U.S. milk production remained below a year ago in February, the eighth consecutive month to do so, thanks to lower cow numbers and output per cow. 

The Agriculture Department’s preliminary data showed output at 18.1 billion pounds, up 2.2% from Feb. 2023, however factoring the extra Leap Day, output was 17.48 billion pounds, down 1.3% on a per day basis, and the most significant decrease since January 2022, according to HighGround Dairy. The top 24-State total, at 16.8 billion pounds, was down 1.1%, factoring in the Leap Day. 

The January 50-State milk total was revised down 10 million pounds from last month’s estimate, which put output down 1.2% from 2023, instead of the 1.1% originally reported. The 24 state revision was down 6 million pounds, and January output was down 1.0% from 2023, instead of the 0.9% reported. 

February cow numbers totaled 9.33 million, up 10,000 from the January count which was revised 5,000 head lower from a month ago, and is down 89,000 head or 0.9% from a year ago. The 24-State count, at 8.878 million head, was up 8,000 from the January count, which was revised down 3,000 head, and is 61,000 below a year ago. 

Output per cow in the 50 states averaged 1,874 pounds, down 7 pounds or 0.4% from a year ago. The 24-State average, at 1,888 pounds, was down 9 pounds or 0.5% from a year ago. 

StoneX Dairy Group says “Farmers have been focused on boosting milk solids instead of boosting water production per cow. Combined fat plus protein in the milk was up 1.4% from last year during February.”

Dairy culling remains well below a year ago. The latest Livestock Slaughter report showed an estimated 252,700 head were sent to slaughter under federal inspection in February, up 2,500 head from January, but 13,800 head or 5.2% below Feb. 2023. 

The week ending March 9 saw 59,400 dairy cows go to slaughter, down 400 from the previous week, and 7,900 or 11.7% below a year ago. Year to date, 576,199 head have been culled, down 97,300 or 14.4% from a year ago.

As reported last week, eyes are focused on an illness affecting milk output in dairy cows in the Texas panhandle. A lot of those cows may be culled as a result. HighGround Dairy points out that “Beef prices remain above average, and the immediate paycheck of a slaughtered cow is more appealing than keeping a very low-producing animal in the herd.” 

That spells trouble in Texas however as HGD warned; “New processing capacity began in 2023 in the Panhandle and more is coming online this year as well as in 2025. It is imperative that the herd grows in this area so that the new plants are filled. Cow numbers in Texas have been flat since last June, and this issue will not help increase milk flows to optimize the new assets.”

 “There have been numerous theories offered including respiratory diseases, dysentery, or other potential toxins although nothing conclusive yet. The Smokehouse Creek Fire has also been raised as a potential culprit, but the blaze burned east of the affected dairies and the winds from the fire blew eastward such that larger dairies with reported cases west of the fire in the Panhandle were not impacted by either the fire or the resulting smoke.”

The MW reported that Trade Data Monitor shows January cheese exports at just less than 85 million pounds, up 12.6% from the prior year, the highest January on record. “U.S. cheese exports to Mexico were also record large for the month, up 39.3% from 2023 which was a previous record for January exports to Mexico.” The MW also warned; “With new cheese plants coming online, exports will need to continue remaining strong to help support prices.” “By contrast, January milk powder exports just above 129 million pounds were down 14% from last year’s record pace and the lowest volume for any month in nearly five years. Exports to Mexico dropped 21.7% from last year,” the MW concluded.

Fluid milk sales got a good start in 2024. The Agriculture Department’s latest data shows packaged sales totaled just under 3.9 billion pounds, up 2.4% from January 2023, after dropping 2.8% in December.

Checking the CME; block Cheddar closed the fourth Friday of March at $1.3925 per pound, down 7.75 cents on the week, lowest since Dec. 26, 2023, and 70.75 cents below a year ago when they stood at $2.10. 

 The barrels closed the week at $1.4250, 1.75 cents lower, 53.75 cents below a year ago, and an inverted 3.25 cents above the blocks. Sales totaled 24 loads of block and 3 of barrel.

Cheese demand is trending higher as spring holidays approach, according to Dairy Market News. Plant managers report that they are nearing capacity. Milk availability is ample, and some plants declined loads at $6 under Class since they were at capacity. Mid-week spot prices ranged $3-under to flat market Class III. Some processors scheduled downtime next week in concert with school closures, which will free up milk supplies. A year ago prices ranged $11- to $4-under Class. Cheese inventories are “comfortable in the region,” says DMN.

Butter finished Friday at $2.8075 per pound, down 1.5 cents on the week but 46.25 cents above a year ago, with 6 sales reported on the week.

Butter manufacturing is in line with recent weeks, says DMN. Churning varies as some plants report increases with micro-fixing bulk volumes. Demand is steady with interest for the spring holiday season picking up slowly. Cream is readily available but not overwhelming, according to contacts.

 Grade A nonfat dry milk dropped to the lowest CME price since Sept. 6, 2023, closing Friday at $1.1075, 5.50 cents lower on the week and 4.25 cents below a year ago, with 13 sales put on the board for the week. Lots of fingers point to the weak GDT powder prices and weak Mexican demand.

Dry whey closed the week at 39.50 cents per pound, down a nickel on the week, lowest since Jan. 1, 2024, and a nickel below a year ago, with 7 loads exchanging hands on the week.

Dairy imports into China don’t hold much hope. January imports were down 5.1% from a year ago and 15.0% lower in February. The data was combined for the fifth year in a row because “The impact of the Lunar New Year is unevenly spread across those two months,” said StoneX broker Dave Kurzawski in the March 25 “Dairy Radio Now” broadcast. He added that “China’s milk price is falling, so either their demand is off or they’re making more milk and keeping that information in-country.”

 In other trade news; weakening continued in the March 19 Global Dairy Trade Auction which saw the weighted average drop 2.8%, following the 2.3% decline on March 5. Traders brought 43.3 million pounds of product to market, down from 46.8 million on March 5, and the lowest since May 19, 2020. The average metric ton price slipped to $3,497 U.S., down from $3,630 on March 5.

Powder again led the declines. Skim milk powder was down 4.8%, after falling 5.2% on March 5. Whole milk powder was down 4.2%, after falling 2.8%. Lactose was down 4.4%, after gaining 4.8%. Cheddar was down 1.9%, after rising 4.0%, and Mozzarella was off 1.0%. Butter was down 1.4%, after slipping 1% last time, while anhydrous milkfat was up 2.5%, after gaining 1.4% last time.

StoneX says the GDT 80% butterfat butter price equates to $2.8359 per pound U.S., down 2.3 cents from March 5, and compares to CME butter which closed Friday at $2.8075. GDT Cheddar, at $1.9016, was down 3.8 cents, and compares to Friday’s CME block Cheddar, a steal at $1.3925. GDT skim milk powder averaged $1.1417 per pound, down from $1.1974, and whole milk powder averaged $1.4258 per pound, down from $1.4903. CME Grade A nonfat dry milk closed Friday at $1.1075 per pound.

Analyst Dustin Winston reports “North Asia purchases, which include China, were substantially weaker than year-ago levels and the previous GDT event. Southeast Asia along with South/Central America were the only regions to increase purchase volume from both last event and last year. The SMP market found some interest in this event as every region that purchased volume apart from North Asia, purchased more than they did a year ago,” Winston said.