DAIRY MARKET REPORT
3/18/2025
OVERVIEW
January began this year positively for U.S. dairy exports, following a weak fourth quarter last year, rising by 0.5% from January 2024. In contrast, fluid milk sales,which in 2024 saw its first annual gain since 2009, were 0.5% lower in January than the previous January. Meanwhile, following end-of-year data revisions by USDA, a national dairy cow herd expansion would seem to be on back track with January’s preliminary estimate showing the national herd was 41,000 larger than a year earlier.
The January U.S. average all-milk price rose by $0.80/cwt from December to $24.10/cwt, and the DMC January feed cost formula increased by $0.33/cwt of milk, moving the DMC margin up by $0.47/cwt of milk for the month, to $13.85/cwt. At the macroeconomic level, the closely-watched overall retail price inflation index eased slightly in February, rising by 2.8% from a year earlier. The February Consumer Price Index (CPI) for all dairy products and those for the various individual dairy products were reported below their respective high levels, many of which were reached about two years earlier.
COMMERCIAL USE OF DAIRY PRODUCTS
Fluid milk sales were 0.5% lower in January than in January 2024, following last year’s first year-over-year gain in 15 years. Domestic use of most other products was also lower in January, except for yogurt and butter.
U.S. DAIRY TRADE
Total exports in January were 0.5% higher than January 2024 on a total milk solids basis and 20% higher by total dollar value. Among the larger product categories, accounting for almost 90% of total solids exported, January’s nonfat dry milk/skim milk powder exports were 20% below last year in volume, whey products of all protein contents were 15% higher, lactose was 14% lower, and all cheese was 21% higher.
A year-over-year drop in casein import volume more than offset gains in milk protein concentrates, leaving butter and cheese as the main sources for the increased volume
of imported products. Although U.S. dairy imports totaled only 23% of the milk solids volume of U.S. dairy exports during 2024, they totaled 75% of the total dollar value of exports, indicating they represented a very different product mix. Total 2024 import volume consisted 34% of dry skim milk ingredient products, mostly high-value concentrated milk protein products, 17% butter and other high butterfat-containing products, and 24% cheese. Exports in 2024 consisted 76% of dry skim milk ingredient products, 4% butter and other high butterfat-containing products, and 16% cheese.
MILK PRODUCTION
USDA’s reports for January revised national dairy cow and milk production numbers back through 2023. The revised numbers show the national dairy cow herd grew consistently by 16,000-17,000 cows from a year earlier during each month of last year’s fourth quarter, and January’s preliminary estimate shows the national herd was 41,000 larger than a year earlier. Accordingly, a national dairy cow herd expansion would seem to be back on track after a moment of doubt, when the December
preliminary numbers showed only 3,000 more cows than a year ago. January’s preliminary numbers also show U.S. milk production up by a slight 0.1% from a year ago, following two months of decline, and January production per cow still down slightly from last year. Total milk solids production growth was just over a full percentage point higher than growth of liquid milk production during the November-January period, with most of the increase coming from milkfat.
DAIRY PRODUCTS
Total U.S. cheese production was slightly lower than a year earler during November 2024 through January, as a 2.2% increase in Italian-type cheese production was again slightly more than offset by overall lower production of
DAIRY PRODUCTS PRODUCTION
all other cheese types. Butter production, which is mostly consumed domestically, continues to show healthy growth, while dry milk and whey product production, most of which is exported, was again lower.
DAIRY PRODUCT INVENTORIES
Recent revisions in USDA’s data on cold storage stocks of butter and cheeses indicate that the seasonal upturns of butter and American-type cheese did not begin in December, as previously indicated, but rather in January. For Americantype cheese, the January increase was small, 0.8% from a month earlier and also modest (2.3%) for other type cheeses.
However, January butter stocks showed a strong 26% jump of 56 million pounds from December. Stocks of dry skim milk continued to grow in January from a month earlier, but whey and WPC product stocks were essentially unchanged on the month.
DAIRY PRODUCT AND FEDERAL ORDER CLASS PRICES
The monthly NDPSR survey prices for butter and nonfat dry milk were lower in February from a month earlier after being relatively steady from December to January. NDPSR prices were modestly higher for cheese in February from January, but sharply lower for dry whey, following both being higher in January from December. Class III prices were down slightly in February from January, and more significantly lower for Class IV prices. The Consumer Price Index (CPI) for all items was 2.8%
higher in February than a year ago, but it also attained its highest ever value that month, as did the CPI for all food and beverages. The February CPI for all dairy products and those for the various individual dairy products reported, as well as their respective prices, remain below their respective high levels, many of which were reached about two years earlier. The February CPI for frozen dairy products was down sharply from the record level it had reached just a month earlier.
MILK AND FEED PRICES
Following three months of falling from record levels, the Dairy Margin Coverage (DMC) program margin reversed course in January, as a rise in the all-milk price outpaced a higher feed cost. The January U.S. average all-milk price rose by $0.80/cwt from the month before to $24.10/cwt, while the DMC January feed cost formula increased by $0.33/cwt of milk on higher prices for all three of its feed components, to move the DMC margin up by $0.47/cwt of milk for the month, to $13.85/cwt.
MILK AND FEED PRICES
*DMC calculations are not revised
LOOKING AHEAD
USDA’s World Agricultural Supply and Demand Estimates (WASDE) monthly report for March again reduced its forecast of 2025 annual milk production, to 226.2 billion pounds, which is equal to, or slightly lower, than 2021, 2022, and 2023 milk production and just 300 million pounds more than 2024 production. The department cited lower expected output per cow that more than offset slightly higher cow inventories as reason for the change.
This seemingly contradictory set of estimates, in the context of expections that U.S. milk production is growing, points up the need for USDA to more fully highlight milk component production. This is becoming more widely discussed, and would take the form of USDA’s National Agricultural Statistics Service (NASS) reporting milkfat and nonfat milk solids components or tests in the monthly Milk
Production report, if the timing is compatable, or else in the Agricultural Prices reports, as milkfat is currently, and also adding estimates of them to the WASDE outlook reports.
The WASDE outlooks for this year’s prices for the four basic products, as well as the Class III, Class IV, and allmilk prices were all lowered in the March report, by an average of 5%. USDA currently expects the U.S. all-milk price for this calendar year to average $21.61/cwt, a dollar a hundedweight lower than it averaged in 2024.
In mid-March, the DMC Decision Tool on the USDA Farm Service Agency website projected the all-milk price would average $22.18/cwt, and the monthly DMC margin would average $12.52/cwt during 2025, with a low of $11.44/cwt in May.
Dairy Management Inc.™ and state, regional, and international organizations work together to drive demand for dairy products on behalf of America’s dairy farmers, through the programs of the American Dairy Association®, the National Dairy Council ® , and the U.S. Dairy Export Council ®
Peter Vitaliano, National Milk Producers Federation pvitaliano@nmpf.org www.nmpf.org
The National Milk Producers Federation (NMPF) develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies.