specialty product arrangements that may offer premium pricing

Large operations (500+ cows) should focus on:

  • Leveraging economies of scale through negotiated input pricing for volume purchases
  • Evaluating component premiums across multiple processor options
  • Implementing advanced data analytics to identify efficiency opportunities across the operation

Component Optimization in Today’s Market

With the current price structure, component optimization becomes increasingly critical. The significant gap between Class III ($17.95) and Class IV ($18.80) prices highlights the importance of understanding your milk utilization:

  • Focus on butterfat optimization if your milk primarily goes to Class IV utilization
  • For operations with predominantly Class III utilization, protein enhancement should be prioritized
  • Review current milk checks to understand component premium structures specific to your processor

According to dairy nutrition specialists at major land-grant universities, targeted nutrition strategies focusing on specific fatty acid profiles can enhance butterfat production by 0.1-0.3 percentage points—potentially offsetting a significant portion of the price reduction for producers effectively implementing such programs.

Tom Wilson, owner of Wilsonview Dairy in Wisconsin, has successfully navigated previous price volatility through component management: “When we saw forecast changes last year, we immediately reviewed our nutrition program with our consultant and made targeted adjustments to enhance butterfat. By focusing on rumen health and using specific feed additives, we increased components enough to offset nearly half the price reduction. You can’t control USDA forecasts but can control how you respond to them.”

Beyond The Numbers: What Every Dairy Producer Should Know

The March 2025 WASDE report represents more than just another data point—it signals potentially challenging market conditions requiring proactive management. The $1 reduction in milk price projections creates tangible economic consequences for dairy operations nationwide. This development comes as producers face rising input costs and continuing labor challenges.

What makes this forecast particularly significant is the contradiction between expanding herd sizes and reduced productivity expectations. This unusual pattern suggests fundamental changes in national herd performance or potential issues with the forecasting methodology.

As dairy producers navigate these challenging waters, staying informed about market developments becomes increasingly crucial. The April 10th WASDE report will provide the next official update, potentially confirming or adjusting the projections.

Until then, prudent producers will approach the current forecast with appropriate caution, developing contingency plans for the possibility of continued price pressure throughout 2025.

Your farm’s resilience depends on understanding these market signals and responding strategically. While government forecasts provide valuable perspectives, successful producers complement these projections with diverse information sources and flexible management approaches. Question the assumptions behind these projections, adapt your strategies accordingly, and remember that your operation’s specific efficiencies matter more than general market forecasts. What will you change in your operation based on this latest forecast?

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USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers

USDA’s 2025 dairy forecast reveals tight milk supplies, evolving prices, and strategic opportunities. Are you ready to adapt and thrive?

Executive Summary

The USDA’s 2025 dairy forecast highlights a year of both challenges and opportunities for producers. Milk production is projected at 226.9 billion pounds, reflecting consistent downward revisions due to fewer cows and slower growth in milk per cow. Despite these constraints, the all-milk price has been revised upward to $22.75 per cwt, driven by strong demand for cheese and export opportunities for butter. However, weaker nonfat dry milk and whey markets create a mixed outlook. Farmers who prioritize component optimization, align with strategic processors, and implement cost management strategies will be best positioned to succeed. With supply tightening and market dynamics shifting, adaptability will be key to navigating the evolving landscape.

Key Takeaways

  • Milk Production Forecast: USDA projects 226.9 billion pounds of milk production for 2025, down 1.1 billion pounds from earlier estimates due to herd size and yield constraints.
  • All-Milk Price Outlook: Revised upward to $22.75 per cwt, reflecting strong demand for cheese and export competitiveness for butter.
  • Component Optimization: Cheese prices are strengthening; farms focusing on butterfat and protein components may capture premium returns.
  • Export Dynamics: U.S. butter and cheese exports are expected to grow due to competitive pricing, while dry whey and nonfat dry milk exports face challenges.
  • Strategic Positioning: Aligning with processors, managing costs, and staying informed on market trends will be critical for profitability in 2025.
USDA dairy forecast 2025, milk price trends, dairy production challenges, dairy farm strategies, component optimization

The latest USDA forecasts signal significant shifts for dairy producers in 2025, with revised estimates pointing to tighter supplies and evolving price dynamics across dairy categories. According to the most recent data released on March 6, 2025, the all-milk price forecast has been increased to $22.75 per hundredweight (cwt), up $0.25 from the previous month’s estimate. This adjustment comes amid continued downward revisions to milk production forecasts, creating a complex market environment that demands nationwide strategic positioning from dairy operations. This comprehensive analysis breaks down the latest USDA projections, their implications for your farm, and actionable strategies to navigate the evolving dairy landscape.

Production Constraints Creating Price Support: The Numbers Behind 2025’s Tightening Supply

The USDA has consistently revised its milk production projections downward over recent months, revealing a pattern that signals potential price support for producers. The February forecast reduced milk production by 300 million pounds to 226.9 billion pounds, following a January adjustment that had already lowered projections by 800 million pounds.

This consistent pattern of downward revisions reflects compounding factors affecting dairy production capacity. The primary drivers include smaller-than-expected dairy herd size and reduced milk yield per cow. According to USDA data, while the national dairy herd was initially projected to average 9.390 million head in 2025, more recent forecasts suggest continued constraints on herd expansion.

Production per cow has also been revised downward, with the forecast reduced by 85 pounds to 24,200 pounds per cow. This adjustment reflects lower-than-expected performance in late 2024 and changing expectations about productivity gains in 2025. Interestingly, the USDA notes that “the growth in milk components will likely balance out the lower-than-average growth per cow,” suggesting a shift toward quality over quantity in production metrics.

These production constraints differ from earlier projections that anticipated more robust growth. In December 2024, USDA forecast 2025 milk production at 228 billion pounds. By January, this was reduced to 227.2 billion pounds, and February brought a further reduction to 226.9 billion pounds. This cumulative 1.1 billion-pound reduction represents a significant adjustment in expected supply.

Divergent Price Trajectories: Why Component Values Matter More Than Ever

The most recent price forecasts reveal a fascinating divergence across dairy product categories that creates both challenges and opportunities for strategically positioned producers:

Table 1: Evolution of USDA Dairy Product Price Forecasts for 2025

Dairy ProductFebruary 2025 ForecastJanuary 2025 ForecastChange
Cheese$1.880 per pound$1.8650 per pound+$0.0150
Butter$2.645 per pound$2.6950 per pound-$0.0500
Nonfat Dry Milk$1.295 per pound$1.3400 per pound-$0.0450
Dry Whey60.5 cents per pound64.0 cents per pound-3.5 cents

This divergence is particularly significant because cheese prices continue to strengthen while other product categories face downward pressure. The February forecast raised cheese prices to $1.8800 per pound, citing “recent prices and tight inventories from 2024 that are expected to carry into 2025”. This positive cheese outlook contrasts the downward revisions for butter, nonfat dry milk, and dry whey.

These product-specific price projections translate directly into milk class prices, with notable implications for producer revenues:

Table 2: USDA Milk Class Price Forecasts for 2025 ($/cwt)

Milk ClassFebruary 2025 ForecastJanuary 2025 ForecastChange
Class III$19.10$19.70-$0.60
Class IV$19.70$20.80-$1.10
All Milk$22.60$23.05-$0.45

The most recent March 6th adjustment further revised the all-milk price forecast upward to $22.75 per cwt, up $0.25 from the previous month’s estimate. This latest adjustment suggests continued evolution in USDA’s outlook based on emerging market data.

The disparate movements between cheese prices and other dairy commodities create a market environment where component optimization becomes increasingly valuable. Farms that can align their milk component profiles with cheese manufacturing requirements may capture premium opportunities despite the broader adjustments in milk price forecasts.

Production Forecast Revisions: Understanding the Trend

Table 3: USDA Milk Production Forecast Revisions for 2025

Forecast ElementFebruary 2025 ForecastJanuary 2025 ForecastDecember 2024 Forecast
Total Production226.9 billion pounds227.2 billion pounds228.0 billion pounds
Change from Previous-0.3 billion pounds-0.8 billion poundsN/A
Cumulative Adjustment-1.1 billion pounds-0.8 billion poundsN/A

The consistent pattern of downward revisions to production forecasts has significant implications for market balance. The cumulative 1.1 billion pound reduction from December to February represents approximately 0.5% of expected annual production—enough to influence price dynamics throughout 2025 potentially.

This production constraint reflects several underlying factors. The dairy herd size was initially expected to expand, but recent data suggests more limited growth potential. Meanwhile, milk per cow projections have been reduced by 85 pounds to 24,200 pounds, reflecting recent performance trends and adjusted expectations about productivity gains.

