15 additional states have enrolled in the National Milk Testing Strategy for bird flu

You’ll recall November milk production was down 1.0% from a year ago. The November Dairy Products report shows where the milk ended up.

November cheese production totaled 1.151 billion pounds, down for the first time since June. Down 6.1% from October and 1.7% below Nov. 2023. Year to date 13.1 billion pounds of cheese had been produced in the U.S. up 0.4% from 2023.

Wisconsin output fell to 291.2 million pounds, down 7.5% from October and 1% below a year ago. California produced just under 200 million pounds, down 2.2% from October, and 3.3% below a year ago. Idaho contributed 79.7 million pounds, down 15.5% from October, but 3.8% above a year ago. New Mexico, with 72.2 million pounds, was down 5.0% from October, and 5.9% below a year ago.

Italian cheese totaled 492.7 million pounds, down 3.6% from October, but 1.1% above a year ago. Year to date (YTD), 5.5 billion pounds had been produced, up 2.7%. American output fell to 448.0 million pounds, down 8.1% from October, and 4.9% below a year ago. YTD, at 5.2 billion pounds, was down 3.7% from 2023. Mozzarella totaled 387.1 million pounds, up 1.8% from a year ago, with YTD output at 4.4 billion pounds, up 3.8%.

Cheddar output dropped to 310.8 million pounds, down 23.1 million pounds or 6.9% from October, and was down 11 million or 3.4%, from a year ago. YTD cheddar output stood at 3.5 billion pounds, down 5.9% from a year ago.

Butter production climbed to 170.8 million pounds, up 1.8 million pounds or 1.1% from October’s output, which was revised up 1.5 million pounds, and was up 7.3 million pounds or 4.4% from a year ago. YTD butter topped 2 billion pounds for the first time and up 5.6% from 2023. Butter output plunged 12.8% in California, as bird flu took a toll on November milk output there, down a record 9.2% from a year ago, mainly impacting butter and cheese totals.

Yogurt production totaled 380.7 million pounds, up 12.2% from a year ago, with YTD output at 4.5 billion pounds, up 6.1%. Hard ice cream, at 51.6 million pounds, was up 6.4% from 2023. YTD, 678.1 million pounds had been produced, up 3.2% from a year ago.

Dry whey output, at 66.2 million pounds, was down 100,000 pounds or 0.2% from October, and down 2.4 million or 3.5% from a year ago. YTD whey was at 794 million pounds, down 8.3% from a year ago. Whey stocks grew to 57.7 million pounds, up 7.1 million or 14.0% from October, but were down 13.4 million pounds or 18.8% from a year ago.

Nonfat dry milk (NFDM) output fell to 120.1 million pounds, down 5.3 million or 4.2% from October, but was up 3.3 million pounds or 2.8% from a year ago. YTD NFDM was at 1.5 billion pounds, down 10.6%. Stocks climbed up to 238.1 million pounds, up 5.3 million, or 2.3% from October, and were up a hefty 37.9 million pounds or 18.9% from 2023.

Skim milk powder (SMP) production, at 47 million pounds, was up 6 million pounds or 14.8% from October, but was down 23.7 million or 33.5% from a year ago. YTD SMP was at 502.9 million pounds, down 20.2% from 2023.

The Jan. 6 Daily Dairy Report pointed out “Manufacturers favored the production of nonfat dry milk over skim milk powder, suggesting that renewed demand from Mexico and domestic sources have been driving processing decisions.”

U.S. dairy exports fell to 448.2 million pounds in November, down 6.5% from Nov. 2023, and the smallest volume since Jan. 2022, according to HighGround Dairy (HGD). Shipments to the U.S.’ top two destinations declined, down 2.3% to Mexico, and down 17% to China, with shipments to Southeast Asia down 20%.

One of the bright spots was cheese, which totaled 87.1 million pounds, up 2.4%, and up 17.2% year to date. Much of the increased purchases were from Mexico.

Butter sailings totaled 6.7 million pounds, up 100%, and up from October, the second-highest volume of the year, according to HGD. Canada was the top destination, with a 70% share, and up for the fourth month in a row.

Nonfat/skim milk powder exports totaled 119.3 million pounds, down 19.7%, lowest monthly volume on a 30-day adjusted basis since August 2019, says HGD. Sales to Mexico were down 8% and down 89% to Chile, with significant declines to Asian nations, according to HGD. Dry whey exports were down 2.2%.

