The Agriculture Department’s latest preliminary data shows January milk production hit 19.1 billion pounds, up 0.1% from January 2024, following a 0.5% decline in December. Output in the top 24 states totaled 18.3 billion, up 0.2%, after slipping 0.4% in December. December output was revised down 3 million pounds in the 50 states and was unchanged in the 24-State data. 

January cow numbers, at 9.37 million, were up 10,000 head from December and 41,000 more than a year ago. The December count was revised up 4,000 head. The 24-State count, at 8.9 million, was up 9,000 from December, and 54,000 above a year ago. The December count was revised up 5,000 head.

January output per cow in the 50 states averaged 2,040 pounds, down 7 pounds or 0.3% from a year ago. The December average was revised down 1 pound. The 24-State January average, at 2,054 pounds, was down 8 pounds or 0.4%. The December average was revised down 2 pounds from last month’s report.

Milk output for all of 2024 was reported at 226 billion pounds, down 0.2% from 2023. Revisions to 2023 production decreased the annual total by 53 million pounds. Revised 2024 production was up 14 million pounds from last month’s estimate. Annual milk production has increased 8.3% from 2015, says USDA.

Cow numbers in 2024 totaled 9.34 million, down 42,000 from 2023. The average number of milk cows was revised up 3,000 head for 2024. The average has increased 0.2% from 2015. Production per cow averaged 24,178 pounds, up 61 from 2023. That average has increased 8.1% from 2015, according to the USDA.

Lots of eyes were on California which continues its battle with bird flu. Variants in several states are keeping the war going. January output in the nation’s Number 1 milk producer was down a whopping 203 million pounds or 5.7% from a year ago. December output was revised down 43 million pounds, resulting in an 8.0% decline from a year ago instead of the 6.8% reported.

Michigan was up 0.7% on 1,000 more cows and a 10 pound gain per cow.

StoneX says both fat and protein content nationwide were well above a year ago, which puts component adjusted production up 2.2%.

The U.S. therefore has plenty of butter and cheese. USDA’s latest Cold Storage report shows January 31 butter stocks totaled 270.3 million pounds, up a whopping 56 million or 26.1% from December, and up 22.7 million pounds or 9.2% from Jan. 2024. December stocks were revised down 8.1 million pounds.

The American type cheese inventory inched up to 777.6 million pounds, up 6.5 million or 0.8% from December’s level, but was down 62.2 million pounds or 7.4% from a year ago. The December total was revised 1.4 million pounds lower.

The “other” cheese category climbed to 573.0 million pounds, up 13.6 million pounds or 2.4% from the December level, but was down 21.9 million or 3.7% from a year ago. December’s level was revised up by 435,000 pounds.

The total cheese inventory hit 1.37 billion pounds, up 19.9 million pounds or 1.5% from December, but down 82.4 million pounds or 5.7% from a year ago as competitive U.S. prices attracted plenty of global buyers for our cheese.

StoneX says the report suggests that butter demand was better than thought for December and probably January as well. It adds “This was the biggest cheese decline we’ve seen in January in at least two decades and would argue for CME block close to $2.00 per pound, even though they averaged $1.88 for the month.” 

New data from USDA’s Agricultural Marketing Service suggests that the growing number of beef-on-dairy animals is contributing to higher cattle prices for producers and added value to feedlots and processors, according to CoBank livestock analyst Abbi Prins.

Speaking in the March 3 Dairy Radio Now broadcast, Prins said auction prices show that dairy beef crossbred cattle are more expensive, especially on the slaughter side, compared to native beef and traditional dairy cattle. She attributes that to a number of things, such as weight as “Traditionally, dairy cattle are heavier than native beef cattle in a feedlot and dairy beef settles in between.”

Secondly are the attributes. “Because they have a dairy background, those animals can have a higher meat grade,” says Prins, “when they enter the processing plants and they show a little more feed efficiency compared to traditional dairy cattle.” It’s also meant extra income for dairy bottom lines as crossbred calves range $600-$800 per head at just a week of age, she said.