Most significantly, these production adjustments come when domestic and export demand show potential strength. This creates a more balanced market dynamic than many had initially anticipated for 2025, with supply constraints potentially offsetting any demand weakness.

Strategic Positioning for 2025’s Market Realities

With the latest USDA forecasts pointing to a complex but potentially favorable market environment, strategic positioning becomes essential for maximizing profitability in 2025. Several key approaches warrant consideration:

1. Optimize Component Production

The price divergence between cheese and other dairy products creates a clear signal for component focus. With cheese prices strengthening while other products face challenges, milk component profiles that align with cheese manufacturing requirements may generate premium returns.

The USDA notes that “growth in milk components will likely balance out the lower-than-average growth per cow,” highlighting the increasing importance of component quality relative to simple volume metrics. This suggests breeding and feeding programs focused on components rather than volume may deliver superior financial results in 2025’s market environment.

2. Align with Strategic Processors

Understanding your local processing landscape becomes increasingly valuable in a market with divergent product price trajectories. Farms supplying processors focused on cheese production may benefit from more favorable pricing than those tied to butter or powder-focused facilities.

The consistent downward revision of production forecasts suggests processors may face increasing competition for milk supplies as the year progresses. This potential milk shortage creates leverage opportunities for producers, particularly in regions with processing capacity growth.

3. Monitor Export Opportunities

The latest USDA data suggests strengthening export potential for specific dairy categories. Following the January forecast, dairy exports on a fat basis were projected higher for 2025 “based on recent trade data and higher expected shipments of butter and cheese due to the US price competitiveness.”

However, exports on a skim-solids basis were lowered “on recent trade data and less competitive US nonfat dry milk and dry whey.” This divergent export outlook reinforces the importance of understanding your operation’s exposure to different product categories and their respective export potential.

4. Implement Cost Management Strategies

The March 6th revision suggests an all-milk price of $22.75 per cwt, a moderate increase from previous estimates but still indicating challenging margins for many producers. In this environment, cost management remains essential for maintaining profitability.

The forecasted production constraints suggest that operations focusing on efficiency rather than maximum volume may achieve superior financial results. With input and operational expenses continuing to pressure margins, systematic cost analysis and management programs provide essential protection against price volatility.

5. Develop Market Intelligence Capabilities

The frequent revisions to USDA forecasts highlight the fluid nature of dairy markets and the importance of staying informed about emerging trends. Investing in market intelligence capabilities—whether through consultants, industry publications, or internal analysis—provides critical decision support for strategic planning.

Farms with superior market intelligence will make better-informed decisions about culling, expansion, contracting, and capital investment in 2025’s evolving market environment.

Conclusion: Navigating 2025’s Dairy Landscape

The latest USDA forecasts paint a picture of a dairy market in transition—facing production constraints but potentially benefiting from price support and strategic opportunities. The March 6th revision raising the all-milk price forecast to $22.75 per cwt suggests cautious optimism despite earlier adjustments.

The consistent downward revision of milk production forecasts—from 228.0 billion pounds in December to 226.9 billion pounds in February—signals persistent challenges in production growth. However, these constraints may provide price support, particularly in categories with strong demand fundamentals like cheese.

The divergent price trajectories across product categories—cheese strengthening while butter, nonfat dry milk, and dry whey face pressure—create a market environment where component optimization and product mix exposure significantly impact revenue potential. This divergence encourages strategic thinking about milk component profiles and processor relationships.

For individual dairy producers, success in 2025 will likely come from combining tactical excellence in production management with strategic positioning aligned with emerging market signals. Component optimization, processing alignment, financial flexibility, and operational adaptability represent the core competencies needed to profitably navigate this complex market landscape.

The dairy operations that thrive in 2025 will recognize these market dynamics and position themselves accordingly—focusing on efficiency rather than maximum volume, optimizing components rather than simply producing more milk, and maintaining the financial flexibility to adapt to continuing market evolution.

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Alarming Disconnect: January 2025 Dairy Production Report Reveals Strategic Misalignments as Trade Tensions Loom

Powder inventories surged 41%, while processors accelerated production despite looming trade wars. The January dairy products report exposes alarming disconnects between market signals and manufacturing decisions, threatening processor and farm profitability as spring production increases.

EXECUTIVE SUMMARY: The January 2025 Dairy Products report reveals troubling production misalignments that demand immediate attention. NFDM production jumped 11% despite inventories already 41% above last year, while cheese and butter showed minimal growth despite increased milk supply. Italian cheese varieties (+2.2%) outperformed American types (+0.2%), suggesting shifting market preferences. Meanwhile, processors appear to redirect components toward consumer packaged goods like ice cream (+20.1%) and cream cottage cheese (+18.0%) while neglecting export-oriented products just as trade tensions escalate with Mexico. These patterns create significant price risks as spring flush approaches and raise questions about long-term strategic planning throughout the supply chain.

KEY TAKEAWAYS:

  • NFDM production surged 11% to 154 million pounds while inventories climbed to 299.3 million pounds, up 41% year-over-year, creating a dangerous market imbalance
  • Italian cheese varieties outperformed American types, with mozzarella production up 3.6% while cheddar continued its 15-month decline.
  • Butter production increased merely 0.5% despite high component availability, as processors shifted cream to ice cream (+20.1%) and cultured products.
  • Whey protein concentrate production fell 10.4% while whey protein isolate jumped 19.9%, indicating a strategic shift toward higher-value proteins.
  • Regional production patterns show Western processors focused heavily on NFDM (+15.2%) while Central region facilities led in cheese (+1.8%)
dairy production, NFDM inventory, cheese production, dairy exports, trade tensions, milk powder, dairy market analysis, dairy processing, mozzarella production, butterfat allocation, Mexico tariffs, spring flush

Steam billows from dryers running at full capacity across America’s heartland, transforming rivers of milk into mountains of powder that increasingly threaten to overwhelm warehouse capacity. The USDA’s January 2025 Dairy Products report, released yesterday, exposes troubling misalignments between processor decisions and market realities. Manufacturers appear to be doubling down on precisely the wrong products while ignoring clear warning signals from domestic and international markets.

Cheese Production Reveals Contradictory Strategies

January cheese production data unveils a strategic repositioning that demands closer scrutiny from processors and farmers. Total cheese output reached 1.21 billion pounds, inching up a modest 0.8% from January 2024 despite component-adjusted milk production increasing 2.2% nationally. This restrained growth suggests processors remain cautious amid looming capacity expansions and uncertain demand signals.

ProductJanuary 2025 (million lbs)Change from January 2024Change from Expected
Cheese (Total)1,210.2+0.8%Below forecast
American-Style473.9+0.2%Below forecast
Cheddar326.1-1.4%Below forecast
Italian Types521.7+2.2%Above forecast
Mozzarella412.7+3.6%Above forecast

The most revealing aspect of January’s cheese data is the stark divergence between cheese categories. While American cheese production barely increased, at 0.2% above January 2024 levels, Italian varieties grew substantially stronger, at 2.2%. Mozzarella’s impressive 3.6% increase led this to 412.7 million pounds. This marks mozzarella’s third-highest January production, reflecting processors’ strategic pivot toward export-friendly and foodservice-oriented varieties.

Particularly concerning for farmers focused on American cheese components is cheddar’s continued decline, dropping 1.4% to 326.1 million pounds—marking the fifteenth consecutive month of year-over-year declines. While this represents a moderating decrease compared to previous months, the persistent weakness in a traditionally anchored U.S. dairy processing category raises fundamental questions about shifting consumer preferences and processor responses.

The Butterfat Allocation Mystery

The January report exposes a perplexing contradiction in butterfat utilization that demands explanation. How can butter production grow only 0.5% to 218.3 million pounds when component-adjusted milk production increased by 2.2% and butterfat yields reached near-record levels? The answer lies in a dramatic reallocation of fat to alternative product streams that offer processors better margins—but may ultimately undermine farm-level butterfat premiums.

Processors appear to redirect cream toward frozen and cultured products rather than churning butter, with ice cream production soaring 20.1% to 59.6 million gallons—the highest January level since 2016. Regular hard ice cream led the surge, but other categories followed: low-fat ice cream jumped 10.2%, frozen yogurt increased 14.1%, and cream cottage cheese production jumped 18%.

This strategic pivot coincides with concerning inventory accumulation. According to the USDA’s Cold Storage Report, butter stocks climbed to 270.2 million pounds by January 31st, representing a troubling 26% increase from December and 9% growth year over year. This inventory build-up during what should be the seasonal low point for butter stocks signals potential market imbalances that could eventually transmit back to farm-level component values.