Meanwhile, lactose and powder pulled the first Global Dairy Trade auction of 2025 lower. Tuesday’s weighted average was down 1.4%, following the 2.8% drop on Dec. 17. Volume fell to 66.5 million pounds, down from 70.8 million, and the lowest since July 16, 2024. The average metric ton price, slipped to $4,029 U.S., down from $4,148 on Dec. 17.

Lactose led the declines, down 2.4%, after inching 0.5% higher on Dec. 17. Skim milk powder was down 2.2%, after dropping 2.9%, and whole milk powder was down 2.1%, after dropping 2.9% as well. Anhydrous milkfat was down 1.6%, following a 3.8% decline on Dec.17.

Butter was up 2.6%, after inching 0.6% lower last time, and buttermilk powder was up 0.9%. GDT mozzarella cheese was up 3.6%, after dropping 1.8% last time, and cheddar was up 1.0%, after inching 0.2% lower last time.

StoneX says the GDT 80% butterfat butter price equates to $3.0159 per pound U.S., up 8.2 cents from Dec. 17, and compares to CME butter which closed Friday at a bargain $2.60. GDT cheddar equated to $2.1446, up 2.1 cents, and compares to Friday’s CME block cheddar at $1.82. GDT skim milk powder averaged $1.2166 per pound, down from $1.2505. Whole milk powder averaged $1.7255 per pound, down from $1.7645. CME Grade A nonfat dry milk closed Friday at $1.3650 per pound.

Analyst Dustin Winston wrote, “Middle east market share rose sharply, led by a large increase in anhydrous milkfat and butter markets. African market share was cut in half from the previous event with large declines in the same markets. Southeast Asia and Oceania held steady overall but had a noticeable increase in cheddar. Since the last event North Asian market share also fell roughly 6%.” 

Speaking in the Jan. 13 “Dairy Radio Now” broadcast, broker Dave Kurzawski said they expected U.S. exports to be flat, so being down that much is not bullish. If you consider what we produced, knowing that California milk output was down a record 9.2% due primarily to bird flu, we thought that would mean less nonfat dry milk and butter, as about 32% of U.S. butter and 50% of nonfat output is produced there. “We thought they’d both be down but that was not the case.”

We produced plenty of nonfat and butter in spite of the issues in California, he said, but cheese continues to “underwhelm.” “We’re not sure why,” he admitted, “But total cheese output was down 1.7% and cheddar output was down 3.4%.”

“It could be the new capacity coming online but, if you roll the clock back 12 months, we’d all be talking about having boatloads of cheese in the country at this time, but that is not the case. It will take some time to build up those inventories,” he concluded. “We will probably do it in 2025 but it’s interesting that we haven’t overproduced and is probably why we’re at $1.90 right now.”

“Dairy margins were relatively flat over the last half of December as higher milk prices and increased feed costs were largely offsetting,” according to the latest Margin Watch (MW) from Chicago-based Commodity and Ingredient Hedging LLC. “The impact of bird flu outbreaks in California was indicated in the latest monthly Milk Production report for December which showed production in the state down 9.2% from a year ago, the largest year-over-year decline on record.”

“Total U.S. production for November was estimated at 17.875 billion pounds, down 1% from a year ago and much lower than pre-report expectations as losses in California more than offset production growth in the rest of the country,” the MW stated. “USDA revised October production up by 35 million pounds as cow numbers were revised 5 million higher with milk per cow also increasing 2 pounds from the initial estimate last month. The milking herd currently pegged at 9.365 million, declined 5,000 from October, but still is 20,000 higher than November last year.”

“USDA’s monthly Cold Storage report showed butter stocks tightened considerably during November to end the month at 213.5 million pounds. While this was up 0.4% from last year, it was the smallest year-over-year gain for any month so far in 2024 and reflects the impact of production losses in California, where more milk goes to manufacturing of Class 4 products like butter and powder. Total cheese inventories at the end of November were estimated at 1.335 billion pounds, down 1% from October and 7.2% lower than last year.”

The MW concluded, “Corn and soybean meal markets rallied sharply on commodity fund short covering and posted key technical breakouts, with soybean meal up 11.6% from its recent low.”

