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.

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 

• 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.”

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 

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

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? 

Learn more:

• How Cheese Exports and China’s Demand are Powering the US Dairy Economy in 2024
• Is 2024 Shaping Up to Be a Disappointing Year for Dairy Exports and Milk Yields?
• Global Dairy Market Trends July 2024: Australia’s Rise as Argentina and New Zealand Face Challenges

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.