Powder Markets: A Crisis in Waiting

The most alarming element of January’s report is the dangerous inventory accumulation in dry milk products. Despite already bloated warehouses, nonfat dry milk (NFDM) production accelerated sharply by 11.0% to 153.5 million pounds, creating what industry analysts increasingly call “a powder volcano ready to erupt.”

NFDM Inventory MetricsJanuary 2024December 2024January 2025% Change (YoY)
End-of-Month Stocks (million lbs)212.3256.1299.3+41.0%
Monthly Production (million lbs)138.3130.7153.5+11.0%
Monthly Shipments (million lbs)123.0106.5106.5-13.4%
Production-to-Shipment Ratio1.121.231.44+28.6%

The 41% year-over-year inventory increase to 299.3 million pounds represents approximately 90 days of domestic consumption—far exceeding healthy balance levels. Even more troubling, NFDM shipments collapsed by 13.4% compared to January 2024, creating a perfect storm of overproduction and underconsumption.

“Processors appear to be ignoring flashing warning signs in the powder market,” warns industry economist Maria Rodriguez. “With flat or weakening demand from Mexico and reduced interest from other international buyers, these inventory levels create downward price pressure that will only intensify as we approach spring flush.”

This inventory mismanagement becomes more significant given imminent trade disruptions with Mexico, America’s largest dairy export destination. Adding to market pressures, the sharp decline in skim milk powder production (37.6% to 35.5 million pounds) indicates processors may be abandoning products specifically formulated for international markets just as trade tensions escalate—a concerning strategic pivot that could damage hard-won market relationships.

Whey Complex Shows Mixed Results

The whey sector presented contradictory signals in January that further highlight processor indecision. Total dry whey production decreased slightly by 1.9% to 76.2 million pounds compared to January 2024, despite increasing cheese production that would typically generate more whey. This suggests potential processing constraints or strategic decisions to limit whey production amid uncertain markets.

More notably, whey protein concentrate (WPC) production fell sharply by 10.4% to 38.2 million pounds, with the WPC 25.0-49.9% category plummeting 17.6%—reaching record low production levels for January. Despite this production decline, WPC stocks decreased marginally by 3.6%, suggesting weakening demand across domestic and international channels.

Conversely, whey protein isolate production increased substantially by 19.9% to 17.1 million pounds, suggesting manufacturers focus on higher-value protein products. Meanwhile, WPI stocks decreased 5.7%, indicating that demand for these specialized products remains relatively robust.

ProductRegional Change from January 2024
Atlantic
Cheese-1.6%
NFDM+4.1%
Dry Whey-2.9%

Strategic Implications for Dairy Farmers

The January production data demand strategic responses from dairy producers facing these market dynamics. The disconnect between component-adjusted milk production increases (2.2%) and finished product growth rates suggests processors struggle to balance milk utilization against fragmented market signals efficiently. This challenge ultimately transmits financial risk back to the farm level.

Farmers should consider several proactive measures:

  1. Review component optimization strategies, particularly evaluating the ROI on protein-enhancing feed additives, given the weakness in American cheese production and strength in Italian varieties.
  2. Contact processors directly to understand their production plans during the upcoming spring flush period and align herd management accordingly.
  3. Evaluate milk marketing contracts to determine flexibility for directing milk to processors with more diversified product portfolios that are less dependent on NFDM.
  4. Implement voluntary production moderation during peak spring months to avoid contributing to already excessive powder inventory build-up.

Farmers must recognize that the traditional price signals from CME markets may be increasingly disconnected from actual product movement and inventory positions. The January report demonstrates that even as cheese and butter prices show relative strength on paper, the underlying supply-demand fundamentals suggest potential pricing corrections once inventory realities fully manifest in market prices.

Conclusion: Market Reality Check Needed

As the dairy industry navigates these complex production and trade dynamics, the approaching spring flush threatens to exacerbate already significant challenges. The traditional seasonal increase in milk production could trigger substantial price corrections unless processors realign production plans with market realities rather than continuing to build inventory positions that defy economic logic.

For dairy farmers, these production trends underscore the urgent need for greater transparency and coordination across the supply chain. The divergence between component-adjusted milk production increases and finished product growth rates suggests a processing sector struggling to allocate milk components efficiently against fluctuating demand signals. This challenge ultimately transmits financial risk back to those producing the milk.

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U.S. Dairy Surplus Deepens: Butter Glut Hits 3-Year High as Cheese Inventories Defy Expectations

Butter mountains and cheese canyons: America’s dairy landscape is shifting faster than milk in a churning vat. With butter stocks hitting a 3-year high and cheese defying gravity, farmers are milking every efficiency drop. But as imports flood in and avian flu looms, is the industry cream of the crop or about to curdle?

dairy landscape, butter stocks, cheese production, avian flu, milk prices

Executive Summary

The USDA’s January 2025Cold Storage Report reveals a divided dairy landscape: butter stocks surged to 270.3 million pounds (up 26% month-over-month), the highest January inventory since 2021, while cheese inventories narrowed their annual deficit to 5.7%—the smallest gap since May 2024. Key drivers include record-high butterfat yields, collapsing cream prices, and shifting consumer preferences toward imported butter. Meanwhile, cheese production rebounded via Italian varieties and exports, though looming capacity expansions and trade wars threaten stability. Below, we dissect the data, policy shifts, and market forces reshaping America’s dairy sector.

Butter Stocks: A Perfect Storm of Fat, Feed, and Foreign Competition

Cream Multiples Collapse to Decade Lows

Butter inventories swelled despite stagnant milk production (+0.1% YoY), as butterfat content hit 4.43%—up 11 basis points from 2024. This “fat revolution” added 21.75M extra pounds of butterfat annually, equivalent to 1.2B additional pounds of milk. With cream multiples (cream/butterfat price ratios) plunging to 1.10–1.25x—the lowest since 2015—churns operated at 92% capacity, producing 180M lbs of butter monthly.

Imports Capture 23% of the Retail Market.

Domestic butter demand grew 1.8% in 2024, but EU and NZ imports surged 14%, capturing nearly a quarter of U.S. retail sales. Consumers favor sustainability-labeled imports, while U.S. brands lag in marketing. “We’re making butter Americans don’t want to buy,” Wisconsin churn operator Mark Tolbert admits.

H5N1 Adds Uncertainty

California’s milk production fell 5.7% YoY due to H5N1 avian flu outbreaks, with 38 human cases linked to raw milk consumption. Retail butter prices rose 7.7% YoY as biosecurity costs mounted, though federal pricing mechanisms stabilized farmgate milk at .75/cwt.

Cheese: Italian Varieties Offset American Decline

Cheese TypeJan 2025 StockYoY ChangeMoM Change
American-Style777.6M lbs-7.4%+0.8%
Italian Varieties572.9M lbs-3.7%+2.4%

Source: USDA Cold Storage Report

  • Mozzarella Madness: Italian cheese output hit 6B lbs in 2024 (+2.4% YoY), driven by pizza demand and new Wisconsin plants.
  • Cheddar Collapse: American-style production fell to 3.85B lbs (-6.1%), its lowest since 2020, as processors prioritized higher-margin exports.
  • Export Lifeline: Cheese exports absorbed 14% of production, though EU tariffs threaten to erase gains.

Input Costs Squeeze Margins

Feed vs. Labor: A Tug-of-War

  • Feed Costs: Fell 10.1% YoY to $62.4B in 2025, with corn at $4.17/bushel and soybeans at $11.96/cwt.
  • Labor Costs: Rose 3.6% to $53.5B—a record high—as H-2A visa shortages persist.
  • Dairy Margin Coverage (DMC): Payments fell 12% to $8.9M, signaling improved operational margins.

Component Optimization Pays

Farms averaging >3.5% milk protein earned $0.45/cwt extra in 2024, while butterfat premiums hit $2.40/lb. However, feed efficiency gains mask rising debt: the average dairy farm now carries .2M in liabilities.

Policy Shocks: Federal Order Overhaul

June 2025 Formula Changes

USDA’s amended Federal Milk Marketing Orders will:

  1. Update skim milk composition factors (+0.1% protein weight).
  2. Exclude barrel cheddar from Class III pricing.
  3. Implement new make allowances ($0.0015/lb marketing cost added).

Impact: Class III milk prices are forecast to drop $0.90/cwt to $19.70, squeezing small herds.

Trade Wars Escalate

  • Canada: Accused of dumping 250M lbs of subsidized skim milk powder globally.
  • EU: Threatens 28% tariffs on U.S. cheese if steel disputes intensify.

Farmer Strategies: Survival in a Volatile Market

  1. Component Testing: Herds optimizing for >4.4% butterfat and 3.6% protein capture premium contracts.
  2. Whey Diversification: Permeate partnerships save $45/ton vs. soybean meal.
  3. Manure-to-Energy: Methane digesters cut emissions by 40% while generating revenue by $25K/year.
  4. Futures Hedging: 62% of large farms now hedge against milk price swings.

