U.S. cheese consumption hit an all-time high in 2025, according to data from USDA’s Economic Research Service, however consumption is not keeping up with cheese output. The Agriculture Department issued December and January Supply and Utilization data on March 13 as both were delayed by the previous government shutdown. Highlights from January follow.

Cheese utilization totaled 1.29 billion pounds, up 5.7 percent from January 2025, and marked a record for the month of January, according to HighGround Dairy, due to domestic utilization and exports setting highs for the month. Domestic use hit just under 1.2 billion pounds, up 5.2 percent from Jan. 2025, while exports, at 114 million pounds, were up 10.8 percent from a year ago.

Butter disappearance totaled 213.1 million pounds, up 14.6 percent from a year ago, exceeding 200 million for the first time ever, according to HighGround. Domestic usage hit 192.8 million pounds, up 7.8 percent, while exports came in at 20.3 million, up 185.9 percent. HighGround says November’s data was “abysmal” but “turned out two very strong months in December and January, both totals set monthly records, and on a 30-day adjusted basis, December ranked third all-time.”

Dry whey totaled 73.7 million pounds, up 1.9 percent from a year ago. “Robust export volumes narrowly offset record low January domestic use,” says HGD. “In contrast, although total whey protein concentrate utilization was positive year-over-year, it was due to strong domestic consumption while exports languished.”

Nonfat-skim milk powder utilization hit 189.3 million pounds, up 20.8 percent from a year ago. Domestic use was up 23.9 percent and exports were up 19.2 percent. Both were up year over year for the first time since May 2025, according to HGD. “However, totals are not overly robust, and smaller than in other years.”

Fluid milk sales took a dip in starting 2026. USDA’s data showed packaged sales at 3.766 billion pounds, down 2.3 percent from January 2025, and followed a 1.2 percent slip in December.

Conventional product sales totaled 3.5 billion pounds, down 2.1 percent from a year ago. Organic sales, at 261 million, were down 5.4 percent from a year ago, but represented a typical 6.9 percent of total milk sales in the month.

Whole milk sales totaled 1.4 billion pounds, up 1.6 percent from a year ago. Whole milk represented a typical 37.2 percent of total sales for the month. Skim milk sales, at 144 million pounds, were down 10.3 percent from a year ago.

The April Federal order Class I base milk price was announced at $18.66 per hundredweight, up $3.19 from March, 91 cents below April 2025, but the highest Class I price since September 2025. It equates to $1.60 per gallon, down from $1.68 a year ago. The four-month Class I average stands at $16.30, down from $20.56 a year ago, and compares to $18.61 in 2024.

While the Fed voted to keep interest rates where they are, dairy margins weakened in the first half of March from a combination of lower milk prices and steady to slightly higher feed costs. That from the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC.

“Most of the pressure on milk futures was due to weakness in the Class III market,” the MW explained, “With Class IV Futures continuing to see strength from butter and nonfat dry milk powder. After a strong butter rally recently, butter futures sold off back below $2 per pound, although a rally in powder futures helped offset this. Butter has been supported by strong export sales despite a continued surge in output. According to USDA’s Dairy Products report, January butter production of 231.5 million pounds rose 6 percent from 2025, although this increase was offset by the highest January butterfat exports since 1994.”

The MW added, “USDA Census Bureau trade data shows January 2026 butterfat exports exceeded 30.4 million pounds, with one-third of the volume consisting of anhydrous milkfat, which exceeds 98 percent butterfat. Consequently, the butterfat equivalent of January’s butter and milkfat exports exceeds 14,900 MT and represents 14 percent of U.S. butter production during January. Cheese production during January of just under 1.3 billion pounds was up 4.7 percent from last year with a 6.5 percent increase noted in Italian varieties which exceeded 3.9 percent growth in the American category, although it should be noted that Cheddar production was up 7.4 percent from last year.”

“January cheese exports of 51,700 MT were up 11 percent from last year though down 4.5 percent from December. Mexico accounted for 30 percent of total cheese exports in January, but exports to our southern neighbor were the lowest since March 2025 and almost 20 percent below December as the US dollar continues to strengthen relative to the Peso, in part resulting from the war with Iran,” the MW concluded.

USDA’s Livestock, Dairy, and Poultry Outlook, issued March 16, mirrored milk price and production projections in the March 10 World Agricultural Supply and Demand Estimates report. The Outlook stated, “Dairy herd expansion is expected to continue into 2026, consistent with 2025 trends and supported by dairy cow numbers reported through January 2026, recent culling patterns, and expected cow retention. Based on recent data, the number of dairy cows forecast in 2026 has been revised upward to 9.57 million, an increase of 30,000 from the previous forecast and 72,000 head more than in 2025. Milk output per cow has been revised downward to 24,520 pounds, a decrease of 65 pounds from the previous forecast, but still 129 pounds higher than in 2025.”

Dairy cow slaughter in January was only slightly below last year’s levels on a monthly basis, according to the Outlook. “However, available data for February suggests an uptick in slaughter activity that aligns with seasonal patterns in dairy cow slaughter, dairy cow slaughter increases in the spring when spring flush in milk production tends to depress milk prices. While year-to-date slaughter data points toward more slaughter activity than last year, January dairy cow average inventories indicate that farmers driven by the high returns from beef-on-dairy practices are still retaining cows in production despite recent falling milk prices.”

The Outlook also warned “On March 6, workers at the JBS beef plant in Greeley, Colorado gave notice to management that they plan to strike at midnight March 15. In anticipation of the walkout, industry analysts have noted that JBS was halting slaughter starting March 9 to finish processing remaining carcasses. It is estimated that JBS harvests 5,000-6,000 head per day at their Greeley plant. JBS spokespeople noted that it will “temporarily shift production to other JBS facilities where we currently have excess processing capacity.”

USDA slaughter data shows 57,900 dairy cows sent to slaughter the week ending Feb. 28, 1,800 head or 3.2 percent more than a year ago. Year to date 517,900 cows had been culled, up 34,200 or 7.1 percent from a year ago.

CME block Cheddar was trading Thursday at $1.6475 per pound, highest since Nov. 10, 2025, and 4.50 cents above a year ago. It closed Friday at $1.53. The barrels were trading Thursday at $1.57, following a Friday finish at $1.53. Traders were anticipating Friday afternoon’s February Milk Production report.