Milk Production Hits High Gear a Few Months Early
Published: Friday, February 6, 2026
Much of the country was digging out of a recent winter storm, and power was being restored to thousands as another storm was threatening. Lawmakers in Washington were hoping to avoid another government shutdown, as last Friday's deadline approached, by approving 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. The Federal Reserve announced last week that it will hold its key interest rate at current levels.
Meanwhile, you'd think U.S. dairy farms were in the spring flush. December milk output hit 19.568 billion pounds, up 4.4% from December 2024. The 24-state total, at 18.823 billion pounds, was up 4.6%. Fat and protein were both up from last year, which put component adjusted production up 5.9%, according to StoneX.
Output for all of 2025 amounted to 231.482 billion pounds, up 2.5% from 2024, and 222.476 billion for the 24 states, up 2.6%. 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 was up 212,000, or 2.3%, 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%, above a year ago.
California cows put just under 3.5 billion pounds of milk in the tank in December, up 305 million, or 9.6%, from a year ago, which follows an 11% increase in November. Cow numbers were up 3,000 head in December and output per cow was up 175 pounds from a year ago when it was still fighting avian influenza. Wisconsin's December output totaled 2.8 billion pounds, up 75 million, or 2.8%, from a year ago, on 20,000 more cows and a 25-pound gain per cow. Michigan was up 4.5% on 20,000 more cows. Output per cow was unchanged. Minnesota was up 3.9%, on 5,000 more cows with a 10-pound gain per cow.
The latest slaughter weekly data showed 59,800 head of dairy cattle were culled in the week ending Jan. 17, 500 head less than the previous week, but 1,800, or 3.1%, more than a year ago. That put the year to date tally at 165,600 head, up 8,100, or 5.1%, from a year ago.
There's plenty of dairy in the freezer though exports have kept stocks in check. The Agriculture Department's latest Cold Storage report showed December butter stocks had shrunk to 199.3 million pounds, down 11.1 million pounds, or 5.3%, from November, and a whopping 14.96 million, or 7%, below December 2024.
American-type cheese crept to 789.8 million pounds, up 2.5 million, or .3%, from the November level, and up 18.6 million pounds, or 2.4%, from a year ago. The "other" cheese holdings climbed to 559.9 million pounds, up 7.2 million, or 1.3%, 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 .7%, from November, and up 18 million, or 1.3%. from a year ago. There were no revisions in any of the November data.
Speaking of exports, U.S. dairy sailings in November hit 515.2 million pounds, up 13.8% from November 2024. The totals were buoyed by stronger shipments to Canada, South Korea, Indonesia and Australia, according to HighGround Dairy's analysis, where exports increased by at least 6.6 million year-over-year. Sales to Mexico, the top U.S. destination, however, dropped on an annual basis for the fourth month in a row, down 1.6%. Sailings to China, our No. 2 export market, were up just .7%.
Butter exports totaled 25.1 million pounds, up 245.2% from a year ago, second-highest all-time total, just behind August 2008, according to HighGround, which stated, "U.S. butter has been at a sizable discount to global prices for some time, with the largest discount occurring in September and October 2025, when some of these sales would have been booked. Clearly, international buyers have noticed the price advantage. Top markets were Canada, Bahrain, Saudi Arabia, Morocco and Australia."
Cheese exports hit 111.9 million pounds, up 28.1%, and up 20.1% year to date.
Nonfat/skim milk powder totaled 121.3 million pounds, up just .1%, but down 11.1% year to date. Dry whey, at 37.8 million pounds, was up 18%, marking the sixth month in a row of an increase, according to HGD.
One factor that keeps stocks low is consumer demand here at home, and there's good news on that front for dairy products. CoBank said, "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."
"The dairy industry is in a great position to help consumers meet their protein intake goals," said Corey Geiger, lead dairy economist. "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 dairy markets moved higher the final week of January but then cooled. The Cheddar blocks gained 9 cents last Monday, hitting $1.4450 per pound, highest CME price since the day before Thanksgiving, then reversed and closed last Friday at $1.3625, .75 cents higher on the week, but 51.50 cents below a year ago.
The barrels were bid 10.50 cents higher last Monday, hitting $1.4650, highest since Dec. 2, 2025, but also reversed course and closed the week at $1.39, 3 cents higher, but 42 cents below a year ago. There were 20 sales of block on the week and two of barrel, the first barrel sale since Dec. 5, 2025.
Super Bowl is characteristically one of, if not the strongest, drivers of cheese demand and may have contributed to the price rise last week. However, more than likely weather conditions played a part.
Central region milk output is strong, according to Dairy Market News. A 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 last week, though contacts expected busier schedules later in the week. Retail cheese demand is strong, says 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 are 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 last Monday, hitting $1.60 per pound, highest since Halloween, then headed back down, losing 11.50 cents, only to regain 9.50 cents last Friday and close at $1.58, a half-cent higher on the week, but 85.25 cents below a year ago. There were 39 loads that exchanged hands on the week.
Central region cream production remains strong, says DMN, and spot volumes were plentiful. Winter weather slowed the movement of some milk and cream over the weekend and early this week. Class II and III demand was generally strong but somewhat lighter due to storm related downtime at plants. Demand for cream from butter makers remains light, as processors have enough to run busy schedules. Some plants operated lighter schedules early in the week but anticipated busy churning thereafter. Demand for bulk butter is increasing, particularly for loads produced after Dec. 1. Retail and food service butter sales are unchanged. Export demand for 82% butterfat butter is strong and inventories are tight, according to DMN. Spot loads of butter are available, but inventories are tightening for loads produced after Dec. 1.
Western handlers reported milk and cream volumes were generally meeting the demands of butter producers. Some were bringing in spot cream to max out churn capacity and augment lower than anticipated weekly milk production. Butter production is robust and inventories are building to more comfortable levels, says DMN. Some contacts reported some off-spec salted butter production due to improperly working salting equipment. Contacts reported that 80% butterfat butter was widely available. Domestic demand is strong. Export demand varies from moderate to strong and 82% butter spot loads are tight.
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