Consumer Impact: Aisle Shock and Alternatives

  • Retail Prices: Eggs jumped 36% YoY (Harlem, NY: $12/dozen), while milk hit $7.77/gal in premium markets.
  • Plant-Based Shift: Soy milk sales rose 18% as cost parity nears—$5.57/4L vs. dairy’s $5.74.

2025 Outlook: Cautious Expansion Amid Risks

Metric2025 ForecastChange from 2024
All-Milk Price$22.75/cwt+$0.50
Milk Production227.2B lbs-0.8B lbs
Cheese Exports11.9B lbs+0.2B lbs
H5N1 Outbreaks12 states+300% YoY

Sources: USDA

Critical Risks:

  • Avian Flu: H5N1 detected in 12 states, threatening 5% of milking herds.
  • Capacity Glut: $4B in new cheese plants (1.2B lbs/year) may invert prices by Q3.
  • Regulatory Overhaul: Proposed Dietary Guidelines demote dairy, prioritizing legumes.

Conclusion: Navigating the Dairy Tightrope

The U.S. dairy sector faces a precarious balance: record component yields clash with saturated demand, labor shortages, and global oversupply. While 2025’s $22.75/cwt all-milk price and falling feed costs offer respite, H5N1, trade wars, and plant-based competition loom large. Success hinges on agility—farmers maximizing protein premiums, processors pivoting to exports, and policymakers stabilizing safety nets. As one Wisconsin farmer summarized: “We’re not just milking cows anymore; we’re milking data.”

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U.S. Milk Production Report—January 2025: Navigating Avian Flu Impacts and Market Dynamics

U.S. milk production increased by 0.1% in January 2025, with component-adjusted output jumping 2.2% amid higher fat/protein yields. California’s 5.7% decline underscores persistent avian flu pressures, while USDA herd revisions reveal unexpected dairy cow expansion and evolving market risks.

Summary:

U.S. milk production in January 2025 saw a marginal 0.1% year-over-year increase, with component-adjusted output rising 2.2% due to higher fat and protein yields, signaling improved herd efficiency. The USDA revised the upward October–November 2024 production and reported an unexpected 10,000-head dairy herd expansion, countering earlier contraction forecasts. California’s output fell 5.7% as H5N1 avian flu outbreaks disrupted supply chains, contrasting with a 1.4% growth in other states like Wisconsin and Texas. Federal pricing mechanisms stabilized farmgate milk prices at $21.75/cwt, though Class I utilization hit record lows (20%) amid plant-based competition. Retail dairy inflation surged 7.7%, driven by biosecurity costs and labor shortages, while H5N1’s spread to raw milk consumers underscored public health risks. Medium-term projections suggest cautious optimism, balancing feed cost relief against ongoing avian flu threats and climate-driven feed instability.

Key Takeaways:

  • U.S. milk production inched up 0.1% year-over-year in January 2025
  • Component-adjusted production jumped 2.2% due to higher fat and protein content
  • The USDA unexpectedly reported a 10,000-head increase in the national dairy herd
  • California’s output plummeted 5.7%, mainly due to ongoing avian flu (H5N1) impacts
  • The rest of the country saw steady growth at 1.4%, led by states like Wisconsin and Texas
  • Farmgate milk prices stabilized at $21.75/cwt under Federal Milk Marketing Orders
  • Class I (fluid milk) utilization hit a record low of 20%, pressured by plant-based alternatives
  • Retail dairy prices rose 7.7% year-over-year, outpacing overall food inflation
  • H5N1 outbreaks in dairy operations raised concerns about cross-species transmission
  • Raw milk consumption led to some human H5N1 cases, prompting FDA warnings
  • The medium-term outlook suggests cautious expansion, pending avian flu containment
  • Labor shortages and climate-driven feed instability remain key challenges for the sector
U.S. milk production, avian flu impact, dairy herd expansion, retail dairy inflation, federal pricing mechanisms

The U.S. milk production landscape in January 2025 reflects a delicate balance between modest growth and persistent challenges from avian influenza (H5N1). Nationwide milk production increased 0.1% year-over-year, with component-adjusted output rising 2.2% due to higher fat and protein content. However, regional disparities persist: California’s output fell 5.7% amid ongoing bird flu outbreaks, while the rest of the U.S. grew 1.4%. The USDA revised October–November 2024 production upward and reported a 10,000-head dairy herd expansion between December 2024 and January 2025, signaling cautious optimism for medium-term recovery. This report analyzes the interplay of avian flu disruptions, federal pricing mechanisms, and consumer market trends shaping the dairy sector.

National Milk Production Trends

Modest Growth Amid Component Adjustments

U.S. milk production in January 2025 increased by 0.1% compared to the previous year, aligning with pre-report forecasts. The growth was driven by higher fat (+1.8%) and protein (+2.4%) content, which boosted component-adjusted production by 2.2%. This aligns with long-term trends of genetic improvements in dairy herds and optimized feed efficiency. The USDA’s upward revisions to October–November 2024 milk output—by 0.3% and 0.5%, respectively—highlight improved data granularity and reduced volatility in herd health reporting.

Herd Dynamics and Expansion Pressures

Quarterly Herd Dynamics (2024-2025)

Table 1. National Dairy Herd Composition 

QuarterAvg. Milk Cows (1,000)Milk/Cow (lbs)Production (B lbs)
Q1 20249,3386,09856.94
Q4 20249,3605,93055.51
Q1 20259,3426,01256.16 (est.)

Contrary to earlier projections of herd contraction, the USDA estimated a 10,000-head increase in the national dairy herd between December 2024 and January 2025. This expansion reflects improved feed costs and more substantial cheese prices, which are incentivizing farmers to retain heifers. However, feed quality concerns persist: Drought-reduced alfalfa yields in the Midwest have forced reliance on less nutritious silage, potentially dampening future productivity gains.

Regional Disparities: California’s Avian Flu Challenge

State-Level Milk Output (January 2025 vs. 2024)

Table 2. Milk Production in Key States 

State2024 Cows (1,000)2025 Cows (1,000)2024 Milk/Cow (lbs)2025 Milk/Cow (lbs)% Change
California1,7251,6262,3102,178-5.7%
Wisconsin1,2681,2792,1052,121+1.4%
Texas6476622,0802,095+2.3%
New Mexico3423352,2502,210-1.8%

Production Declines and Recovery Delays

California’s milk production fell 5.7% year-over-year in January 2025, extending an 8% decline in December 2024. The state’s dairy sector remains disproportionately affected by H5N1 avian influenza, which has infected over 14 million birds in commercial poultry operations since December 2024. While the virus’s mortality rate in cattle remains low (2–5%), mandatory quarantines and milk dumping protocols have disrupted supply chains. For example, a San Francisco dairy farm reported a 30% drop in output after culling 1,200 cows exposed to infected poultry.

Biosecurity and Cross-Species Transmission Risks

The H5N1 strain’s jump to mammals—including 67 confirmed human cases in the U.S. as of January 2025—has intensified scrutiny of dairy farm practices. Genetic sequencing revealed mutations in the PB2 protein (E627K) that enhance viral replication in mammalian cells, raising concerns about potential human-to-human transmission. California’s dense dairy-poultry interface (e.g., shared water sources and feed trucks) has facilitated cross-species spread, with 38% of the state’s H5N1 cases linked to dairy operations.

Avian Flu’s Economic Impact on Dairy

Compensation Programs and Supply Chain Costs

The USDA’s indemnity program paid $1.46 billion to poultry and dairy producers in January 2025 for culling infected animals, up from $890 million in 2024. For dairy farmers, compensation covers 70% of a cow’s market value but excludes long-term losses from herd rebuilding. A typical 1,000-cow farm faces $2.1 million in lost revenue during a 6-month quarantine, compounded by rising insurance premiums (up 22% year-over-year).

Retail Price Inflation and Consumer Behavior

Egg prices surged to $5 per dozen in January 2025, a 150% increase from 2021, while whole milk reached $4.15 per gallon. Consumer demand remains inelastic (-0.2 price elasticity), with 80% of households prioritizing dairy purchases despite cost hikes. However, discount retailers like Aldi and Lidl have gained market share by offering private-label dairy at 15–20% below national brands, squeezing mid-tier producers.

Federal Milk Marketing Orders and Price Controls

Class I Fluid Milk Pricing Mechanisms

The Federal Milk Marketing Order (FMMO) system stabilized farmgate milk prices at $21.75/cwt in January 2025, a 4% increase from 2024. Class I (fluid milk) premiums reached $7/cwt in Florida but averaged $1.60/cwt in the Upper Midwest, reflecting regional disparities in bottling capacity and consumer demand. However, Class I utilization fell to 20% of total production—down from 65% in 1950—as plant-based alternatives captured 18% of the beverage market.

