February’s Milk Production report shows output at 17.725 billion pounds, down 2.5 percent from February 2024, however adjusting for the Leap Day, output was up 1.0 percent from a year ago, and the largest percentage gain in two years. The 24-state production, at 16.985 billion pounds, was up 0.9 percent.

January output was revised up 70 million pounds in the 50 states, resulting in a 0.5 percent increase from a year ago, instead of the 0.1 percent originally reported. Revisions added 72 million pounds in the 24-state data, up 0.6 percent, instead of 0.2 percent.

February cow numbers totaled 9.405 million, up 15,000 head from January and 62,000 more than a year ago. The January count was revised up 25,000 head. The 24-state count, at 8.963 million, was up 13,000 from January, and 75,000 above a year ago. The January count was revised up 25,000 head.

February output per cow in the 50 states averaged 1,885 pounds, up 6 pounds or 0.3 percent from a year ago, and up 2 pounds or 0.1 percent in the 24-state data.

HighGround Dairy says this was a per cow record for the month, but “Even more impressive, was the 44-pound increase from January, which is the second-highest gain between these two months since at least 1981.”

Adjusting for component increases, milk production was up 3.5 percent year over year, according to StoneX, which added, “The last time we saw that kind of growth was mid-2021.” It means there’s plenty to make more butter and cheese.

Year over year comparisons are skewed because of the Leap Day, but factoring that in, California milk was down 126 million pounds or 3.7 percent from a year ago, thanks to a 75 pound drop per cow. Cow numbers were up 1,000 head. Bird flu continues to impact the U.S. top milk producer and slow its recovery.

The USDA’s latest Cold Storage data reported Feb. 28 butter stocks at 305.5 million pounds, up a hefty 44.8 million pounds or 17.2 percent from January, up 7.8 million or 2.6 percent from Feb. 2024, and the second-highest February level since 1994, according to HighGround Dairy. January stocks were revised down 9.5 million pounds from last month’s report.

American type cheese climbed to 782.9 million pounds in February, up 12.1 million or 1.6 percent from January’s level, but was down 47.4 million pounds or 5.7 percent from a year ago. The January total was revised 6.8 million pounds lower.

The “other” cheese category holdings totaled 574.2 million pounds, up 11.9 million pounds or 2.1 percent from the January level, but down 31.8 million or 5.2 percent from a year ago. January’s level was revised down 10.7 million pounds.

That put the total February cheese inventory at 1.38 billion pounds, up 24.7 million pounds or 1.8 percent from January, but down 76.8 million or 5.3 percent from a year ago. January’s total was revised down 18 million pounds. The report is viewed as neutral to the market.

The importance of U.S. dairy exports will increase as the spring flush begins and new cheese capacity turns out more cheese to consume. China’s January and February dairy imports rose 10 percent, compared to a year ago, when adjusted for the leap year. Unfortunately, little to none of that came from the U.S. HighGround Dairy says import data aligns with strength seen in New Zealand’s data and was primarily driven by fat-based products.

Butter imports totaled 25.6 million pounds in January and 29.1 million in February, up 29.1 percent and 64.7 percent respectively from a year ago.

Cheese imports reached four-year highs, totaling 32 million pounds in January, down 5.8 percent from a year ago, and 33.1 million in February, up 44.9 percent. Oceania dominated market share at 67.5 percent, says HGD, while the U.S. lost market share.

Whey imports totaled 125.4 million in January and 124.8 million in February, up 19.6 percent and 48.8 percent respectively, and were at three year highs, according to HGD. “While much of the surge was driven by a push to bring in product ahead of the U.S. tariff exemption expiration, there are also early signs of diversification.

Combined whole milk/skim milk powder imports amounted to 177.8 million pounds in January and 162.7 million in February, down 9.7 percent and 1.7 percent respectively.

HighGround summed up the report, “If there were any questions as to why the Oceania market has been so well supported over the last six months, this data reinforces the notion of strong Chinese demand. It also highlights the deepening link between China and New Zealand, with notable market share growth across all product classes.”

A new report from CoBank says “Genetic improvements within the U.S. dairy herd are fueling historic gains in key milk components needed to produce cheese, butter and a variety of other popular dairy foods. While U.S. fluid milk production has remained relatively flat in recent years, butterfat and protein levels within the nation’s milk supply are growing at a record pace as more producers are employing genetics to optimize milk composition.”

The steady upswing in milk components is paying dividends for dairy producers and positioning dairy processors for continued growth. Over 80 percent of the U.S. milk supply goes into manufactured dairy products that rely on butterfat and protein content. Demand for those two key milk components is rising as $8 billion of new dairy processing capacity is slated to come online through 2027.

The report adds: “The historic pace of change in U.S. milk composition is poised to continue as genetic gains and market incentives will drive butterfat and protein production higher for the foreseeable future.”

In politics, the International Dairy Foods Association (IDFA) submitted formal comments to the Office of the U.S. Trade Representative (USTR) this week, urging the agency to “Reconsider its proposed actions to curb China’s dominance in global shipbuilding and boost shipbuilding in the U.S. While IDFA supports the administration’s efforts to revitalize the U.S. shipbuilding industry, the organization opposes USTR’s proposed penalties as they would severely disrupt U.S. dairy supply chains and damage the global competitiveness of American agriculture.”

“Strengthening America’s shipbuilding is a goal the dairy industry shares. IDFA members have seen firsthand the value of U.S.-owned and -flagged vessels when supply chains are tested,” said Becky Rasdall Vargas, senior vice president of trade and workforce policy at IDFA. “USTR’s proposed actions, however, risk inflicting serious unintended consequences on American exporters, producers, and workers by raising shipping costs, rerouting global trade, and weakening supply chains, especially for time-sensitive, perishable products like dairy.”

Meanwhile, U.S. Sen. Kirsten Gillibrand, Senate Minority Leader Chuck Schumer, and Rep. John Mannion demanded answers on the Trump administration’s reported plans to potentially close the statewide offices for the Natural Resources Conservation Service, Farm Service Agency, and USDA Rural Development in Syracuse.

The letter stated, “President Trump and Elon Musk’s so-called ‘Department of Government Efficiency’ is terminating the lease for the building that houses these three agencies, leaving the future of the programs they administer uncertain. The administration has also laid off a number of workers, leaving New Yorkers unable to reach New York-based staff at the USDA over the phone.”