Dairy Herds Set New Productivity Mark in February
Published: Friday, April 4, 2025
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
February's Milk Production report shows output at 17.725 billion pounds, down 2.5% from February 2024. However, adjusting for the Leap Day, output was up 1% from a year ago and the largest percentage gain in two years. The 24-state production, at 16.985 billion pounds, was up .9%.
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 .3%, from a year ago, and up 2 pounds, or .1%, 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% 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%, 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. No. 1 milk producer and slow its recovery.
Wisconsin output was down 4 million pounds, or .2%, due to 5,000 fewer cows, though output per cow was up 5 pounds.
Dairy cows are staying in the herd longer. The USDA's weekly Slaughter report shows 52,400 head were sent to slaughter the week ending March 15, down 5,000, or 8.7%, from a year ago. Year to date, 591,500 head had exited the dairy business, down 42,000, or 6.6%, from a year ago.
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%, from January, up 7.8 million, or 2.6%, from February 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%, from January's level, but was down 47.4 million pounds, or 5.7%, 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%, from the January level, but down 31.8 million, or 5.2%, 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%, from January, but down 76.8 million, or 5.3%, from a year ago. January's total was revised down 18 million pounds. The report is pretty much 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%, compared to a year ago, when adjusted for the leap year. Unfortunately, little to none of that increase came from the U.S. HighGround Dairy says the 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% and 64.7%, respectively, from a year ago. Cheese imports reached four-year highs, totaling 32 million pounds in January, down 5.8% from a year ago, and 33.1 million in February, up 44.9%. Oceania dominated market share at 67.5%, 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% and 48.8%, 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."
"The U.S. saw a slight dip in market share, but from a volume standpoint, increased shipments from Turkey, Poland, Argentina and the UK stood out."
Combined whole milk/skim milk powder imports amounted to 177.8 million pounds in January and 162.7 million in February, down 9.7% and 1.7%, respectively. Powder stocks here at home were growing, with NFDM stocks in January up a whopping 41% from a year ago.
HighGround stated, "If there were any questions as to why the Oceania market has been so well-supported 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."
The March 24 Daily Dairy Report pointed out that China's imports of skim milk powder from the U.S. were down 60% from a year ago in January, and there was none in February. "The last time China recorded a zero volume of skim milk powder imports from the United States was in May 2019, toward the end of the previous trade war between the two countries," the DDR stated.
CME block Cheddar hit $1.6475 per pound last Thursday but closed last Friday at $1.6350, up 3.25 cents on the week, and 21.75 cents above a year ago. The barrels also finished at $1.6350, 8.50 cents higher on the week, and 20.75 cents above a year ago. Forty-eight loads of block traded hands on the week, highest weekly total since the week of June 26, 2023 and 21 loads of barrel.
StoneX said, "While domestic cheese demand remains underwhelming or somewhat quiet, export inquiries are red-hot. How much of this turns into export sales remains to be seen, but we expect strong export data when we get it two months from now."
Speaking in the March 31 Dairy Radio Now broadcast, broker Dave Kurzawski said the Milk Production, Cold Storage, and China's imports spell stability around current price levels for the U.S. market. U.S. prices remain well below world levels, specifically cheese and butter, so it's "a live one with good-sided trade."
The milk production and cold storage data is important, he said, but "given the fact we're right ahead of a new month and the potential tariff trade war heating up April 2, the markets are broadly indecisive around current levels, but very stable."
When asked about the depressed powder market, he reminded us that a few months ago, the U.S. price was almost at a record spread above the rest of the world. He suspects that was due to bird flu issues in California, where 50% of U.S. nonfat dry milk is made. We came through that, he said, but it does speak to the weak demand that exists, though he doesn't see prices falling lower. "The million dollar question" is the tariff situation, he concluded, and "No one has the answer."
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