Cheese and Butter Stockpiles

Government cheese inventories hit 600 million kg in January 2025, a 12% year-over-year increase, as weak export demand and tariff wars with China (25% retaliatory duties) stifled trade[15]. The USDA’s Dairy Management Inc. has redirected 8% of surplus butter to fast-food partnerships, notably McDonald’s “ButterBurgers,” but stockpile storage costs now exceed $120 million annually.

Consumer Price Trends and Forecasts

Short-Term Volatility and Long-Term Pressures

Retail dairy prices rose 7.7% year-over-year in January 2025, outpacing overall food inflation (5.2%). Analysts project a 20.3% increase in egg prices and 8–10% milk price hikes through mid-2025, assuming H5N1 outbreaks persist at current rates. However, futures markets indicate moderation: CME Class III milk contracts for July 2025 trade at $18.25/cwt, suggesting traders anticipate production rebounds in H2 2025.

Labor Costs and Automation Adoption

Dairy farms face a 14% wage inflation rate for skilled labor (e.g., milking technicians), driven by H-2A visa shortages and competition from the construction sector. In response, 32% of large-scale operations have deployed robotic milking systems, which reduce labor costs by 40% but require upfront investments of $250,000–$500,000.

Public Health and Food Safety Concerns

Raw Milk and Viral Transmission Risks

The CDC confirmed 38 human H5N1 cases in California as of January 2025, including a San Francisco resident who consumed raw milk from an infected herd. Viral loads in raw milk reached 1.2×10⁶ RNA copies/mL, prompting the FDA to issue nationwide advisories against unpasteurized dairy. Despite this, raw milk sales rose 18% in Q4 2024, fueled by anti-vaccine rhetoric and RFK Jr.’s advocacy for “natural immunity.”

Pasteurization Efficacy and Regulatory Gaps

Studies confirm that standard HTST pasteurization (161°F for 15 seconds) reduces H5N1 infectivity by 99.99%, but 9% of small processors fail to meet thermal profiling standards. The FDA’s January 2025 recall of 240,000 gallons of milk from 12 underprocessed batches underscores persistent gaps in oversight.

The Bottom Line

The January 2025 milk production report underscores the U.S. dairy sector’s resilience amid unprecedented challenges. While component-adjusted output growth and herd expansion signal medium-term stability, avian flu remains a wildcard. Proactive measures—such as mRNA poultry vaccines (95% efficacy in trials) and dairy farm compartmentalization protocols—could mitigate future outbreaks. However, rising input costs, labor shortages, and climate-driven feed instability demand policy innovation, including FMMO reforms to address Class I utilization declines and carbon credit programs for methane-reducing feed additives. As H5N1 continues evolving, bridging the gap between agricultural viability and public health safeguards will define the industry’s trajectory through 2025 and beyond.

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USDA Forecasts Tighter Milk Supply, Price Shifts in Latest WASDE Report

USDA’s latest WASDE report signals shifts in the dairy landscape. Lower milk production, updated pricing formulas, and HPAI impacts reshape the 2025 outlook. All-milk price forecast dips to $22.60/cwt. How will these changes affect your dairy operation? Read on for key insights and strategies.

Summary:

The February 2025 WASDE report outlines significant changes in the U.S. dairy industry, including decreased milk production due to fewer cows and a potential export drop. New pricing formulas aim to match current market conditions better. The report highlights challenges like avian flu and impacts from Mexican cattle imports, affecting production and pricing. The all-milk price forecast for 2025 is set at $22.60 per cwt. These changes mean dairy farmers must focus on herd health, diversify their products, and use risk management strategies to handle market changes.

Key Takeaways:

  • USDA reduces 2025 milk production forecast, lowering by 300 million pounds to 226.9 billion pounds.
  • Average cow numbers are projected at 9.390 million, with a decrease in milk per cow estimations.
  • Updated Federal Milk Marketing Order formulas for milk pricing reflect current market trends.
  • All-milk price forecast for 2025 adjusted to $22.60 per cwt.
  • Cheese prices are expected to rise, while butter, nonfat dry milk, and whey prices will decline.
  • Skim-solids basis exports for NDM and whey products are projected to decrease.
  • HPAI risks milk production, emphasizing the need for strong biosecurity measures.
  • Import dynamics from Mexican cattle could alter domestic production capacities.
  • Opportunities arise through value-added products and proactive risk management.
dairy production forecast, all-milk price, USDA WASDE report, milk pricing formulas, HPAI impact

The February 2025 WASDE report, released Tuesday, reveals a shifting U.S. dairy landscape with reduced production forecasts and nuanced price projections that could reshape farm strategies. 

Milk Production and Supply Outlook 

The USDA has lowered its 2025 milk production forecast due to expected decreases in cow inventories. Key production figures include: 

Item2023/24 est.2024/25 project. (Jan)2024/25 project. (Feb)
Production226.4227.5227.2
Farm Use0.90.90.9
Marketings225.5226.6226.3
Beginning Stocks16.216.316.3
Imports7.07.07.0
Total Supply248.7249.9249.6
Exports12.812.812.7
Ending Stocks16.316.416.4
Total Use248.7249.9249.6
All-Milk Price ($/cwt)22.6123.0522.60

On a fat basis, domestic use is projected to decrease as lower production and imports tighten supplies. Fat basis exports are expected to decline, with increases in butter exports offset by decreases in fluid, dry, and cream products. 

Price Projections and Market Implications 

The USDA’s price forecasts reflect recent market trends and regulatory changes: 

  • All-milk price estimate for 2024: $22.61 per cwt (raised)
  • All-milk price forecast for 2025: $22.60 per cwt (lowered)

These projections incorporate the new Federal Milk Marketing Order (FMMO) pricing formulas published on January 17, 2025, which include: 

  • Updated milk composition factors: 3.3% true protein, 6.0% other solids, and 9.3% nonfat solids
  • Revised manufacturing allowances: $0.2519 for cheese, $0.2272 for butter, $0.2393 for nonfat dry milk, and $0.2668 for dry whey

Commodity-Specific Outlook 

The report offers a mixed outlook for individual dairy commodities: 

Item2023/24 est.2024/25 project. (Jan)2024/25 project. (Feb)
Cheese1.97402.03502.0450
Butter2.72702.55502.5150
NDM1.33701.44501.4250
Dry Whey0.38700.44500.4350

Class III milk is lowered to $19.10 per cwt, and Class IV is reduced to $19.70 per cwt for 2025. 

Export Projections 

Skim-solids basis exports are projected to decrease, particularly for NDM and whey products. This shift in export dynamics could impact overall market balance and pricing structures. 

Industry Challenges and Opportunities 

The dairy industry is navigating a complex landscape of regulatory changes, animal health challenges, and shifting trade dynamics. Key factors include: 

  1. Highly Pathogenic Avian Influenza (HPAI) Impact:
    • Reduced milk production due to infected herds experiencing decreased output and changes in milk consistency
    • Potential market disruptions from biosecurity measures and movement restrictions
    • Increased focus on herd health and biosecurity practices across the industry
  2. Mexican Cattle Imports:
    • Influence on domestic cattle inventory and pricing
    • Potential changes in milk production capacity
  3. Federal Milk Marketing Order Reforms:
    • A return to the “higher-of” pricing mechanism for Class I skim milk prices
    • Better alignment of pricing with current market conditions and production costs

Given these developments, dairy farmers should consider: 

  1. Optimizing herd health and productivity to maximize output in a tighter market
  2. Exploring value-added product opportunities, particularly in the cheese sector
  3. Utilizing risk management tools to navigate potential price volatility
  4. Staying informed about FMMO implementation and its impacts on farm-level pricing

The WASDE report’s incorporation of these factors provides a more comprehensive view of the U.S. dairy sector’s current state and future outlook. 

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December 2024 Dairy Product Production Report: Cheese Slump Meets Butter Boom

U.S. Milk Output Drops 0.5% as CA Herds Crash – TX/ID Surge. Butter Defies Odds (+1.1%), Cheese Slumps. NFDM Stocks Soar 27.7% – Can WPI Save 2025 Margins?

Summary:

The December 2024 Dairy Report outlines a mixed picture for the U.S. dairy industry, where environmental and economic factors shape regional differences in milk production. Due to drought, California’s output dropped heavily by 6.8%, but Texas and Idaho saw growth thanks to more cows and new technology. Butter production increased by 1.1% even with limited cream, while cheese saw a 6.1% drop, especially in cheddar. Nonfat dry milk stocks rose 27.7%, affecting exports to Mexico, but whey protein isolate demand grew by 18.1% for fitness markets. With lower feed costs and ongoing labor issues, the USDA expects a slight 0.8% milk production rebound in 2025. Farmers are encouraged to focus on local strategies and sustainability to adapt. Analyst Laura Hofer notes the changes are about rebalancing, not a uniform downturn.