The USDA announced that 15 additional states have enrolled in the National Milk Testing Strategy for bird flu, bringing the total to 28. These 28 states represent nearly 65% of the nation’s milk production. USDA is also sharing updates on its expedited work to support vaccine development for use in poultry and bovine species, as part of a multi-faceted effort to fight the spread of H5N1.

CME cheddar block cheese climbed to $1.94 per pound Monday, highest since Oct. 16, but closed the second Friday of 2025 at $1.82, down a dime on the week, ending five weeks of gain, but was still 25.75 cents above a year ago.

The barrels reached $1.87 Wednesday, highest since Oct. 30, but finished Friday at $1.85, 2 cents higher on the week, 40.50 cents above a year ago, and 3 cents above the blocks. There were 19 sales of block traded on the week and 5 barrel.

Dairy Market News (DMN) reports that Midwest cheesemakers are busy following the holidays but expect markets to exhibit some near-term balance until post-holiday production catches up with demand. Italian style cheesemakers relay strong demand and some are oversold. Barrel makers say the slow autumn buying season has moved into winter and customers are awaiting pricing updates. Cheese availability varies from tight to slightly available, but not at concerning levels. Milk availability has quickly balanced out following some below-Class III prices, some as low as $7-under Class. Mid-week they were Class III to $1-over.

Western cheese output was generally stronger this week. Strengthening milk production is making more available to cheesemakers. Some indicated tighter inventories than others, especially for certain varieties. Domestic demand is steady to stronger, while steady to lighter from international buyers, says DMN.

Butter climbed to $2.60 per pound Wednesday, highest since Nov. 15, and that’s where it closed Friday, 4.75 cents higher on the week and 3.25 cents above a year ago, on 17 sales for the week.

Central butter churning quickly ramped up following holiday downtime. Cream is widely available, as multiples have yet to climb out of the holiday basement. Current production is focused on spring and fall needs. Current multiples had been as low as .70 across the region. Cream handlers say butter makers are less active on the spot cream market, according to DMN.

Plenty of cream is available in the West. Butter production is stronger following the holiday weeks. It has kept up with or stayed ahead of demand and continues to do so, says DMN. Inventories are healthy and demand is noted as mixed.

Grade A nonfat dry milk closed the week at $1.3650 per pound, down a quarter-cent, but still 18 cents above a year ago, with 34 sales reported on the week.

StoneX warned that, with Tuesday’s GDT “revealing a low $1.20 equivalent skim milk price, the trade is left to question just how much above the world price level the U.S. can sustain. In the midst of that, futures are tip-toeing lower and with each tick like an unsteady step into a dark room. Bird flu remains just the most obvious immediate issue for NFDM but to date all but priced in.”

Dry whey saw its Friday finish at 74 cents per pound, a penny lower on the week, but 31 cents above a year ago, with 3 sales put on the board this week.

The Jan. 9 Daily Dairy Report warned, “The steep uptick in U.S. whey powder values is cutting into the country’s export prospects. The strong dollar makes already pricey U.S. whey products less attractive to international buyers, with dry whey values 54% higher than in mid-2024. Over the same period, European whey values are up 24%, but they are only 19% higher after adjusting for the currency impact. International buyers have noticed,” says the DDR.

The Agriculture Department lowered its 2024 milk production estimate in its latest World Agricultural Supply and Demand Estimates report issued late Friday morning. The report cited lower milk cow inventories and lower expected milk per cow, based on the most recent Milk Production report. The 2025 production forecast was also lowered due to slower growth in output per cow. “USDA’s Cattle report will provide an indication of producer intentions for retaining dairy heifers for addition to the milking herd,” the USDA stated. I’ll have more details next week.

As the U.S. mourned the passing of former President Jimmy Carter and anticipated the inauguration of President-elect Donald Trump, Canadian Prime Minister Justin Trudeau announced his resignation following opposition within his party. Canada is one of America’s largest trading partners and the announcement followed a surprise trip that Trudeau made to Mar-a-Lago to meet with President-elect Trump. Trump has teased of Canada becoming the 51^st state. Trudeau will remain in office until his party chooses a new leader.

Lee Mielke is a graduate of Brown Institute in Minneapolis, Minnesota. He’s formerly the voice of the radio show “DairyLine” and his column appears in agricultural papers across the U.S. Contact him at lkmielke@juno.com.