More cows produce more milk. USDA’s latest data illustrates that as February production totaled 18.255 billion pounds, up 2.9 percent from February 2025. The 24-state total, at 17.559 billion, was up 3.1 percent. Most of the increase is attributed to increased cow numbers but the rising tide may be slowing some as this was the smallest year-over-year increase since May 2025.

StoneX broker Dave Kurzawski says, “Protein content was higher at 3.45 percent but fat content is not growing as much year-over-year at just .5 percent growth. Component-adjusted production still appears to be expanding, but changes are being made on farm as a result of farm-gate price declines through the second half of 2025.

“Farmers have likely been adjusting feed rations somewhat to cut costs, which is the likely driver behind slowing fat content growth,” he said. “That hasn’t stopped expansion of the herd, however. Beef prices are still strong and with milk prices recovering, there’s not a strong incentive to cull cows yet.”

January milk output was revised up 40 million pounds to 19.850 billion, 3.4 percent above a year ago, instead of the 3.2 originally reported. The 24-state total was upped 37 million pounds, to 19.095 billion, up 3.6 percent instead of 3.4 percent.

February cows totaled 9.615 million head, up 15,000 from the January count, which was revised up 20,000 head, and was up 211,000 or 2.2 percent from a year ago. The 24-state count hit 9.183 million, up 13,000 from the January total, which was revised up 16,000 head, and is 217,000 head or 2.4 percent above a year ago.

February output per cow averaged 1,899 pounds in the 50 states, up 12 pounds or 0.6 percent from a year ago. The 24-state average, at 1,912 pounds, was up 13 pounds or 0.7 percent from 2025. January averages were not revised.

U.S. butter stocks jumped again in February but were below those a year ago for the 11th consecutive month. The Agriculture Department’s latest Cold Storage report showed the February inventory at 253.8 million pounds, up 27 million pounds or 11.9 percent from January, following a 27.8-million-pound jump in January from December, but were 52.1 million or 17.0 percent below those in February 2025. The January total was revised up 11.3 million pounds from last month’s report.

American type cheese stocks fell to 784.9 million pounds, down 8.2 million or 1.0 percent from the January level, which was revised up 739,000 pounds, and were down 20.6 million pounds or 2.6 percent from a year ago.

The “other” cheese holdings crept to 578.0 million pounds, up 12.2 million or 2.2 percent from January, and up 6.3 million pounds or 1.1 percent above a year ago. The January total was revised up 1 million pounds.

The total cheese inventory hit 1.387 billion pounds, up 5 million or 0.4 percent from January, but 13.7 million pounds or 1.0 percent below a year ago. January’s total was revised up 2.2 million pounds from last month’s data. The report is seen as bullish for both butter and cheese as U.S. exports continued to keep product out of the freezer.

CME block Cheddar cheese headed lower this week and was trading Thursday morning at $1.62 per pound, following a Friday close at $1.6625, highest since Nov. 11, 2025, but is 1.50 cents below a year ago. The barrels were at $1.5725 Thursday, after closing Friday at $1.57, 6.25 cents below a year ago.

Central region contacts told Dairy Market News that milk output is steady to higher. Upper Midwest cheesemakers report spot milk is plentiful, due to downtime at nearby processing plants. Spot prices ranged $6-under to flat Class at mid-week. Cheese production was stronger this week. Plants with downtime due to last week’s snowstorm were running full schedules this week. Demand for cheese barrels is steady. Retail sales are strong, but food service demand is light. Export interest is declining due to increasing transportation costs.

Seasonally strong milk production in the West is more than sufficient for cheese manufacturers and cheese production is steady, says DMN. Some noted increasing delivery and packaging material costs. Some contacts indicated that production is heavily geared to fulfilling contractual sales well into second quarter. Domestic cheese demand is steady to strong. Demand from international buyers is mixed and export demand for mozzarella is keeping domestic availability somewhat tight, according to DMN.

Cash butter started the week slipping 2.50 cents to $1.7750 per pound, but reversed from there and was trading Thursday at $1.8450, still 50.50 cents below a year ago. It closed Friday at $1.80. A lot of product, 103 loads, had made its way to Chicago already this week, with 45 lots on Wednesday alone.

Cream production is strong in the Midwest and contacts say Class II and III processors are pulling in ample volumes, keeping inventories snug. Last week’s snowstorm caused some downtime in the Midwest, but butter makers are running full schedules this week. Contacts report strong retail butter sales ahead of the spring holidays but food service demand is tepid. Export interest has softened in recent weeks, as transportation costs have increased, according to DMN.

Spot cream is tighter in the West, with stronger demand from Class II and III manufacturers. Demand from butter makers is moderate. Churns remain heavily active. Traders indicate some old crop loads, in terms of CME timing cut offs, are available. Domestic demand is steady but mixed from international buyers.

Grade A nonfat dry milk is continuing its trek higher for the third week in a row and was trading Thursday at $1.9375 per pound, 77.50 cents above a year ago and the highest CME price in 12 years, April 8, 2014, when it was at $1.9975.

The Daily Dairy Report’s Monica Ganley Quarterra wrote in the March 20 Milk Producer Council newsletter, “The dramatic increase in NDM prices continues to be a supply driven phenomenon. Even though milk is long, powder is short as skim solids are consistently being routed to alternate uses. Increased demand for ultra-filtered milk as well as spoonable Class II products continues to limit the condensed skim available for dryers and is expected to keep milk powder production constrained over the coming months.

“Demand has been stable, but market participants report that even though contracted volumes are being delivered, there are no spot volumes of milk powder to be had. Export demand for U.S. product was upbeat late in 2025 and into 2026 but the price rally has rendered U.S. product largely uncompetitive with other global suppliers and export prospects are likely to suffer,” warns Quarterra.

Dry whey was at 69 cents per pound Thursday, 19 cents above a year ago, after closing Friday at 66 cents per pound.

USDA issued January and February Chinese import data last week and HighGround Dairy says it showed the weakest start since 2018.

Whole milk powder took the biggest hit and sank to a 16-year low, says HGD, as “China’s procurement strategy will likely shift as they adjust to full free trade with New Zealand. The need to rush product in is gone. Second, domestic farmers are in a lot of pain and the government continues to promise aid to those producers.”