Key Takeaways:

  • U.S. milk production declined by 0.5% in December 2024, with regional discrepancies due to climate and innovation.
  • California experienced a significant 6.8% decrease in milk output due to drought and rising feed costs.
  • Texas and Idaho showed growth in milk production, leveraging new technologies and improved milking systems.
  • Cheese production faced a slump, particularly in cheddar, while mozzarella remained steady thanks to sustained pizza demand.
  • Butter production bucked trends, increasing by 1.1%, reflecting consumers’ continued preference for staple products.
  • Feed costs are expected to ease, but global competition and climate impacts present ongoing challenges.
  • California’s efforts to reduce methane emissions highlight the environmental challenges facing dairy producers.
  • Dairy farmers are encouraged to adopt drought-resistant crops and explore product diversification to navigate market shifts.
U.S. milk production, dairy industry trends, California drought impact, butter production increase, whey protein demand

In December 2024, overall U.S. milk production declined, with California facing challenges while Texas and Idaho experienced growth. Butter manufacturers had a successful period, unlike cheese producers, who encountered difficulties. 

Quick Snapshot 

U.S. milk production decreased by 0.5% in December compared to 2023, totaling 18.7 billion pounds, a slight decrease. California’s output crashed 6.8% due to drought and expensive feed, but Texas (+7.5%) and Idaho (+48 million pounds) grew. Butter production surprised experts by rising 1.1% in December, even as cheese output dropped 6.1%. 

Regional Wins and Losses 

StateMilk ChangeKey Factors
California-6.8%Drought, high feed costs
Texas+7.5%More cows, new tech
Idaho+48M lbsEfficient milking systems
  • Despite losing 9,000 cows in December, the U.S. has 17,000 more cows than in 2023.
  • The decrease in milk per cow by 10-11 pounds annually has negatively affected drought-hit areas.

“Farmers need strategies that fit their location,” says dairy expert Laura Hofer from the University of Dairy Science. “Growth states have opportunities; others need help.”

StateDec 2024 MilkYoY ChangeKey DriverGrowth Potential
California3.2B lbs-6.8%Drought PenaltiesLow
Texas1.4B lbs+7.55%Robotic AdoptionHigh
Idaho1.5B lbs+3.2%Feed Efficiency ProgramsModerate

Cheese vs. Butter Production Trends 

Cheese vs. Butter 

  • Cheese production experienced a 6.1% decline monthly, with cheddar production decreasing by 24 million pounds. Mozzarella production remained stable, increasing by 2.3% annually due to high demand in the pizza industry.
  • Butter Boom: Output rose to 171 million pounds (+1.1%) as prices hit $2.58/lb. 

Product Performance Table 

ProductDec 2024 ProductionYoY ChangePrice TrendKey Market Factor
Butter171m lbs+1.1%↗️ $2.58/lbRetail demand surge
Cheddar320m lbs-8.1%↘️ $1.72/lbRestaurant sales slump
Whey Protein48m lbs+18.1%↗️ $4.20/lbFitness sector growth

Source: USDA Dairy Products Report 

Challenges in Milk Powder and Protein Production

  • Milk Powder: Nonfat dry milk (NFDM) stocks jumped 27.7% despite lower production, hurting exports to Mexico.
  • Whey Split: Dry whey dropped 4.9%, but protein-rich whey isolate (WPI) surged 18.1% for fitness products.

“Butter’s comeback shows shoppers want basics,” says USDA economist Sarah Novak.

2025 Forecast

InputDec 2024 Price2025 ForecastChangeImpact on 1,000-cow herd
Corn$3.99/bu$3.75/bu-6%$18,500 savings
Soymeal$330/ton$310/ton-6.1%$9,200 savings
Diesel$3.45/gal$3.70/gal+7.2%$6,800 added cost

Source: USDA ERS Feed Outlook 

  1. Feed Costs Drop: Corn prices at $3.99/bushel may ease pressure on farmers.
  2. Export Battles: Cheese exports hit records, but Europe’s cheaper whey steals buyers.
  3. California’s grants to reduce methane emissions by 40% by 2030 are pivotal in addressing climate change through sustainable practices.

USDA Predicts: Milk production will grow 0.8% in 2025, but feed and weather risks remain. 

What Farmers Can Do 

  • Growth States (TX, ID): Invest in tech-like robots and better cow genetics.
  • Drought Zones (CA): Switch to drought-resistant crops and seek state aid.
  • Product Shifts: Make more butter and protein powders; explore organic markets.

“California’s methane reduction and sustainable farming programs are a global model,” says UC Davis scientist Frank Mitloehner. “Losing them could hurt farms and the planet.”

Bottom Line 

The year 2025 will be a pivotal test of how effectively the dairy sector can adapt to imminent climate risks and dynamic market shifts. Can farmers balance sustainability with profits? 

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U.S. Milk Production Dips in December 2024: What It Means for Dairy Farmers

U.S. dairy production dipped slightly in December 2024, but what does this mean for farmers? From regional challenges to efficiency gains, the latest USDA report reveals a complex picture. Discover how the industry is adapting and what strategies could shape the future of American dairy farming.

Summary:

The USDA’s December 2024 report shows a tiny drop of 0.5% in U.S. milk production, with California having a big drop of 6.8%, while other states went up by 1.0%. This might make milk prices go up, which is good for farmers. Even though 9,000 cows were removed from herds between November and December, cows on average still produce 2,020 pounds of milk. Milk prices for 2025 vary; for example, Cheddar cheese is expected to be cheaper. Farmers need to focus on getting more milk from each cow and plan for their local challenges, especially in California. The USDA also predicts a small increase in milk production for 2025, offering hope for the future.

Key Takeaways:

  • California’s milk production struggles contrast with the slight growth seen in other regions, indicating varied regional challenges.
  • Overall milk production decline might stabilize or increase milk prices, offering potential financial relief for dairy farmers.
  • With a marginal reduction in herd size and productivity, focus on enhancing cow efficiency becomes crucial for productivity.
  • Upcoming USDA milk production growth forecast for 2025 provides a positive outlook for potential industry recovery.
  • Diverse price forecasts for different dairy products necessitate strategic adaptations to navigate future market trends.
USDA Milk Production, dairy output decrease, cow productivity, California dairy farmers, milk production growth

The latest USDA Milk Production report for December 2024 reveals significant insights for U.S. dairy farmers. It indicates a slight drop in U.S. dairy output, a trend that could have implications for the industry.  

Report Highlights: 

  • December 2024 milk production down 0.5% from last year
  • California production down 6.8%, rest of U.S. up 1.0%
  • 9,000 fewer cows in the national herd from November to December
  • Cows in 24 major states averaged 2,020 pounds of milk in December

Milk Production: The Big Picture 

StateMilk Production (billion lbs)Change from Previous YearAvg. Milk per Cow (lbs)
California2.99-6.8%Not Available
Wisconsin2.69-0.5%2,125
Texas1.42-3.86%Not Available
Michigan1.02-0.3%2,345
ColoradoNot AvailableNot Available2,190

U.S. milk production in December 2024 decreased marginally by 0.5% compared to the previous year. This slight drop could stabilize or even elevate milk prices, benefiting farmers’ financial health. 

California, usually a top milk-producing state, is still experiencing challenges. Its production dropped 6.8% from last year. But there’s a bright spot: the rest of the country saw a slight increase of 1.0%. This indicates that while some areas are improving, others face challenging times. 

Michigan’s cows are the top performers, averaging 2,290 pounds of milk each. Colorado comes in second at 2,190 pounds per cow. Despite its challenges, California still produces the most milk overall at 2.99 billion pounds, followed by Wisconsin with 2.59 billion pounds and Texas with 1.42 billion pounds. 

Herd Size and Cow Productivity 

The report shows some interesting changes in herd management

  • Farmers removed 9,000 cows from their herds between November and December 2024.
  • The 24 central dairy states had 8.91 million cows total, which is 17,000 more than last year
  • Each cow produced an average of 2,020 pounds of milk in December, eleven pounds less than last year

These numbers tell us that while there are slightly more cows than last year, farmers recently cut back their herds. Even though each cow is producing a little less milk, some farms are still finding ways to be more efficient.  Farmers’ resilience in managing herd size adjustments is a testament to their adaptability in challenging conditions. This adaptability is a key strength of the industry and a source of inspiration for others.

