U.S. milk production is slowly recovering though it was below that of a year ago for the second month in a row in December, primarily due to the impact of bird flu in California.

The USDA’s latest preliminary data put December output at 18.7 billion pounds, down 0.5 percent from December 2023, following a 0.4 percent drop in November. December output in the top 24 states totaled 18.0 billion pounds, down 0.4 percent, after slipping 0.3 percent in November.

November output was revised up a hefty 110 million pounds from last month’s estimate, resulting in a 0.4 percent decline instead of the 1 percent drop originally reported. Revisions added 89 million pounds to the 24-state count, resulting in November output being down 0.3 percent instead of a 0.8 percent decline.

December cow numbers fell to 9.351 million, down 9,000 head from November, though the November count was lowered 5,000. The December herd was only up 3,000 from a year ago and was 28,000 more than January. The 24-state December count, at 8.91 million, was down 8,000 from November, which was revised 4,000 head lower, but numbered 17,000 more than a year ago.

December output per cow in the 50 states averaged 2,005 pounds, down 10 pounds or 0.5 percent from a year ago. The November average was revised up 12 pounds. The 24-state December average, at 2,020 pounds, was down 11 pounds or 0.5 percent from a year ago. The November average was revised up 11 pounds from last month’s report.

Preliminary data for the 50 states for all of 2024 shows milk output at 225.854 billion pounds, down 0.2 percent from 2023, in line with USDA’s latest World Agricultural Supply and Demand Estimates report, and was the second year in a row to fall short of the previous year. Cows numbered 9.339 million head in 2024, down 47,000 from 2023. Output per cow averaged 24,184 pounds, up 67 pounds. The 2025 forecast is for 227.2 billion pounds, which would be a 1.3-billion-pound increase, or 0.6 percent, from 2024.

HighGround Dairy points out 2024 saw the most significant annual decrease since 2001, and “It has been over 50 years since milk production fell for two consecutive years. However, the tide seems to be turning as milk cow numbers improve versus the prior year. Further, component levels will most likely not be down annually, and those are the most important when making dairy products.”

California faired a little better than thought in November and December from its ongoing battle with bird flu. November output, while down a hefty 259 million pounds from a year ago, was revised up 42 million from last month’s report, and resulted in a 7.9 percent drop for the state, instead of the 9.2 percent reported.

December output was down 233 million pounds or 6.8 percent from a year ago. That was due to a 135-pound drop per cow while cow numbers were down 1,000 head. Output per cow was down 150 pounds in November.

Wisconsin’s December output hit 2.69 billion pounds, up 2 million or 0.1 percent from a year ago, on 5,000 fewer cows, and output per cow up 10 pounds.

Idaho was up 3.5 percent, thanks to 17,000 more cows and a 20-pound-gain per cow. Michigan was up 1.4 percent on a 25-pound-gain per cow and 1,000 more cows milked.

Minnesota was off 0.7 percent, due to a loss of 10,000 cows, though output per cow was up 30 pounds. New Mexico was down 3.3 percent, on 10,000 fewer cows. Output per cow was up 15 pounds.

New York was up 0.7 percent on a 15-pound increase per cow. Cow numbers were unchanged. Oregon showed the biggest decline in the country, down 8.2 percent on 9,000 fewer cows, and a 15-pound drop per cow. 

Pennsylvania was unchanged across the board. South Dakota was up 6.4 percent on a 45-pound-gain per cow and 8,000 more cows. Texas again had the biggest gain in the U.S. up 7.5 percent, thanks to 40,000 more cows and 25 pounds more per cow.

Vermont was down 0.5 percent, on 3,000 fewer cows, although output per cow was up 40 pounds.

StoneX says December milk components were strong, “partly due to lapping over some weakness in the previous year. So even with headline production down 0.4 percent, component adjusted production would be up about 1.5 percent for the month.”

Meanwhile, butter and cheese stocks grew December. The USDA’s latest Cold Storage report showed Dec. 31 butter holdings climbed to 222.4 million pounds, up 8.7 million pounds or 4.1 percent from November, and up 22.8 million or 11.4 percent from December 2023. Butter stocks mirrored those a year ago in November.

American type stocks grew to 772.6 million pounds, up 7.1 million or 0.9 percent from November’s level, but were down 65.1 million pounds or 7.8 percent from a year ago.

The “other” cheese holdings climbed to just under 559 million pounds, up 15.8 million or 2.9 percent from November, but down 24.7 million or 4.2 percent from a year ago.

Total cheese stocks grew for the first time in nine consecutive months, with the Dec. 31 inventory at 1.355 billion pounds, up 23 million pounds or 1.7 percent from November. Stocks were down 87.1 million pounds or 6.0 percent from a year ago, however. The report is viewed as somewhat bearish to the market.

Dairy processors met recently in San Antonio, Texas, for the International Dairy Foods Association’s annual Dairy Forum. One of the key take-aways of the forum was the strong demand for high value whey protein, according to StoneX broker Dave Kurzawski in the Feb. 3 “Dairy Radio Now” broadcast.

The bearish side is fat and butter, he said, and while not widely spoken about at the forum, the downside risk is for the butter market. He blamed the shortfall in U.S. milk output to California’s battle with bird flu where production was down 6.8 percent, while output elsewhere in the country was up about 1 percent.

He also reported that organic milk is extremely tight right now. One of the reasons may be a switch by consumers away from plant-based beverages to animal-based milk the past 12 months, particularly to organic product.

The quest to meet that rising demand won’t come quickly. Kurzawski explained that few conventional farmers want to make the switch to organic, and even if they did, it could take several years to do so. He said he thinks consumers will embrace conventional milk again, which he believes is just as healthy and satisfying as organic. “It’s a first step in the right direction,” he concluded.

As I have written in the past, consumers need to read the ingredients on the labels of plant-based products and ask themselves if that is what they want to put into their bodies, compared to natural, nutrient-laden milk from the cow.

Cash block Cheddar cheese was climbing the last week of January and hit $1.9350 per pound Thursday, highest CME price since Jan. 6. It had closed the previous Friday at $1.8325. The barrels were trading Thursday at $1.8650, highest since Jan. 17, after finishing Friday at $1.82.