Prins says the trend for beef on dairy animals will continue because of the value it provides dairy producers but also for what’s it’s meant for feedlots and packers. She doesn’t see the beef herd getting rebuilt until 2027 or later because that’s dependent on weather and “We have really high calf prices right now so once those things come into balance we should see the herd starting to rebuild.”

“The U.S. beef cow herd is at historically low levels due to prolonged drought and poor grazing conditions,” says CoBank. “Tight supplies amid robust consumer demand for beef have pushed cattle prices to record highs.”

Milk volumes are sufficient and steady for supporting somewhat stronger output. Retail cheese demand is somewhat lighter to steady while moderate to steady from food service. Manufacturers and distributors indicate that demand from international buyers is mixed, according to DMN.

CME butter fell to $2.3350 per pound Wednesday, lowest since April 14, 2023, but it closed Thursday morning at $2.3450, after finishing Friday at $2.4150.

StoneX say export activity has increased as international buyers step in to a wildly discounted U.S. fat market. DMN says Central region butter makers reported some upticks in demand this week. As market prices continue to fall, retail customers are showing less reluctance to add to their orders. The delay times outside butter plants for cream truckers has declined but the onslaught of cream has come on heavily the past few weeks. Plant downtime, due to weather or other situations subsided this week. Cream multiple lows have not been reported at the same levels this week, despite being well below 1.00 for most churn usage. The CME new crop rule may stanch some of the recent price declines, as butter produced before Dec. 1, 2024 will no longer be available to offer on the cash call, says DMN.

StoneX says “Bearish news abounds. Powder demand remains lackluster and now discussions seem hopeless around demand, especially export demand to Mexico ever returning to normal.”

Dry whey lost a penny Monday and fell to 52.50 cents per pound Thursday morning, lowest since July 19, 2024, and compares to its Friday close at 54.50 cents per pound.

Trump’s threatened tariffs look like they will indeed be implemented on March 4 and the dairy industry is watching things closely because they will impact U.S. dairy exports.

HighGround Dairy’s Monday Morning Huddle warned that the tariff exemption China has maintained on whey for the past four years on U.S. products is set to expire at the end of February, “which means U.S. whey imports into China will no longer be duty-free. The U.S. primarily ships feed-grade whey, which the Chinese use for pork production. This expiration and heightened trade tensions with the country has already significantly impacted the U.S. whey market.”

On a brighter note, the Feb. 24 Daily Dairy Report stated “The yogurt market could be poised for a demand resurgence. Not only are sales increasing due to the growing use of GLP-1 weight loss drugs, but a new study shows that eating yogurt twice a week could reduce the risk of colon cancer. 

Tuesday’s Global Dairy Trade Pulse saw 4.33 million pounds of product sold, up slightly from the Feb. 11 Pulse, and 96.9% of the total on offer. Prices on both skim and whole milk powder was down from the last Pulse. 

In politics, the International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMPF) gave a thumbs up to the Trump Administration’s updated response plan for highly pathogenic avian influenza (HPA).

IDFA President and CEO Michael Dykes, D.V.M., stated; “The International Dairy Foods Association is grateful to Agriculture Secretary Rollins for investing up to $100 million in new and ongoing research into animal vaccinations and therapeutic tools to manage highly pathogenic avian influenza in our nation’s dairy herds and commercial poultry flocks. We continue to urge USDA and its federal partners to act quickly to develop and approve the use of safe, effective bovine vaccines to guard against current and future strains of avian influenza affecting U.S. dairy. It is essential that the federal government work with our industry to ensure a vaccination strategy is feasible and cost-effective for farmers while working with international trading partners to assure the use of vaccines does not limit or disrupt U.S. agricultural exports.”

NMPF President and CEO Gregg Doud said “Dairy farmers and cooperatives appreciate USDA’s leadership in supporting American agriculture and safeguarding animal health as it deals with what soon will be a second year of H5N1 bird flu disruptions in dairy cattle. Dairy farmers and all of agriculture takes biosecurity seriously, and we thank USDA and the Trump Administration for actions that will further those efforts.”