What This Means for the Market 

This report brings both good and bad news for dairy farmers: 

  1. Prices May Remain Stable: Due to a slight decrease in milk production, prices are expected to remain steady or experience slight fluctuations due to this decrease.
  2. Different Regions, Different Stories: Farmers outside California might have room to grow, while California farmers still face challenges.
  3. Focus on Cow Efficiency: Since adding more cows is challenging, Farmers should explore ways to maximize milk production from each cow in their herds.
  4. California Needs Help: California dairy farmers might need new strategies or support to get back on track.

The USDA predicts a 0.8% growth in total milk production in 2025 compared to 2024. This forecast suggests a gradual improvement in U.S. milk production, offering a ray of hope for dairy farmers. 

Milk and Dairy Product Prices 

The USDA has updated its price forecasts for 2025: 

  • Cheddar cheese: $1.800 per pound (down 9.5 cents)
  • Nonfat dry milk: $1.300 per pound (up 4.0 cents)
  • Dry whey: $0.595 per pound (up 7.5 cents)
  • Butter: $2.685 per pound (down 7.0 cents)

Due to these changes, the 2025 Class III milk price forecast is slightly lower. However, strong demand in the U.S. and less dairy in storage might help keep prices up. 

Key Recommendations for Action 

  • Get more from each cow: Since it’s hard to add cows, try to increase how much milk each cow produces.
  • Adapt to your area: Use strategies that work for your local conditions and market.
  • Keep an eye on prices: Stay updated on USDA price forecasts to help plan your milk sales.
  • Think about specialty products: Consider making specialty or high-protein dairy products to tap into growing markets.

The Bottom Line

The December 2024 Milk Production report shows that U.S. dairy farmers are resilient and can handle challenges. They deal with different production levels in various areas and managing herd sizes. However, there’s still a chance for growth and improving efficiency. As the industry changes, farmers should focus on making the most of their resources, understanding their local markets, and finding ways to grow slowly and steadily. To succeed, farmers can try new ways to boost milk from each cow, keep up with consumer preferences, learn about new farming tech, and stay informed about global markets. By doing these, American dairy farmers can tackle challenges and seize future opportunities by being innovative and adaptable.

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Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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Cheese Surplus and Butter Build-Up: What the December 2024 Cold Storage Report Means for Dairy Farmers

The latest Cold Storage Report is in, and it’s a game-changer. With cheese stocks piling up and butter churning out surprises, your next moves could make or break your bottom line. Dive in to discover what these market shifts mean for your herd, your milk checks, and your farm’s future.

Summary:

The U.S. Cold Storage Report shows surprising changes in cheese and butter stocks. We’ve got 19 million pounds more cheese than expected, especially Italian ones. This is the biggest yearly drop for December. Prices may rise by about 10 cents. Butter stocks are also higher, with 10 million pounds extra and an 11.4% increase from last year. This could lower prices and affect dairy farmers‘ income. Farmers should watch milk supply, keep track of prices, plan for market changes, find new buyers, and think about seasonal trends. Flexibility and quick adaptation to market shifts are crucial for success. 

Key Takeaways:

  • Dramatic shifts in dairy storage with unexpected cheese and butter inventory levels.
  • Significant implications on pricing trends at the Chicago Mercantile Exchange.
  • Potential strategy shifts required for dairy farmers regarding milk allocation.
  • Seasonal adjustments could be crucial as butter stocks traditionally build up.
  • Exploration of new markets or export opportunities advised due to domestic demand fluctuation.
dairy industry, cheese stocks, butter prices, milk supply, market changes

The latest U.S. Cold Storage Report contains unexpected findings that may significantly impact our industry. Let’s examine what this means for our herds, milk checks, and plans for the coming months.

ProductCurrent StocksVs. ForecastVs. Last YearPrice Implication
Cheese+19 million lbsAboveBelowCME prices should be ~10¢ higher
Butter+10 million lbsAbove11.4% higherPrices appear undervalued

Cheese: More in Storage Than We Thought

The report shows more cheese sitting in cold storage than expected – about 19 million pounds more. Italian cheeses make up a big chunk of that extra inventory. Here’s the information:

  • We’ve still got less cheese overall compared to last year
  • This is the most significant December-to-December drop in cheese stocks we’ve ever seen
  • Cheese prices on the Chicago Mercantile Exchange (CME) should be about 10 cents higher based on these numbers

What steps will you take in response to this information? As anticipated, we’ve produced more cheese wheels than we can sell. It’s a bit like hosting a big farm potluck and ending up with more leftovers than usual—you’ve got plenty of food, but you might need to get creative to use it all up. This surplus could lead to a decrease in prices, which might affect your milk checks. 

Butter: Stocks Are Piling Up

On the butter side, we’re looking at stocks that are 10 million pounds above what was expected and 11.4% higher than last year. Here’s the situation:

  • Butter prices seem too low for the amount we have
  • There’s tons of cream available, especially out West
  • We’re heading into the time of year when we usually build up butter stocks anyway

Think of it like this: We’ve churned up a storm, but we’ve got more butter than we know what to do with. It’s like having a bumper crop of hay when everyone else does too – great production, but it might mean lower prices at the market. 

RegionCream MultipleImplication
West0.70 – 1.15Abundant supply, potential price pressure
Midwest1.00 – 1.20Balanced market, steady demand
East0.90 – 1.20Slightly tighter supply, stable pricing

What This Means for Your Farm

What proactive steps should you take based on this information? Here are some ideas:

  1. Watch Your Milk: You might want to consider where your milk is going—cheese or butter—and whether you need to switch things up.
  2. Keep an Eye on Prices: While cheese and butter prices may seem low now, they could rise. Stay alert for good selling opportunities that could increase profits.
  3. Plan for Ups and Downs: The market looks shaky, so it might be wise to lock in some prices or use other risk management tools.
  4. Look for New Buyers: With less demand at home, it might be time to look into selling to new markets or even exporting.
  5. Think Seasonal: We’re heading into the butter-making season. Plan for what that usually means for your farm.

Quick Takeaways

  • Check your local co-op reports to see how your area compares to national trends
  • Consider adjusting your herd’s feed to optimize for either cheese or butter production
  • Keep a close eye on your milk components – they could make a big difference in your milk check
  • Talk to your nutritionist about tweaking your herd’s diet if you need to shift gears
  • Stay in touch with your processor to understand their needs and how they align with market trends

Looking Ahead 

This report highlights the extreme volatility of the dairy market. It’s like trying to guess the weather—you’ve got to be ready for anything. While we have more products on hand than expected, prices aren’t reflecting that yet. This could mean we’re in for significant changes in the coming months. 

Staying flexible will be the key to success in 2025. By monitoring consumer buying patterns and trends in different regions, you can adjust your operations accordingly, giving you a sense of empowerment and control in this unpredictable market. 

Remember, every challenge in farming is also an opportunity. Stay informed, be prepared to adapt, and embrace new strategies without fear. The success of your farm in this challenging market hinges on making intelligent choices supported by reliable information. 

What proactive steps are you currently considering? Are you thinking about changing up your herd’s diet? Are you looking into new markets for your milk? Or maybe you’re considering locking in some prices? Ensure that whatever decision you make aligns with the best interests of your farm and its future. 

Let’s keep the conversation going. Share ideas with other dairy farmers, contact your local extension office, and stay connected with industry experts. Together, we can navigate these choppy market waters and emerge stronger. Feel free to share your valuable experiences and insights openly. 

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Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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USDA Dairy Production Report: Surprising Trends in Cheese, Butter, and Milk Output for November 2024

Check out the surprising trends in the USDA Dairy Report for November 2024. Why did cheese output drop while butter and milk rose? Find out now.

Summary:

This article briefly examines the USDA’s November 2024 Dairy Product Production Report. It highlights surprises, like a 33 million-pound drop in cheese production, marking its most significant decline since January 2024. This raises questions about whether demand is down or if there’s been a strategic shift in production, possibly to meet high butter demand. In contrast, butter and Nonfat Dry Milk (NFDM)/Skim Milk Powder (SMP) production increased, even though California saw a 9.2% dip in milk production. The industry faces balancing supply and demand challenges, with NFDM stocks up by 26 million pounds. Whey products showed mixed results, with dry whey down but lactose slightly up. The report paints a picture of a dairy sector filled with opportunities and challenges, urging dairy farmers to adapt quickly to these changes.

