The Latest: June - 2025
Milk Flows Again as Herds Grow
The heifer shortage and avian influenza reined in U.S. milk output in 2024, fostering lofty milk and dairy product prices in the second half of last year. But after nearly two years of low cull rates and sheer grit, the parlors are full, and so are the milk tanks. In the first 24 weeks of 2025, dairy cow slaughter was 7.7% behind the 2024 pace and 15.6% slower than historic average cull rates. Dairy producers added 122,000 cows over the past 11 months. From coast to coast, but especially in the center of the country, producers are looking to expand their facilities and add significantly more cows over the next 18 months.
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A blast of cold air from Canada reached as far south as Texas this week, closing schools, freezing pipes, sidelining milk trucks, and disrupting dairy processing.
View reportThe dairy trade is feeling around for the bottom in the cheese market. Cheese output remains robust, but low prices have finally attracted international attention. U.S. cheese exports topped 85 million pounds in November, the highest-ever volume for the month, up 3% from the previous monthly high, logged in November 2022. Once again, record-setting shipments to Mexico helped to offset softer demand from Japan and South Korea.
View reportMild winter conditions across most of the country have supported milk production though margins remain thin, especially for producers in the western U.S. Milk remains readily available for manufacturers.
View reportThere was a decided lack of Christmas cheer in the Class III markets this week. The January through April contracts scored life-of-contract lows. December Class III settled at $16.09 per cwt., promising Scrooge-like margins on the farm. January and February Class III looked even worse. This week January tumbled 47ȼ to $15.43 and February plummeted 54ȼ to $15.60.
View reportJanuary Class III futures dipped below the $16 mark, a level signaling plenty of red ink on the farm as well. Unfortunately, Class III prices will have a greater influence on most milk checks. Ever-expanding cheese production capacity, lower milk powder output, and depooling will water down the share of dairy producer revenue derived from the higher Class IV market.
View reportCheese vats remain full, despite lower milk output. U.S. cheese production reached 1.19 billion pounds in October, up 0.8% from the year before. Given the continued investment in U.S. cheese production capacity, cheese output is likely to grow for the foreseeable future, to the detriment of U.S. cheese and Class III prices. But the details of U.S. cheese production offered some fodder for the bulls. In October, cheesemakers shifted milk into fresh cheeses like cream cheese and Neufchatel (+6.8% year-over-year), cottage cheese (+13%), Hispanic cheeses (+5.7%), ricotta (+12.2%) and Mozzarella (+2.3%).
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