Much of the country was digging out of last weekend’s winter storm this week and power was being restored to thousands. Lawmakers in Washington were hoping to avoid a second government shutdown as Friday’s deadline approached to approve another funding measure. Unlike the frigid weather, tempers were flaring on Capitol Hill as several lawmakers warned they would not support any legislation containing funding for Immigration and Customs Enforcement, better known as ICE, which has drawn extreme opposition across the country, particularly in Minnesota. And, the Federal Reserve announced that it will hold its key interest rate at current levels.

Meanwhile, you’d think US dairy farms were in the spring flush. December milk output hit 19.568 billion pounds, up 4.4 percent from December 2024. The 24-state total, at 18.823 billion pounds, was up 4.6 percent. Fat and protein were both up from last year, which put component adjusted production up 5.9 percent, according to StoneX.

Production in the 50 states for the quarter totaled 57.8 billion pounds, up 4.2 percent from a year ago. Cow numbers, at 9.56 million, were up 23,000 head from the July to September quarter, and 202,000 more than fourth quarter a year ago.

November milk production was revised up 6 million pounds to 18.796 billion, 4.5 percent above a year ago, and the 24-state total was revised up 3 million pounds, to 18.081 billion, up 4.7 percent.

Output for all of 2025 amounts to 231.482 billion pounds, up 2.5 percent from 2024, and 222.476 billion for the 24 states, up 2.6 percent. Cow numbers for the year were up 148,000 head and output per cow averaged 24,392 pounds, up 214 pounds.

December cows numbered 9.567 million, up 9,000 from the November count, which was revised down 12,000 head, but up 212,000 or 2.3 percent from a year ago. The 24-state count was 9.138 million, up 9,000 from the November total, which was revised down 4,000 head, but is 222,000 or 2.5 percent above a year ago.

December output per cow averaged 2,045 pounds in the 50 states, up 41 pounds or 2.0 percent from a year ago. The 24-state average, at 2,060 pounds, was up 42 pounds or 2.1 percent from 2024. The November average was revised up 4 pounds in the 50 States and 2 pounds in the 24 states.

The USDA’s weekly data showed 60,300 head of dairy cattle were sent to slaughter in the week ending Jan. 10, up 14,800 from the previous week, and 4,900 or 8.8 percent above that week a year ago. That brought the year-to-date total to 105,800 head, up 6,300 or 6.3 percent from a year ago.

There’s plenty of dairy in the freezer though exports have kept stocks in check. The USDA’s latest Cold Storage report showed December butter stocks had shrunk to 199.3 million pounds, down 11.1 million pounds or 5.3 percent from November, and a whopping 14.96 million or 7.0 percent below December 2024.

American type cheese crept to 789.8 million pounds, up 2.5 million or 0.3 percent from the November level, and up 18.6 million pounds or 2.4 percent from a year ago. The “other” cheese holdings climbed to 559.9 million pounds, up 7.2 million or 1.3 percent from November, but were just 468,000 pounds above a year ago.

The total December cheese inventory hit 1.372 billion pounds, up 10.2 million or 0.7 percent from November, and up 18.0 million or 1.3 percent from a year ago. There were no revisions in any of the November data.

One thing for sure that keeps stocks low is consumer demand and there’s good news on that front for dairy products. CoBank says, “Consumer demand for foods and beverages with high protein levels continues to surge as a growing percentage of Americans focus on increasing their dietary protein. The sharp rise in demand is shifting buying habits and could ultimately transform the retail grocery space. Food and beverage manufacturers representing a host of product categories are moving quickly to respond with new product offerings and position themselves for success with protein-hungry consumers.”

A new report from CoBank states, “This strong consumer demand for protein bodes well for the U.S. dairy industry, given the high protein levels and nutritional qualities in traditional dairy products like milk, cheese, yogurt and cottage cheese. But for dairy processors, the opportunity extends well beyond staple products in the retail dairy case. Dairy-based ingredients are increasingly being used to boost protein content in a wide variety of products including baked goods, protein bars, ready-to-drink protein shakes and whey powders.”

Corey Geiger, lead dairy economist, said, “The dairy industry is in a great position to help consumers meet their protein intake goals. Dairy products have a unique advantage because they contain all nine essential amino acids required in a human diet, making it a complete protein source. We expect more food and beverage manufacturers will take a cue from formulators that have already incorporated dairy-based ingredients into protein-centric product areas outside of the retail dairy case.”

The cash dairy markets moved higher Monday but soon petered out. The Cheddar blocks gained 9 cents, hitting $1.4450 per pound, highest CME price since the day before Thanksgiving, but then reversed direction Tuesday, falling 4 cents, and was trading Thursday at $1.3750, 50.25 cents below a year ago, after closing Friday at $1.3550.

The barrels were bid 10.50 cents higher Monday, hitting $1.4650 per pound, highest since Dec. 2, 2025. They also reversed course, giving back 5.50 cents Wednesday on 2 sales, slipping to $1.41, where they remained on Thursday. That’s 40 cents below a year ago after closing Friday at $1.36.

Super Bowl is characteristically one of, if not the strongest, drivers of cheese demand and may have contributed to the price rise this week, but was probably more due to weather conditions.

Central region milk output is strong, says Dairy Market News. The winter storm that impacted much of the region over the weekend contributed to lighter demand for spot volumes of milk from Class I and Class III processors. Class III spot milk prices at mid-week ranged from $5- under to $1-under.

Poor road conditions hindered movement of milk and negatively impacted production early in the week. Cheese production was steady to lighter this week, though contacts expected busier schedules later in the week. Retail cheese demand is strong, according to DMN, but contacts say food service sales remain lackluster.

Western cheese manufacturers reported that milk production was meeting contractual volumes. Class III spot loads were tighter in the northwestern part of the region, but enough was being secured from outside the immediate area. Cheese manufacturer demand for Class III spot loads was mixed. Cheese output was steady. Domestic demand is moderate. Export demand is stronger.

CME butter was up 2.50 cents Monday, hitting $1.60 per pound, highest since Halloween, but it had fallen back to $1.4850 Thursday, 94.75 cents below a year ago, after closing Friday at $1.5750. 38 loads had made their way to Chicago so far this week.

Central region cream production remains strong, says DMN, and spot volumes were plentiful. Winter weather slowed the movement of some volumes of milk and cream over the weekend and early this week.