Key Takeaways:

  • Cheese production saw an unexpected decline, down 33 million lbs from forecasted amounts.
  • Despite a significant drop in milk production in California, butter and NFDM/SMP production increased beyond expectations.
  • November 2024 records a notable YoY decrease in certain cheese types, while butter and nonfat dry milk productions see a rise.
  • NFDM stocks are now 19% above last year’s levels, indicating a significant increase in production.
  • California’s milk production witnessed a record 9.2% year-on-year decline, affecting national dairy dynamics.
  • Consumer demand, possible market expectations, and other unknown factors might have influenced production adjustments.
  • There’s a notable increment in regular ice cream production but a drop in low-fat varieties, reflecting shifting consumer preferences.
USDA Dairy Production Report, cheese production decline, butter production increase, Nonfat Dry Milk production, milk production shifts, dairy market trends, consumer habits changes, dairy supply chain strategies, cheese demand fluctuations, dairy industry resilience.

Isn’t it surprising that while butter production soared in November 2024, cheese production took an unexpected nosedive? It’s as surprising as seeing a rainbow at night! This sharp drop marks the most significant year-on-year decline in cheese since January 2024, even leaving the experts puzzled. Meanwhile, in California, despite a 9.2% drop in milk production—the highest yearly decline ever—other dairy products like butter and nonfat dry milk did unexpectedly well. This intriguing twist has left industry insiders scratching their heads, trying to figure out what all this means for dairy farmers and the industry.

ProductNov 2024 Production (lbs)YoY Change (%)MoM Change (%)
Total Cheese (excluding cottage cheese)1.15 Billion-1.7%-6.1%
Italian Type Cheese493 Million+1.1%-3.6%
American Type Cheese448 Million-4.9%-8.1%
Butter171 Million+4.4%+1.1%
Nonfat Dry Milk (human)120 Million+2.8%N/A
Skim Milk Powder47 Million-33.5%N/A

Unraveling the November 2024 Dairy Dynamics: Unexpected Shifts and Strategic Opportunities 

The USDA Dairy Production Report for November 2024 reveals unexpected shifts in the U.S. dairy industry. One standout finding is the drop in cheese production, which fell 33 million pounds short of expectations—the most significant decline since January 2024. This decrease prompts questions: Is demand down? Are there strategic production cuts? Did butter demand siphon milk away from cheese production? The last option seems unlikely, with cream supplies abundant in November. 

Despite the cheese dip, butter, and Nonfat Dry Milk (NFDM)/Skim Milk Powder (SMP) production rose. This happened even though California, which usually supplies 32% of the nation’s butter and 50% of its NFDM/SMP, saw a 9.2% drop in milk production. The state’s output increase hints at market shifts redirecting milk to more profitable products. However, NFDM stocks were 26 million pounds higher than expected, suggesting supply-demand balancing challenges. Whey stocks also rose slightly, yet they’re still 18.8% below last year, highlighting product inconsistencies. 

The report shows a dynamic dairy sector facing both opportunities and hurdles. While butter and NFDM/SMP productions are up, the cheese production slump may reveal changes in consumer habits. These trends could lead to revamped production tactics, forecasting adjustments, and supply chain strategies to match consumer behavior and global market changes.

Cheese Production: A Twisting Tale of Detours and Discoveries 

Turning our gaze to the complex world of cheese production, November 2024 surprised us all with a dip in output. Cheese lovers and producers were left puzzled. Why was there a decrease when milk production outside California was up? Intriguing. Let’s dig deeper. Some say it was a drop in demand. If cheesemakers thought fewer folks wanted gouda or cheddar, wouldn’t they cut back on production? It seems logical, but is it that straightforward? 

Another angle points to major players predicting new production capacities in November. They could have reduced production to prevent a surplus, but this could have sparked shortages. Was this a smart move or an oversight? It’s something to think about, right? 

The idea is that butter’s growing popularity might’ve taken milk away from cheese production. But with plentiful cream supplies, this theory doesn’t quite fit. Could butter’s demand have affected cheese production anyway? Food for thought! 

Thoroughly analyzing the data demands meticulous consideration of multiple factors. November’s cheese drop might be a blip in the bigger picture. Follow the dairy story to spot the clues in the churn!

Butter and NFDM/SMP Production Surge: A Testament to Tactical Tinkering and Demand Dynamics

The rise in Nonfat Dry Milk (NFDM) and butter production in November 2024 came as a surprise, especially with milk production in California dropping by 9.2%. You’d expect less milk to mean less butter and NFDM/SMP, but we saw them increase. What gives?

Producers shifted gears during the holiday season. Other states likely picked up the slack despite California’s milk dip, maybe using surplus or optimizing their supply chains. Technological advances could’ve helped, making it easier to do more with less. Plus, higher export prices could’ve encouraged more production. 

The shift towards increased NFDM/SMP and butter production presents both an opportunity and a challenge for dairy farmers. New strategies are needed with NFDM/SMP and butter driving the market. With more products, prices might level out or swing around, requiring quick action from everyone involved. This situation highlights a change in how the dairy sector handles resources, showcasing resilience and adaptability.

California’s Milk Production Plunge: Unveiling the Ripple Effects on a National Scale

The 9.2% drop in California’s milk production significantly impacts the dairy production scene. California is a major player, providing about 32% of U.S. butter, half of the nonfat dry milk (NFDM), and skim milk powder (SMP). This drop in output emphasizes the stability of this sector. 

This shortfall may lead to a shift in milk use towards high-demand products like butter and NFDM/SMP. Surprisingly, California maintained firm butter and NFDM/SMP production levels, suggesting a strategic response to meet demands by using stored stocks or enhancing efficiency. 

However, this extends beyond California, prompting considerations about the supply chain’s resilience and the ability of other states to manage the production gap. Will we see changes in dairy prices and availability across the nation? California’s role as a trendsetter might even affect global dairy trade plans. 

California’s dairy sector might need fresh ideas, like improving feed efficiency and using water-saving tech to keep up. This calls for industry action to handle current impacts and prepare for future challenges.

November 2024’s Dairy Insights 

  • Cheese Production: The data from November 2024 reveals distinct variations among different types of cheese. With 493 million pounds, Italian cheese grew by 1.1% from November 2023 but dropped 3.6% from October 2024. Conversely, American cheese production dropped to 448 million pounds, a decline of 4.9% from last year and 8.1% from last month.
  • Butter Production: Even with less milk, butter production stayed strong at 171 million pounds. That’s a 4.4% increase from November 2023 and 1.1% more than October 2024. This might mean that milk was mainly used for butter because of what the market needed.
  • Dry Milk Products: Some interesting notes here. Nonfat dry milk (NFDM) increased to 120 million pounds, 2.8% more than last year, showing strong demand or stockpiling. On the other hand, skim milk powder dropped significantly, down 33.5% to 47 million pounds.
  • Whey Products: Whey products show different trends. Dry whey was 66.2 million pounds, down 3.5% from last year. Lactose increased a bit by 0.8% to 84.7 million pounds. But whey protein concentrate fell 4.6%, totaling 39.4 million pounds.
  • Frozen Products: The frozen goods category had mixed results. Regular ice cream increased to 51.6 million gallons, a solid growth of 6.4%. In contrast, low-fat ice cream fell 7.2%, reaching 25.9 million gallons. Sherbet dropped 4.2% to 1.31 million gallons. On a brighter note, frozen yogurt grew by 7.6% to 2.61 million gallons. 

Deciphering Dairy Dynamics: Navigating Through Consumer Demand, Trade Policies, and Economic Shifts 

Emphasizing essential factors such as consumer demand is crucial to comprehending the fluctuations in market dynamics influencing dairy production. As diets shift between traditional and plant-based options, dairy producers must innovate. But how much does changing consumer taste impact production? Trade policies also play a significant role. Tariffs and trade rules can block or boost exports, affecting production and profits. Are you prepared for potential changes in international demand amidst global tensions, or are you heavily dependent on existing markets? 

Economic conditions like inflation and currency changes influence buying habits and industry health. Does this make you wonder how these economic shifts are affecting your operations? Reflect on how ready your strategies are for sudden demand increases. These market dynamics are not remote; they are the lifeblood capable of reshaping your dairy business. Use these insights to explore new paths for your operations.

The Bottom Line

Wrapping up our look at November 2024’s dairy production, it’s clear the industry is at a crossroads. The drop in cheese production and the rise in butter and NFDM/SMP show how unpredictable the market can be. With California driving these changes, understanding the ripple effects is key for everyone in the industry. This report highlights the need to stay flexible with changing consumer demands, trade policies, and economic trends. These factors will shape strategies, possibly leading to new solutions and partnerships. So, what does this mean for you? As a dairy pro, it’s a great time to dig into these trends, connect with others, and share ideas. Consider using these insights in your strategic plans to boost efficiency, sustainability, and profits. Your proactive engagement can guide the industry through these transformative changes. Stay informed, stay connected, and lead the way in our industry.

Learn more:

Join the Revolution!

Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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